Leaving Is Not Enough

Joana Cotar does not begin with a new regulation, but with a model more than fifty years old by the economist Albert O. Hirschman: Loyalty, Voice, Exit. You can remain loyal, object or leave.

Cotar has gone through all three variants herself. She joined a party, objected to its development, eventually left it and gave up a safe place on the party list in doing so. The exit, she says, is the point at which a conviction acquires a price: whoever merely objects can be ignored. Whoever leaves withdraws labour, money or legitimacy from an organisation.

At a conference on emigration, applying this to states is the obvious step.

The truly interesting question, however, only begins after that.

Anyone leaving Germany is first of all leaving a territory. Afterwards they live in Asunción, Dubai, Zurich or Panama City instead of Munich, Hamburg or Berlin. That sounds trivial, yet it still shapes a considerable part of how we think about emigration.

Here Germany ends. There, abroad begins.

Cotar describes very aptly why this notion worked quite well historically. Administration was slow, information stayed local, accounts and registers were barely linked. A state's reach did not necessarily end at its border because it was practising liberal self-restraint there. Often it simply did not know what happened beyond that border, or could only obtain the information with considerable effort.

For the citizen, this technical limitation was practical freedom.

That may well be the most important sentence of her entire talk.

Because today a person can genuinely live in Paraguay, own a company in the USA, serve clients in Europe and hold accounts in several countries. But this international set-up by no means automatically implies that their dependencies are internationally diversified too.

Abroad is not a lawless space. Wealth that is geographically far away is by no means invisible wealth.

Both are wrong.

Cotar goes one step further. A state, she argues, does not need to control international economic activity completely. It is enough to control the bottlenecks.

Banks. Payment service providers. Exchanges. Platforms. Identity providers. Financial intermediaries.

The state itself does not have to examine every single transaction if it can regulate those whose infrastructure the citizen needs for that transaction.

CRD VI provides a remarkably concrete example. Nobody forbids an EU citizen from holding an account with a bank outside Europe. The new banking regulation does, however, change the conditions under which certain third-country banks may serve clients within the EU.

The foreign account remains legal.

It is just that at some point the bank may decide the client has become too expensive from a regulatory point of view.

The state does not need a border barrier for that.

A compliance department is enough.

In this context Cotar calls private actors outsourced control bodies. The wording is pointed. The underlying mechanism is not.

At this point Cotar develops a model that creates no new legal category but is extremely useful analytically.

Modern people, she says, do not have just one residence.

They have three.

First there is the physical residence: where do you wake up in the morning?

Then the tax residence: which legal system claims your income, which states exchange data about you?

Finally the economic residence: where are your companies, accounts and clients? Which banks, platforms and payment channels does your ability to act depend on?

You do not have to misread these categories as legal terms to see how much truth they contain.

Someone who holds three citizenships, two residencies and has founded five companies, but whose wealth sits entirely at the same bank, may be considerably less diversified than their personal flag portfolio suggests.

Cotar puts it even more fundamentally: a structure that only works as long as authorities, banks and platforms remain friendly is not a sovereign structure.

This is the point at which international structuring stops being a scrapbook of passports, bank cards and certificates of incorporation.

Diversification does not mean spreading as many flags as possible across a world map. It means recognising dependencies.

Cotar's argument becomes particularly interesting where she talks about digital identity.

By the end of 2026, the European Digital Identity Wallet is to be available in the EU member states. It is intended to let citizens identify themselves across borders, present credentials and use electronic signatures. The system is designed to be interoperable and is meant, precisely for that reason, to simplify much of what is administratively tedious today.

Cotar does not dispute these advantages. On the contrary: precisely because the wallet is useful, she says, it will gain acceptance. Her concern is path dependency. Once an infrastructure has been built and is widely used, additional functions become technically cheaper and politically easier to push through.

An important clarification is worthwhile here, however.

Under current EU law, using the wallet is expressly voluntary. Anyone who does not use it may not be disadvantaged in access to public and private services, the labour market or in their freedom to conduct a business. The regulation also contains requirements on user control and data protection.

