A List of the Top 10 Crypto-Friendly Countries in 2024

El Salvador

The Central American nation of El Salvador pioneered accepting Bitcoin and other digital currencies for everyday transactions. Curiously, the government is quite fond of Bitcoin since it views it as a formidable competitor to the USD and actively works to dissuade its citizens from utilizing the USD.

El Salvador allows enterprises to establish a foothold in a growing market. Companies can position themselves to lead the nation’s cryptocurrency business by obtaining a crypto license. El Salvador has shown a commitment to developing blockchain and cryptocurrency. Companies can show their support for government programs and perhaps collaborate on digital payment, financial inclusion, or blockchain-based solution projects by obtaining a crypto license. Possibilities for joint projects, research partnerships, or contracts with the government might emerge from these kinds of collaborations.

Switzerland

Among the crypto-friendly nations with the most free and straightforward legislation is Switzerland. Cryptocurrencies have been supported by Switzerland, a world-renowned banking and financial center, since 2016. Every other country views the country as a safe haven because it is home to their economic institutions, as you are well aware. The government is on the side of the cryptocurrency business and wants to see it grow across the nation. This means that the tax rules are attractive and that official entities are easy to register with.

The government also applies Anti-Money Laundering laws to prohibit terrorist or suspicious payments. In addition to being a popular travel destination, the nation is home to one of the top blockchain ecosystems. It is open to entrepreneurs and companies engaged in cutting-edge cryptography technology.

United States

Several government agencies and lawmakers have praised the technology as an essential part of the future infrastructure of the United States. The country’s importance in maintaining its position as a growth pioneer was emphasized. In 2022, in time for the broad acceptance of cryptocurrencies in popular culture. The United States Congress will implement a slew of legislation to shed light on the developing cryptocurrency business. To bring digital assets in line with existing banking and tax regulations, encourage innovation in digital assets. The clarify rules for the agencies responsible for monitoring digital asset markets. The two major parties submitted the Responsible Financial Innovation Act (“RFIA”).

Germany

One of the countries in the world that has crypto-friendly policies, Germany comes in second place to Switzerland. Along with Estonia and Malta, Germany was among the first countries to declare. That cryptocurrencies could be legally used as tender. Germany is the first nation in the world that has passed legislations thereby enabling businesses to pay part of their employee salaries in Bitcoin. Germany has adopted a legal framework for the protection of its people from cybercrime, money laundering, and consumer fraud. In addition, Commerzbank is the first German financial institution to receive a custody license for cryptocurrency.

With a BaFi license, you are protected from fraud and illegal behavior, as BaFin is responsible for the safety and security of investors and Germany’s financial markets. In December 2020, blockchain technology was legalized for storing financial assets in Germany. Previously, issuers and holders were required to provide physical documentation of securities transactions; now, they can use a blockchain-based registry instead. However, this only applies to bonds; it does not address publicly traded stocks or shares.

There is an ever-changing aim for the licensing requirement. This barrier may be swiftly crossed if more service components exclusively use crypto values. Consequently, a BaFin license is necessary for everybody involved in market support, expansion, or establishment, as well as cryptocurrency mining, purchasing, or selling consumable goods and services.

Malta

Several years ago, to encourage the development of Malta’s cutting-edge technological industry, the island nation’s government called it “the blockchain” and chose to knowledge and officially regulate companies involved with cryptocurrencies. Because of its straightforward cryptocurrency laws, Malta is often considered among the most Friendly Countries in the world. Because of this, Malta stands out among the few EU member states with a clear set of rules governing cryptocurrency and related services.

The Malta Financial Services Authority (MFSA) oversees the financial sector and ensures stability, safeguarding consumers and the sector’s integrity. Like other financial service providers in Malta, it also regulates bitcoin enterprises.

Canada

Canada has always maintained a moderate attitude toward cryptocurrencies, passing transparent regulations that have made the country an attractive site for blockchain-based companies. The country was one of the first to recognize the potential of digital assets and pass legislation on them in 2014.

