There are many legal and practical issues that may prevent the creation of Liberland altogether. Nevertheless, the status quo justifies it. The aspiring micronation’s creator, Vít Jedlička, has declared that bitcoin would be the backbone of the economy in Liberland. Therefore, assuming that ICOs would find a fertile environment in the would-be nation, would be a safe assumption. Given that the status quo forces have been training their sights on ICOs lately. The Chinese Central Bank declared on Monday that ICOs are illegal and that they should be halted immediately. Regulators around the world are slowly following the SEC’s lead. In the case of China, the declaration was more severe than elsewhere. Therefore, it seems that only a fresh, new political entity could provide the kind of jurisdiction needed to allow this industry to flourish.
Liberland and ICOs
Indeed, Liberland could become the home of most ICOs if the current onslaught from regulators and government entities – such as China’s Central Bank – chokes this kind of crowdfunding off completely. Liberland however, would have to be strong enough to withstand the backlash from the status quo powers if it insists in supporting the industry. The hypothetical micronation could face the following, should it become the black sheep that supports the ICO industry:
- International sanctions.
- Political pressure, including requirement for visas for its citizens when they go to other countries.
- Targeted sanctions of its political leadership.
- Seizure or freezing of assets abroad.
- A ban from SWIFT and other international banking systems.
Could Liberland Survive Under Pressure?
Nevertheless, in this hypothetical scenario, there wouldn’t be a nation more able to withstand sanctions in the history of human kind than Liberland. With a bitcoin-based economy, it would be virtually impossible to stop capital flows in or out of the country. Furthermore, should the ICO industry find a warm home in this hypothetical micronation, the sheer amount of innovation concentrated within its borders would make it difficult for others to shun.
Liberland might have to deal with a different hypothetical problem, should it become a nation that supports the ICO industry. That problem would be mass migration. One can only imagine all the Chinese ICO investors – 105,000 of them, according to reports on Bloomberg – moving into this tiny 7km^2 piece of land between Serbia and Croatia. That added to the more than 200,000 applications for citizenship that Liberland has already received, could put Liberland on the brink of collapse from day 1 if it ever achieves the status of a country.
The More Regulators Attack the ICO Industry, the More Liberland Makes Sense
Nevertheless, with the Chinese Central Bank spearheading the regulatory onslaught, it seems that the ICO industry needs a nation such as Liberland more and more. The ICO industry could also provide an interesting spark for Liberland’s economy and an interesting way to mitigate some of the immediate economic costs of mass immigration, should this nation ever come into being. The likelihood of Liberland gaining nation state status is quite low, so the ICO industry and those involved in it, will have to continue to look for ways to either comply with regulation – and move out of China – or make a case for why they shouldn’t. There is no doubt that the regulatory noose will continue to tighten. Barring the establishment of Liberland, and an express show of support from this micronation, the ICO industry has its job cut out for itself.
Note: China’s Central Bank announcement on the ICO ban was so eventful, that Bloomberg published 3 informative pieces on it on the same day! Click here to read more.