The existence of an interoperable digital identity therefore by no means automatically results in a digital surveillance state.

But this observation does not dispose of Cotar's argument.

Because she does not only ask which functions a system has today. She asks which infrastructure is being created and which future decisions that infrastructure makes easier.

That is a different yardstick.

The transparent citizen does not need a central register. Only the right interfaces.

Precisely because Cotar's talk is politically pointed, it is worth separating existing architecture from expected development at one further point.

For crypto-asset service providers, the expansion of the information system has long been reality. The European Travel Rule has applied since 30 December 2024. DAC8 has applied since 1 January 2026; relevant crypto service providers have since been recording certain transaction data. The information for the first reporting year 2026 must be reported, or exchanged between the competent tax authorities, by 30 September 2027 at the latest.

The situation with the digital euro is different.

Cotar speaks of it as an upcoming development and names 2029 as the time horizon. As of 8 October 2026, however, issuing a digital euro has not yet been decided. The ECB is preparing the technical infrastructure and plans a twelve-month pilot project for the second half of 2027. The Eurosystem wants to be ready for a possible first issuance in 2029; the ECB intends to decide on this only after the European legal basis has been adopted.

One can assess the architecture of a possible digital euro critically without pretending that the finished system is already on the table.
Liberty-minded criticism does not become stronger by blurring development and applicable law. It becomes stronger when it keeps the two apart.

It is hardly surprising that Cotar finally arrives at Bitcoin. As the initiator of “Bitcoin im Bundestag” (Bitcoin in the German Parliament), she regards the network not merely as an object of speculation but as a component of economic sovereignty.

Her argument is more interesting than the usual claim that Bitcoin somehow makes its owner “independent of the state”.

Bitcoin does no such thing, of course.

Tax law does not disappear with a seed phrase. Legal obligations do not disappear with self-custody. Ownership risks, price risks or the possibility of state coercion outside the network protocol do not vanish into thin air either.

Cotar herself points out some of these limits: whoever controls their keys themselves can, after all, also lose them themselves. Personal responsibility does not only mean freedom from an intermediary, but equally the freedom to make one's own mistakes.

The stronger thought follows a few minutes later.

Which brings us back to Hirschman.

Voice carries more weight when exit is actually possible.

At the end of her talk, Cotar returns to emigration. From our point of view, it is precisely this conclusion that is remarkable.

She does not merely recommend looking for low taxes, an uncomplicated residence permit or a pleasant climate. Anyone choosing a country as their new centre of life should look at which international standards it follows, which foreign rules it adopts and how quickly it does so.

This is exactly where emigration marketing parts ways with a sustainable international strategy.

A country's current state matters. But it is only a snapshot.

A territorial tax system can be changed. A liberal banking practice can become tighter through regulation. A politically stable country can change direction. International standards can be adopted, agreements concluded, data flows created and the balance of rights can shift.

That is why it is not enough to judge a destination country by the advantages it offers today. You also have to ask which institutions support these advantages and what would have to happen for them to disappear.

Joana Cotar's talk is not a technical guide to international structuring and does not even try to be one.

Its strength lies elsewhere.

It connects developments that, viewed in isolation, can easily be filed away as specialist topics: exit taxation with the tax adviser. CRD VI with the banker. DAC8 with the crypto service provider. Digital identity with the IT expert. Cash with the anti-money-laundering act. Bitcoin somewhere between monetary theory and technology.

Every rule has its own justification, its own prerequisites and its own limits.

Only from some distance does a different question become visible:

Perhaps that really is one of the most sensible questions anyone thinking about emigration and international diversification can ask themselves.

Not because complete independence is achievable. It isn't. Every person lives within legal systems, uses infrastructure and depends on other people and institutions.

Nor does freedom begin by cutting all ties.

It begins with knowing which of them you entered into voluntarily, which you can change, and for which a single third party is enough to considerably restrict your own ability to act.

Cotar's final sentence sums up this perspective with remarkable precision:

Leaving can be a beginning.

Nothing more.