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There is concern about the expropriation of rights in ZEDE, after a court ruling.
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The rights that the government granted to the ZEDE are now under threat.
The Bitcoin City on the island of Roatán in Honduras continues to operate normally. This, a month after the Supreme Court of Justice declared unconstitutional the charter cities, better known as Employment and Economic Development Zones (ZEDE), which have existed in the Central American country since 2013.
Próspera, also called the Bitcoin City of Honduras, along with other charter cities or ZEDE are projects of a type of independent administrative division in some areas of the Central American country. The Supreme Court of Justice approved them in the past, but with the arrival of Xiomara Castro’s government, in 2022, The Honduran Parliament repealed these initiatives considering that they cede sovereignty to foreigners.
On September 20, 2024, the Supreme Court voted overwhelmingly against the law that allowed the establishment and development of these autonomous cities with private government. And since this ruling became known, intense controversy has arisen. Lawyers specialists argue that once the government grants a right, such as a tax exemption or a guarantee of legal stability, it cannot arbitrarily withdraw it without following due process.
The Court’s ruling against the ZEDE was approved with “nullary” effect, which means that its decision is retroactive and invalidates all regulations related to these previously approved economic zones.
The repeal of the laws that support the ZEDE is carried out in a context of legal uncertainty. This situation has generated divergent opinions regarding the interpretation of the Constitution of the Republic and about the possibility of reforming articles that are considered intangible or “stone”, that is, laws so fundamental that they cannot be easily repealed or modified.
Alex Ugorji, an entrepreneur interested in “competitive jurisdictions, dissident civilizations and disruptive technologies,” holds that what is happening with the ZEDE In Honduras there is evidence of a process of “expropriation”. Ugorji states that, although there is no evidence of illegal activity in the ZEDEs that would justify their closure by the government, there is evidence that acquired rights that the Constitution guarantees to these areas and their residents are being eliminated.
More than 140 investors from 19 countries have expressed their concerns in a letter addressed to Rebeca Obando, president of the Supreme Court of Honduras. In it, they denounce the “illegal expropriation of investments in the ZEDE and violations of International Law” by the government, affecting a coalition of companies that made significant investments in Honduras under the protection of the law that protects the ZEDE.
The document emphasizes that the ZEDE law, enacted in 2013, guaranteed the “legal stability of special economic zones for a period of 50 years, supported by international treaties and stability contracts.”
In addition, it is reported that about ten international companies are preparing international arbitration claims against Honduras after the declaration of unconstitutionality of the 2013 law, according to Jorge Colindres, technical secretary of Próspera, the first ZEDE established in the country on the island of Roatán. also known as Bitcoin City, as said before in this note.
Próspera continues to encourage bitcoin adoption among the residents of the island of Roatán. Source: X/Prosperahn.
«Eliminating the ZEDE is an expropriation»
Honduras Prospera Inc. (HPI), together with its affiliates, has issued a strong warning about the legal implications of any changes to the framework of the Employment and Economic Development Zones (ZEDE). According to HPI legal advisors, the promise of legal stability that was offered to them is an acquired right that, if threatened by actions of the Honduran government, could constitute an expropriation. This situation poses a serious dilemma for the country’s economic future.
In a recent publication, Nick Dranias, HPI representative, emphasized that any government act that generates instability in the ZEDE could invalidate the legal rights granted to the company.
Dranias also provided an alarming estimate: if the ZEDEs are eliminated, Honduras could face a financial exposure of approximately $10.775 million. This amount, according to himreflects the present value of HPI’s share of fees, taxes and rising land values, assuming its business model can operate with legal stability over a 50-year period.
The uncertainty about the future of the ZEDE and its impact on investments puts the Honduran government in a delicate position. While some sectors see the elimination of the ZEDE as an opportunity to redirect the country’s economic development, others warn that this It could lead to million-dollar losses and a disincentive for future investors.
The debate over the ZEDE continues and raises fundamental questions about the economic direction Honduras should take in the coming years. The decision made by the government, although it is true that it will affect Próspera, will also define the investment and development panorama in the country for a long time.
«We are going to do BRRRR on the island of Roatán»
Despite the challenges facing the Bitcoin City of Honduras, the Bitcoin Roatán Retreat challenge will take place, a five day tour which promises relaxation activities and business opportunities in an environment where the use of the pioneering digital currency is common.
Roatán, known for its crystal clear waters and pirate history, is becoming a center for the bitcoiner community through the Próspera special economic zone. The Amity Age community has promoted adoption and education about Bitcoin, integrating this Cryptocurrency into daily life on the island, so “doing BRRR” for them is driving adoption of the digital currency.
Roatán is an island in the Caribbean, part of the territory of Honduras. Source: Satelites.pro.
The Amity Age team uses the metaphor of pirates and their use of eye patches to represent the need for adapt and defend yourself in the current financial ecosystem. This image illustrates their focus on privacy and financial autonomy.
Despite political adversities, bitcoiners in Roatán continue to work to establish their community and defend their vision of a parallel financial system, highlighting the tension between innovation and government regulations in Honduras.
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