Why Crypto Enthusiasts Are Drawn to Freedom Cities

The concept of freedom cities has captured the imagination of the cryptocurrency community, offering a vision of urban innovation that breaks away from traditional regulatory structures and centralized governance.

Initially proposed by Donald Trump during his presidential campaign, the idea involves building ten new cities from scratch on federal land, designed to be free from excessive bureaucracy and red tape that often hinders housing development and technological innovation.

While freedom cities are a modern branding of charter cities — a concept dating back to the late 19th century — the notion has found renewed energy, particularly among Silicon Valley’s tech elite, many of whom were early adopters of cryptocurrency and blockchain technology. Figures like Elon Musk, Peter Thiel, Marc Andreessen, and Balaji Srinivasan have shown interest in both decentralized finance and experimental urban development, seeing a natural alignment between the two movements.

Early Steps Toward Reality

In mid-March, the Trump administration took initial steps to realize this vision by forming a Joint Task Force led by Interior Secretary Doug Burgum and Housing and Urban Development Secretary Scott Turner. Their focus: evaluating underutilized federal land for potential transformation into new communities.

The administration frames freedom cities as part of the solution to America’s affordable housing crisis, arguing that the federal government can directly catalyze the construction of much-needed housing stock by leveraging public lands.

However, critics caution that loosening environmental and regulatory safeguards could create lawless zones outside normal federal and state oversight. There are concerns that freedom cities might bypass critical protections like the Clean Water Act and the Endangered Species Act, leading to communities that operate beyond the reach of standard legal frameworks.

A Polarizing Concept

Academics like Max Woodworth of Ohio State University acknowledge that, under normal political conditions, the idea of federally backed master-planned cities might seem fantastical. Yet, he points out, these are not normal times:

“The current administration seems open to ideas that would previously have been dismissed as impossible or misguided.”

Freedom cities have faced strong criticism. Some have labeled them as modern versions of company towns — like Pullman, Illinois — but updated with a veneer of crypto-libertarianism. Instead of company-issued scrip used in old mining towns, today’s “freedom cities” might rely on cryptocurrency as the primary medium of exchange.

Nevertheless, proponents argue that these cities would not be “lawless.” Tom Bell, a law professor at Chapman University, notes that investors demand some form of legal protection for their investments.

“The goal is not getting rid of all regulation, but rather finding new and better ways to guide investment, construction, and business.”

Bell has worked on a draft Freedom Cities Act that would allow developers to propose alternative enforcement mechanisms that meet the intent of federal regulations without the heavy bureaucratic burden.

Similarly, Jeffrey Mason of the Charter Cities Institute emphasizes that regulatory sandboxes — flexible environments where innovation can flourish under lighter regulations — could be key to fostering these new urban spaces.

Why the Crypto Community is Enthusiastic

The deep interest of the crypto community in freedom cities is not coincidental. Crypto advocates have long sought decentralized governance models that mirror the distributed architecture of blockchain technology.

Mason explains:

“The crypto community has been interested in new cities, charter cities, and other innovative governance mechanisms for a long time. I think the common interest in decentralization drives a large part of this.”

Urban theorists like Woodworth also see alignment. Existing cities and institutions, deeply rooted in 20th-century models, often stifle innovation. Freedom cities, designed from the ground up, could create regulatory environments tailored to the needs of emerging technologies, especially in finance and decentralized networks.

Bell concurs, adding that the crypto world sees in freedom cities a rare chance to test bold new ideas without immediate interference from outdated regulatory structures.

However, there is a growing urgency for action. Although Trump proposed freedom cities in March 2023, legislative follow-up has been limited. Advocates continue to lobby Congress to enact enabling legislation, but concrete progress remains slow.

Lessons from Real-World Experiments: California Forever and

History shows that building a city from scratch is no simple task — even for the world’s wealthiest and most innovative individuals.

California Forever was a Silicon Valley-backed initiative to build an eco-friendly, walkable city north of San Francisco. Funded by tech billionaires and marketed as a model for sustainable urban living, the project faced immediate cultural and regulatory backlash.

Purchasing $900 million of farmland without disclosing their identities or plans alienated local residents. Relations deteriorated further when California Forever filed a $500-million antitrust lawsuit against farmers, accusing them of collusion.

Although the project highlighted the urgent need for more housing in California — especially in places like San Francisco — it also exposed the deep institutional and social challenges of large-scale city-building in the United States.

On the other hand, Próspera, a charter city initiative in Honduras, initially made faster progress. Established under a special economic development agreement, Próspera offers low taxes, a flexible regulatory framework, and private arbitration courts. It attracted investments from major crypto-aligned venture capitalists like Peter Thiel and Sam Altman and became known as one of the most Bitcoin-friendly jurisdictions in the world.

Próspera even hosted crypto summits and opened a Bitcoin education center. However, recent troubles — including a $11 billion dispute with the Honduran government — show that even in permissive jurisdictions, sustaining a startup city over the long term is fraught with risk.

Nobel laureate Paul Romer, once a supporter, recently criticized Próspera as becoming an exclusive gated community, raising questions about whether such projects genuinely serve broader social goals.

Moving Forward: Vision vs. Reality

Freedom cities offer a compelling vision for those disillusioned with traditional regulatory models and urban stagnation. For the crypto community, they represent an opportunity to build environments where innovation isn’t hamstrung by legacy rules.

Yet, the experiences of California Forever and Próspera serve as reminders that utopian experiments often collide with complex political, social, and economic realities. Success will depend heavily on careful planning, genuine community engagement, and a realistic assessment of the obstacles ahead.

Whether freedom cities become beacons of the future or cautionary tales of overreach remains to be seen.