Bitcoin paradise? Briton creates ‘crypto utopia’ in South Pacific | Cryptocurrencies

For the past 12 years Anthony Welch and his partner Theresa have been living a Robinson Crusoe life alone on a South Pacific island mostly untouched by humanity.

Welch, a retired British property investor, hopes the tranquility will soon be shattered by 21,000 cryptocurrency investors he is trying to convince to move to his island and form a regulation-free “crypto utopia”.

Under Welch’s plan, the 3 million sq metre (32 million sq ft) island, which is part of the Vanuatu archipelago between Australia and Fiji, would be transformed from 90% undisturbed rainforest into a “sustainable smart city”, filled with multistorey apartment blocks and offices for cryptocurrency investors from around the world.

Welch, who has renamed the island from its native name Lataro to Satoshi (in a nod to Satoshi Nakamoto the pseudonym of the person who invented bitcoin), has joined forces with cryptocurrency evangelists to create a “blockchain-based democracy” and “the crypto capital of the world”.

However, Welch will first have to unwind his previous marketing of the island as a “wildlife nature reserve” home to rare giant crabs.

In his previous attempt to sell the island for $12m (£9m), Lataro is described as an ecological paradise “covered in lush rainforests, together with a wonderful array of flora and fauna that’s been here for thousands of years undisturbed and will surely make anyone believe they have gone back in time”.

A video promoting the island for sale in 2017 boasts that the 4 miles of “pristine coral reef surrounding the island is a marine conservation area” that “teems with beautiful fish and coral life”. It says only a handful of people have ever dived at the reef and “most parts of it have never been explored”.

The Welches have previously petitioned the Vanuatu government to designate the island as a wildlife reserve to “prevent the extinction” of the rare coconut crab. “The ultimate goal is to re-establish the breed strongly on the island,” Theresa said.

A website describing the couple’s efforts to establish the wildlife reserve was deleted soon after the Guardian approached Welch for comment. He said the reserve was “voluntary” and one that he could “dismantle at any time” to allow for the building of the crypto city.

“This was the last place with coconut crabs, they [the local population] had decimated them absolutely everywhere else on Espiritu Santo [Vanuatu’s largest island nearby],” Welch told the Guardian.

“We formed the reserve to try to stop them decimating them here to get the numbers back up … the government department for the environment have supported us creating a wildlife refuge here.”

The Satoshi island project is the latest in a series of schemes aimed at bringing cryptocurrency fanatics out from behind the blockchain in their bedrooms and into real-world community in small island states.

The president of Palau, another Pacific island nation about 3,000 miles to the northeast of Vanuatu, has launched plans to become “the world’s first government-backed national stablecoin” by the end of the year.

President Surangel Whipps Jr says the country has partnered with Ripple, a US cryptocurrency firm whose executives have been charged by the Securities and Exchange Commission of stealing $1.3bn worth of the tokens, “to create a national digital currency, providing the citizens of Palau with greater financial access”.

Plans to establish Cryptoland on an island in Fiji – where investors were told they would “enjoy a first-class crypto lifestyle” – collapsed earlier this month when the promoters failed to buy the island.

Welch says Satoshi Island will succeed where Cryptoland failed because he and his partners own the island, and claims the development plans have the support of both the Vanuatu government and the local community.

However, the Vanuatu government failed to respond to requests for comment, and Welch was unable to provide contact details for any current local residents.

“We’re trying to build a community,” Welch said in an interview over satellite link to the island which currently has no mains electricity, water, phone or internet connection. “We’re not trying to develop and make a profit.”

He said a team of cryptocurrency evangelists who had been searching the world for a location to form a “crypto society” approached Welch after seeing his island advertised for sale for $12m on private island real estate website.

Welch took the island off the market and entered into a complex partnership with Hong Kong-based architect James Law, Australian crypto entrepreneur Denys Troyak and Daniel Agius, chief operating officer of the Vanuatu Investment Migration Bureau, an agency that sells Vanuatu citizenship.

“The crypto paradise they want to build is a really cool idea, and a wonderful use of a place we have been able to live on for 12 years,” Welch said.

“The team had been working to find a location for some time, the key issue was trying to find a government that would … permit a society to exist on crypto transactions. Most countries in the world want to collect tax, and they therefore don’t want crypto transactions happening because they can’t monitor what’s happening. Vanuatu has no income taxes of any sort.”

The trio are promising 21,000 investors the island will “become home for crypto professionals and enthusiasts, with a goal to be considered the crypto capital of the world”.

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What is cryptocurrency?

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Cryptocurrencies are an alternative way of making payments to cash or credit cards. The technology behind it allows the ‘money’ to be sent directly to others without it having to pass through the banking system. For that reason they are outside the control of governments and are unregulated by financial watchdogs – and transactions can be made in a way that keeps you reasonably pseudonymous.

If you own a crypto-asset you control a secret digital key that you can use to prove to anyone on the network that a certain amount of that asset is yours. If you spend it, you tell the entire network that you have transferred ownership of it, and use the same key to prove that you are telling the truth. Over time, the history of all those transactions becomes a lasting record of who owns what: that record is called the blockchain.

Bitcoin was one of the first and biggest cryptocurrencies and has been on a wild ride since its creation in 2009, sometimes surging in value as investors have piled in – and occasionally crashing back down. Dogecoin – which started as a joke – has also seen a stratospheric rise in value.

Sceptics warn that the lack of central control make crypto-assets ideal for criminals and terrorists, while libertarian monetarists enjoy the idea of a currency with no inflation and no central bank.

The whole concept of cryptocurrencies has been criticised for its ecological impact, with “mining” for new coins requiring vast energy reserves and the associated carbon footprint of the whole system.

Richard Partington and Martin Belam

“Life on the island will be an experience like no other, giving the crypto community a way to live and work amongst like-minded people in a place designed around the industry we love,” they say on a website promoting the island.

Successful applicants wanting to live on the island will be granted with a non-fungible token (NFT) granting them “Satoshi Island citizenship”. However, the small print details that they will also have to gain Vanuatu citizenship to live on the island.

Vanuatu citizenship costs $130,000 and allows “golden passport” visa-free travel to 129 countries, including the UK and all Schengen countries in Europe.

The country is heavily promoting its “citizenship by investment” programme despite concerns that the scheme has been exploited by fugitives, politicians and disgraced businesspeople.

A Guardian investigation last year found that among the 2,200 foreign nationals granted citizenship in 2020 were a Syrian businessman with US sanctions against his businesses, a suspected North Korean politician, an Italian businessman accused of extorting the Vatican and South African brothers accused of a $3.6bn cryptocurrency heist.

Vanuatu this month appointed Mayfair-based citizenship marketing firm CS Global Partners to attract more to buy Vanuatu nationality, which is granted with an online “oath swearing ceremony” and does not require the new citizen to ever visit the country.

Selling citizenships equates to almost 50% of Vanuatu’s total annual revenue, according to the International Monetary Fund (IMF).