Mini
Crypto-friendly nations implement laws and taxation policies that promote the use and development of cryptocurrencies. These countries also support crypto-related businesses and investments.
Cryptocurrencies have taken the world by storm. Since Bitcoin was launched in 2009, more than 10,000 different crypto projects have sprung up, some of which have witnessed an exponential rise in popularity and value. As such, the global market cap of the crypto industry currently stands at a whopping $1 trillion. This growth has led more and more people to pour money into these digital assets.
However, due to a lack of regulatory framework and legal compliance, some countries are not very accommodating of cryptocurrencies. Some nations have even clamped down on crypto activities such as mining and heavily taxed profits arising from these digital assets. Fortunately, as regulation and mainstream adoption increase, several nations are moving towards favourable legislation for cryptocurrencies.
We covered some of the early movers in this space last year. However, a lot has changed since then, warranting a renewed list of crypto-friendly countries you should know about.
Top 5 crypto-friendly countries
Crypto-friendly nations implement laws and taxation policies that promote the use and development of cryptocurrencies. These countries also support crypto-related businesses and investments.
Portugal
Portugal is one of the most popular crypto-friendly destinations in the world. It is a hotspot for crypto traders and investors. But what brings them here? Portugal does not tax individuals on profits made through the purchase or sale of cryptocurrencies. Additionally, there is no tax when one cryptocurrency is exchanged for another.
There is also a budding community of cryptocurrency enthusiasts present in Portugal. The country has several crypto and blockchain incubation spaces, such as The Block (Lisbon) and The Blockchain Center (Porto). These venues provide a common ground for crypto enthusiasts and blockchain developers to interact and network. They also provide frequent training and support initiatives.
Tonga
Following El Salvador’s footsteps, the island nation of Tonga is on the route of accepting Bitcoin as a legal tender. In a series of tweets in January 2022, former MP Lord Fusitu’a announced the game plan and ETA of Bitcoin being accepted as legal tender in Tonga. According to him, Bitcoin should be legally accepted as a means of payment by October 2022.
Being an island nation, Tonga receives a lot of money through foreign remittances. The number of Tongans living outside of the country is more than the population within the country. For this reason, about 30 percent of the household income is received through foreign remittances. Accepting Bitcoin as a legal tender will make this process more efficient and cheaper. Being an isolated island nation, Bitcoin can also help create a circular economy. With proper regulations planned for the future, the country seems to be embracing modern technology and innovations.
Singapore
Singapore is one of the most crypto-friendly countries in Southeast Asia. It is also one of the world’s most stable economies and is a hub for fintech companies. The country encourages innovation, which can be seen in its pro-crypto stance.
Capital gain tax is not levied on cryptocurrencies. Individuals and corporates having cryptocurrency funds are also exempt from taxation. However, if a business receives payments in cryptocurrency or conducts cryptocurrency trading, they are subject to income tax. The country is also home to many crypto companies like the Kyber Network, Qtum, Zilliqa, Crypto.com, etc.
Slovenia
In April 2022, Slovenia unveiled a plan for a flat-rate taxation policy for cryptocurrencies. As per the proposal, profits from the sale or exchange of cryptocurrencies would be taxed at under 5 percent of the sale/exchange value. According to the press release announcing the proposal, if the new legislation is adopted, Slovenia will become “one of the few countries, if not the only country in the world with such a simple taxation” for digital currencies.
Switzerland
Switzerland is considered to be one of the most crypto-friendly nations in the world. Swiss Banks were among the first in the world to accept Bitcoins and provide crypto companies with business accounts. The city of Zug is home to hundreds of crypto startups and projects such as Solana, Polkadot and Cardano, to name a few. Switzerland is also home to 14 crypto unicorns and is termed the “Crypto Valley” of Europe. The co-founders of Ethereum also first met in Zug.
In 2021, the country passed its ‘Blockchain Law’, which provides a regulatory framework for cryptocurrencies. This has attracted a lot of crypto projects and startups to Switzerland.
Conclusion
On one end, major economies such as China, Russia and India are cracking down on cryptocurrencies by imposing strict regulations or taxation policies. While on the other end, more and more countries are adopting digital assets and becoming crypto-friendly. This increased crypto adoption could pave the way for the global acceptance of these digital assets.
