Education Ecosystem Blog

For the same reasons the individual loves cryptocurrencies, governments hate them. Since crypto poses a risk to the legal tender and, in its truest form, can’t be tracked or traced, various governments have shut their gates on them. But in recent years, the global financial market has seen cryptocurrencies taking a huge chunk of its market share, and as more governments adopt cryptos, the more it will increase in growth. If you’re an investor seeking a perfect nest for your crypto venture, this list will suffice in helping you make that decision.

What Is a Crypto-Friendly Country?

These are countries that have a legal framework for cryptocurrencies that increase their use and guard against certain risks. Crypto-friendly countries generally possess one or more of the following advantages to the both crypto traders and crypto businesses. These include; minimal to no crypto tax on crypto gains, minimal crypto income tax, and reduced tax on crypto exchanges. On the other hand, countries yet to create cryptocurrency policies are deemed crypto-hostile with stringent tax laws.

What are the top 10 most crypto-friendly countries in the world?

Compiled below is a list of countries that have successfully integrated cryptocurrencies into their financial and legal structure to ensure crypto payments, crypto transactions and crypto trading are well regulated. This makes these countries the most crypto friendly countries:

1.      Singapore

This southeast Asian country is generally regarded as business-friendly, meaning its legal framework attracts foreign investment, entrepreneurs, and startups. These include crypto companies looking to make Singapore their main hub. In Singapore, crypto is controlled and regulated by The Monetary Authority of Singapore (MAS). In 2020 MAS introduced the Payment Service Act (PSA), which allowed cryptocurrency to be bought, sold, and created a framework for persons to exchange cryptocurrency in Singapore. Here are a few crypto projects based in Singapore; First is the sharded blockchain, Zilliqa, TerraForm Labs, Three Arrows Capital, and Qtum.

2.      Switzerland

Switzerland stands as one of the world’s most crypto-friendly countries, especially observed in 2018 when Swiss banks allowed crypto companies to open accounts. This move signified the legitimization of crypto in the country. Switzerland recognizes cryptocurrencies as legitimate assets, and some locations even allow the use of bitcoin to make payments. The country even has a crypto hub or popularly referred to as the crypto valley, which is home to some popular projects, including; Polkadot, Solana, Aave, and Nexo.

3.      Netherlands

The Netherlands has a history of liberal disposition to things other nations may frown upon; this includes the legalization of cannabis and, more recently, the acceptance of cryptocurrencies. Though cryptocurrencies can be traded freely, it is still not accepted as a legal tender in the country. The Dutch National Bank (DNB) is responsible for supervising crypto service providers based on the Sanction Act of 1977.

4.      Portugal

When it comes to cryptocurrency taxes, Portugal deserves a place on this list because it is a tax haven for crypto. The Portuguese Tax Authorities (PTA) do not recognize profits from the sale of cryptocurrencies as taxable. Since no legal framework exists for cryptocurrencies in the country, it is considered not prohibited; hence, crypto can be bought, held, and traded as citizens wish. In 2020 the Anti-money Laundering Law was improved to include digital assets, and this is supervised by the Bank of Portugal.

5.      El Salvador

The crypto world was active when El Salvador broke the news of its stance on crypto. The country became the first in the world to adopt Bitcoin as a legal tender in 2021. With its tax-free policy on crypto, this south American country has become a crypto haven. The government of El Salvador is in full control of crypto or specifically Bitcoin in the country. The legal framework for Bitcoin is contained in the BTC cryptocurrency regulation for Bitcoin Service Providers (BSP), which includes anti-money laundering policies.

6.      Germany

The laws in Germany also have a soft spot for crypto. Similar to Portugal, Germany also exempts crypto profits from tax. However, these assets have to be held for more than a year. Crypto in Germany is regulated by the Federal Financial Supervisory Authority (known as BaFin). BaFin oversees activities for both traditional and virtual assets. The country also implements various anti-money; laundering directives set by the EU. Also, in Germany, investors can easily trade virtual assets for German legal tender.

7.      Malta

Though a small country, Malta is mighty in the crypto world as it’s home to some of the most reputable crypto projects, including the popular, Binance. Since Malta is a part of the European Union, its regulations allow projects based in Malta to operate in other EU countries. Tagged as a digital island, Malta possesses a legal framework that promotes the acquisition and investment of crypto assets while maintaining an anti-fraud stance. The shores of Malta have seen millions in Crypto investments hence it being on the list.

8.      Slovenia

Upon sighting the unstable nature of cryptocurrency; fluctuations, Slovenia took the stance to exempt traders of Bitcoin from capital gains tax on crypto. However, crypto miners are taxed 25% of their profits. The country also has the highest market capitalization of blockchain projects per capita. Slovenia’s main foci are businesses and corporations rather than individuals; these enterprises are subject to income tax.

9.      Estonia

Estonia was one of the first countries to create a legal framework for crypto activities. In 2017 it passed a law allowing investors to apply for a license to exchange virtual currencies for FIAT/virtual currencies and to provide virtual currency wallet services. This law is overseen by Estonia’s regulatory body, the Estonian Financial Intelligence Unit (FIU). Crypto companies based in Estonia include CoinMetro, CoinLoan, and Crypterium.

10.  Vanuatu

This little country on the pacific deserves a spot on our list, especially after unveiling its crypto paradise, “Satoshi Island.” Making it a popular destination for both crypto investors and users. Vanuatu’s crypto tax regulations makes it a popular destination for crypto. Although many have falsely praised the country for issuing its citizenship in exchange for cryptocurrencies, the country has stated that it doesn’t collect or accept crypto for citizenship but allows prospective citizens to prove their income in digital assets. Satoshi Island is simply a physical home for the crypto industry.

 Final Thoughts

While many countries have welcomed cryptocurrencies, others are still wary and have kept them at bay. This could be due to its unstable nature or the fact it’s untraceable, making it perfect for the funding of criminal activities. Countries that have identified the benefits of cryptocurrencies have sought to curate the perfect legal framework to ensure it thrives while keeping its negatives at arm’s length. If you’re in search of a nesting point for your crypto project, this list should help aid your decision.