> I wish there was some sort of island or safe haven country setup by cryptographers so they could safely work on crypto without legal issues or crypto being seen as a munition and a threat to government.
This has always been a fascinating concept to me as well — but I think history demonstrates that you can't just set up a safe haven without significant international leverage, whether financial or military. And if you're actively exporting "munitions" to other countries, it's only a matter of time until someone tries to knock you off.
The more likely scenario is that your safe haven will be dependent on a larger nation-state patron—and therefore ultimately vulnerable to changes in its domestic politics. (E.g. Israel, or Taiwan.)
It's difficult to build leverage in a country the size of an island—and once you're big enough to have any leverage, autarky becomes nearly impossible as you're always dependent on someone else for logistical reasons (food, fuel, etc.). This is essentially what the Second World War was fought about; autarky lost.