In the roughly 13 years since the introduction of Bitcoin, cryptocurrency has advanced significantly. The industry, which was once viewed as a Wild West of stateless money, is slowly losing most of its bad press as more and more nations implement laws reserving a space for cryptocurrencies inside current financial and economic frameworks.
Yes, cryptocurrency is still illegal in some regions of the world, but an increasing number of countries are making significant efforts to support cryptocurrencies and draw investment from the sector. As a result, this article examines the nations that most support cryptocurrency and describes what each is doing to promote it. It will also demonstrate how, generally speaking, cryptocurrencies are moving in the direction of greater acceptance and integration into the global economy.
El Salvador is unquestionably one of the nations that are most supportive of cryptocurrencies in the world, having proclaimed bitcoin officially legal cash in September 2021. Since it elevated BTC to the level of legal tender, stores, and other companies are now required by law to accept the cryptocurrency as payment for services rendered, unless they lack the necessary technological infrastructure.
The El Salvadorian government has been working to encourage investment from the cryptocurrency industry in addition to making Bitcoin legal money and has been progressively acquiring the currency (even during the ongoing 2022 bear market). Most notably, it described strategies for creating a “Bitcoin City” in November, which would be paid for by the issuance of $1 billion in bonds.
El Salvador currently does not impose an income or capital gains tax on bitcoin, giving it a relatively welcoming tax environment for cryptocurrency investors.
When three pieces of legislation were put into law by the parliament of Malta, an EU member state, in July 2018, they created a supportive regulatory environment for cryptocurrencies and blockchain technology. Due to this, its lawmakers nicknamed it the “world’s first blockchain island,” and prominent exchange Binance opened a facility there in 2019. (although it never gained an official licence to operate under Maltese law)
Malta wants its blockchain industry to expand to 10% of its GDP by 2027, but because of the strict licensing requirements, many prospective bitcoin businesses have given up on becoming registered. Nevertheless, according to a recent report from the EU Blockchain Observatory and Forum, this industry has raised somewhere around €141 million to date.
Singapore presently ranks as one of the world’s most permissive and friendly countries for the cryptocurrency industry, despite the fact that it has not yet approved any comprehensive cryptocurrency legislation.
The fact that the city-blockchain state and cryptocurrency industries attracted $1.48 billion in investment in 2021—nearly half the total for the whole Asia Pacific region—is a glaring indication of this. In addition, the republic is home to 6% of all cryptocurrency-focused funds in the globe, placing it third overall (behind the US and the UK).
In fact, the country’s embrace of cryptocurrencies has led a number of major corporations, including US-based exchange Gemini, to establish their regional Asia headquarters there. At the same time, 10% of its citizens are said to be crypto owners.
However, in light of the dramatic failure of businesses like Three Arrows Capital and Terra Labs, both of which had Singaporean headquarters, the Singaporean government has recently started to examine tightening regulations. Additionally, legislation putting cryptocurrencies under income tax was passed in 2020.
Due to its lax approach to taxing of bitcoin investors, Portugal is one of the most crypto-friendly nations in the world. Profits from trading and investing are not subject to capital gains tax, even though income gained in cryptocurrencies is taxed as income.
With over €1 billion already raised in 2022, compared to £437 million in 2021, Portugal has become so welcoming to cryptocurrencies that the blockchain industry now represents 17% of the total funding raised by fintech companies in the EU member state.
In the country’s budget for 2023, there are plans to enact a 28% capital gains tax, but this will only apply to cryptocurrencies held for less than a year.
Switzerland has long been recognized as a safe haven for money, but it has now become one for cryptocurrencies. In fact, the German-speaking canton of Zug declared itself a “crypto valley” as early as 2018. In fact, a survey by Zug-based venture capital firm CV VC estimates that the fifty largest fintech and cryptocurrency companies were valued at slightly over $250 billion at the beginning of 2021.
More generally, other regions of Switzerland have also made an effort to draw cryptocurrency investment. Lugano, for example, made a famous announcement in early 2022 that it would start accepting bitcoin and the stablecoin tether (USDT) as legal forms of tax payment. The Italian-speaking canton will also promote the use of cryptocurrency in commerce.
As long as you’re not a professional trader, Switzerland doesn’t charge capital gains taxes on investments in cryptocurrencies, while income tax does apply to mining profits.
Lithuania is one of the nations with the best crypto policies in the world, however, it may be an unexpected addition to this list. It was one of the first EU countries to provide regulations for initial coin offerings in 2018, creating a flexible framework for crypto-related businesses within its borders.
It has attracted a little more than €1.1 billion in total funding so far and boasts many noteworthy blockchain-related firms (31, according to the EU Blockchain Observatory).
Germany, yet another EU member state, has led other industrialized nations in creating laws that promote cryptocurrency while also safeguarding consumers. To account for cryptocurrencies, it revised its Banking Act on January 1, 2020, requiring companies who wish to maintain custody of virtual currencies to obtain BaFin authorization.
Due to Germany’s early adoption of cryptocurrencies, the country’s blockchain industry has been steadily expanding. This year, major savings bank Sparkasse began offering bitcoin trading to its 50 million customers. Trading and purchasing cryptocurrencies are completely legal, and cryptocurrencies held for more than a year are exempt from capital gains tax.