Libertarian “Free Cities” like Próspera and CryptoCity in Latin America are testing private governance beyond state regulation. Discover how these corporate enclaves exploit weak governments, redefine citizenship, and pose a growing threat to global democracy.
People think history doesn’t change enough because they don’t know enough about it, and they think the future will be the same as the present. People see the time we live in now as an important break or interregnum. Where can you already see these breaks, even if they’re only somewhat? Where does the future already happen? Latin America is a place where people test forms of private government without democratic control, even though it may seem far away. Of course, this is not the case for all of Latin America. Just small areas in Honduras, Nicaragua, Venezuela, and maybe even Uruguay and Argentina soon. It sounds like a long way away. But it has a lot to do with how things are going in the US and Europe right now. There are also people in Germany who support it.
In experimental, ideologically charged microcosms, things that were once taken for granted, like rental agreements and consumer and tenant protection, have been done away with for a long time while Europe talks about the housing crisis and competitiveness.
The names Próspera, Veritas Village, CryptoCity, Praxis, and Xcity sound appealing to people in the West. These private areas are tests, made-up places for “free” businesses and startups that want to do well without having to follow state laws and rules. Private towns like Próspera in Honduras, probably the most famous example, draw tech companies, crypto fans, and especially libertarians who don’t want to pay taxes. Depending on your point of view, you might see these experiments as either disruptive or visionary. But most importantly, they are libertarian and neocolonialist: private contracts bypass the government, and these islands of wealth sit in poorer areas. People in the area seldom use the high-tech infrastructure. In theory, the business model exploits weak states, instability, and people who are struggling financially. Some pioneers say the truth right out.
The U.S. company Honduras Próspera Inc. runs the special economic zone Próspera, which is on the island of Roatán in the Caribbean. Some very rich tech people, like Peter Thiel, Sam Altman, and Marc Andreessen, are said to be involved. The company says that about 1,700 people have bought registration; to take part, you have to pay a flat tax of $5,000. Furthermore, you have to live there for at least seven days a year. The tax rate is 1% of a company’s gross income, which is lower than the national rate of about 25%. An economic zone called Próspera was made official by Honduras in 2017. This country is not bound by Honduran law and can make its own rules, courts, police force, tax laws, and legal system.
Honduras’s right-wing governments always backed the project, but in 2022, the left-wing government led by Xiomara Castro decided to shut down Próspera. On April 20, 2022, the Honduran Congress threw out the law that made the special economic zone possible. As a result, Próspera sued the Honduran government for violating investment rights and legal certainty, asking for US$10.7 million in damages, which is about one-third of Honduras’ GDP. The Supreme Constitutional Court said in 2024 that the special zone law was unconstitutional, but the claim was later greatly lowered. The future is still uncertain. It has been impossible to stop Próspera for now because a very conservative right-wing party has held the presidency since January 2026. In this case as well as others in Latin America, the Trump administration meddled in the polls by only backing Nasry Asfuera, a candidate on the right.
Titus Gebel, head of the Free City Foundation and supporter of privately run “city-states” that are not controlled by democracy, is active in Próspera from the German side. In this way, Próspera shows how far the disagreement between private self-government and state authority can go. Different projects have different priorities but try to reach the same goals.
Another project that has attracted entrepreneurs since 2023 is CryptoCity, which is building on the island of Margarita in Venezuela. CryptoCity is run decentralisedly, independently, and digitally, according to its website. Every person can make investments and take part in making decisions. This means that ownership is linked to participation. “We firmly believe that Germany is on the decline,” which makes the political reasons clear. We won’t accept the slow taking away of our rights and property. We are leaving behind war, high taxes, the dangers of unskilled immigration, and green policies. “Any country in Latin America is great as long as you get out of Europe,” says founder Tim Stern. After that, you get a good wife and are content.
There are many kinds of experiments. Veritas Villages is a network of private, self-governing communities that encourage creative, risk-taking thinking. The towns are okay with the way the government is set up, but they want more freedom and self-government, especially when it comes to getting energy and water and handling money. Nicaragua, Panama, and Costa Rica all have beautiful beaches and resorts that are part of the network. There are plans to add more sites in El Salvador, Mexico, Ecuador, Argentina, Belize, and Honduras.
Other experimental places, like BitcoinCity in El Salvador, haven’t really moved past the planning stage, even though they’ve been talked about a lot. In the same way, it’s still too early to tell how much of the big promises made by Praxis in Uruguay and Xcity in Argentina will come true. Praxis thinks of itself as a “digital nation” where building a new society is just as important as being a business. Praxis announced on September 22, 2026, that it would open its first physical branch in Uruguay as part of the +Colonia urban development project. The Free City Foundation’s members seem a little let down because “the status as a special administrative territory under Uruguayan law is far removed from the once-promised self-governing city.” Because the Uruguayan government is so strong, it’s still not clear if it can really become a mostly self-governing enclave.
The newest example is Xcity, which wants to build an AI-powered city in the northwest of Argentina. If you spend enough, you can also become an Argentine citizen. Tengo Data research also shows that the project is trying to get the Argentine government to let it have some control over its own affairs. At this point, Xcity is a big private investment led by a Chinese businessman who is taking advantage of the new freedom-focused rules put in place by President Javier Milei. It’s still not clear if it will also try out new ways of letting people rule themselves privately.
Not every idea is as extreme or even a reality yet. But what they all have in common is that they try to keep business interests as separate from government rules as possible. People from the Global North, like China, who are early adopters of entrepreneurship are setting up shop outside of their own democratic societies because they think they have too many rules. To do this, they take advantage of weak governments, money problems, or, as in Argentina, the political space that libertarians provide.
Elites are leaving the group. Tech billionaires and businesspeople who have lost faith in community and the group are pushing for their vision of a world based on profit within a liberal framework. While Musk works on his ideas on Mars, people on Earth are already trying private government models that are meant to take economic power and self-regulation away from states that were formed through democracy. Even if they use a member-based government, like private clubs or groups, they still put up a wall that makes it hard for people to get in. People who are not part of this exclusive community but are affected by its decisions can’t say anything. The most important question is whether political equality is a right for everyone or a privilege for some people in a community.
These small groups of people in Latin America give us a look into a possible future. In Germany, people on the far right and in libertarian groups also talk about them. The question is not whether these kinds of projects make money. The important thing is who makes the rules and who has to follow them without a choice.
Taking private power away from democratic or even state control is a real threat, not a chance for growth and prosperity. Latin America is being used as a test bed by libertarians who are against democracy. As we continue to be shocked by Argentina’s anarcho-capitalist experiment or take too long to condemn the Donroe Doctrine, more and more private areas are appearing. In the new American “backyard,” things are moving faster, and the future is forming itself according to its own rules. Libertarian and far-right policies are slowly taking away rights that were won through democracy. This is the next logical step: when political equality is tied to membership or property, democracy risks turning from a principle for everyone to an agreement only for a select few.
The author, Svenja Blanke, is the head of the Friedrich-Ebert-Stiftung (FES) Uruguay branch in Montevideo. This article first appeared on IPG in German.
