(Newsweek) -- The Pacific island nation of Vanuatu has become the world’s first country to accept the virtual currency bitcoin for its citizenship program.
The Vanuatu Information Centre (VIC) announced that its Development Support Program (DSP) will allow foreigners to qualify for Vanuatuan citizenship through a one-time payment of $200,000 – or its cryptocurrency equivalent.
At current market prices, this puts the price of citizenship for the so-called Paradise Islands at slightly more than 43 bitcoins.
“While attempts have been made in the past to effect payments for citizenship by investment programs via bitcoin, these efforts never had the political stamp of approval, and were shut down as a consequence,” said Geoffrey Bond, Chairman of the VIC.
He continued: “In this case, the government of Vanuatu has explicitly expressed a desire to be at the forefront of adopting new technologies, officially encouraging the VIC to receive payments in bitcoin.”
All bitcoin transactions for Vanuatuan citizenship will be run through an Australian cryptocurrency exchange, which complies with requirements imposed by the Australian financial regulations.
Vanuatu is a member of the Commonwealth of Nations and citizenship allows visa-free travel to 113 countries, including EU states, Russia and the United Kingdom.
The country also advertises tax and investment incentives as part of the appeal for citizenship to its country.
“I’m convinced Vanuatu’s bold move will give them a considerable competitive advantage in the citizenship market,” says Christian Nesheim, an investment migration specialist and advisor to the VIC, in a news release.
“Many early investors in bitcoin would like to realize some of their earnings without incurring large capital gains taxes. Ideally, then, they would convert their cryptocurrency into tangible assets in a low-tax jurisdiction… As Vanuatu will now be the only country to offer citizenship for bitcoins, I think the program will see a surge in interest more or less immediately.” The price of bitcoin hit an all-time high of $5,013 on September 2 but has since dropped to around $4,500, according to industry website CoinDesk.
Today’s slightly reduced price still represents an 18-month gain of more than 1,000 percent and puts bitcoin’s market cap at around $76 billion.
The cryptocurrency' recent rise in value can in part be attributed to interest from China, despite a crackdown from authorities in the country. The slump of certain currency markets, including the British and Egyptian pound, can also help explain bitcoin’s price rise.
According to some cryptocurrency analysts, bitcoin is at a similar stage in its development to the early internet.
“Exponential technologies have incredible impacts on our society,” Nicolas Cary, co-founder of the popular bitcoin wallet Blockchain, said in an opinion piece in Newsweek earlier this year.
“While bitcoin quietly doubles in size year-on-year, it’s covering more and more territory, surprising more and more pundits, and being adopted by more and more people.”