Organizations involved in the issuing or dealing with cryptocurrency must adhere to the nation’s specific regulations, norms, and disclosure criteria. As a result, Canada is home to hundreds of cryptocurrency businesses that build DApps and provide blockchain services and expertise relevant to Web3 development. Bitbuy and Newton are two exchanges that deal with cryptocurrencies that operate in Canada.

The Canadian Securities Administrators (CSA) are a significant government body in Canada. They established the CSA Regulatory Sandbox to foster the development of new business ideas. Anyone running a business in the Bitcoin sector is welcome to sign up with them.

Singapore

Notable crypto-friendly countries include Singapore as number seven. In 2022, 4.2 percent of the global population held cryptocurrency; however, at 11.0 percent, adoption rates in Singapore were significantly higher. The population’s high level of technology literacy and the support for cryptocurrency among Southeast Asian nations are the key factors contributing to this. Learning about Singapore’s legal frameworks for digital assets and cryptocurrencies can help other Crypto-Friendly consider doing the same, as Singapore was an early adopter of such rules. The creation and invention of cryptocurrencies have flourished in Singapore. Regarding blockchain and cryptocurrencies, the Monetary Authority of Singapore (MAS) usually creates frameworks for governance, standards for technology, and infrastructure.

Estonia

Estonia is one of the few Crypto-Friendly Countries that initially permitted Bitcoin activity and continues to adapt to new technology and payment choices. According to a new law that took effect on November 27, 2017, business owners in Estonia now have two options for applying for a license. One offers virtual currency wallet services; the other exchanges virtual currency for FIAT or other virtual currencies.

Estonian law recognizes and protects businesses that facilitate the exchange of cryptocurrency for fiat money, whether that exchange takes place in person, over the phone, or online. According to Estonian law, “virtual currency” is a digital asset that neither physically exists nor is legally enforceable in any one country but can be kept, transferred, and exchanged by individuals or entities who are not physically present. Therefore, tokens and other forms of digital currency perfectly suit the concept of value in a digital form.

Companies operating in the cryptocurrency exchange industry in the Republic of Estonia must comply with anti-money laundering and anti-terrorism financing regulations, which include AML/KYC protocols. State law also requires these companies to have a cryptocurrency license (i.e., a license to provide virtual currency services) or a virtual value service provider license.

Hong Kong

More participants (managers, traders, exchanges, etc.) have applied for and gained licenses from the SFC due to the expanding regulatory environment around crypto activity and services. Therefore, steps had to be taken by the government to ensure the country was counted among Crypto-Friendly Countries. The SFC has issued eleven Type 9 VA licenses (permitting the management of a portfolio consisting entirely of VAs) and one hybrid license (allowing a Type 9 asset manager to oversee a fund of cryptocurrency funds) as of August 7, 2023.

Given the above, it’s clear that the Hong Kong government welcomes and supports Bitcoin activity, provided it’s adequately controlled. It is essential to notice the upcoming fundamental shift allowing ordinary investors to trade “non-security” VAs on authorized VATPs. Amid the mayhem that ensued after FTX’s demise, the SFC moved forward with its plan to allow the December 2022 public offering of three exchange-traded funds (ETFs) focused on virtual assets (CSOP Bitcoin Futures ETF (3066), CSOP Ether Futures ETF (3068), and Samsung Bitcoin Futures Active ETF (3145)).

Portugal

The government of Portugal has several separate strategies with regard to the issue of cryptocurrency. These unidentified bills passed in Portugal permit the legality of both cryptocurrency buying and selling and their ownership. Many consider Portugal as a Crypto-Friendly community that is somewhat accommodating of cryptocurrency, thus making it more famous, especially those who come for vacations and work, as travelers, enthusiasts, and businessmen.

Buying, keeping, or selling cryptocurrencies is not illegal in Portugal. As a result, the Portuguese government has seen their promise and has legalized. Their usage as an alternative to more conventional means of payment and investment.

However, due to their lack of legal tender status, cryptocurrencies are not considered “money” or fiat. Portugal’s official position on cryptocurrencies as of 2016 was that they should be treated similarly to traditional currency. We have included one European nation to round up our list of crypto-friendly countries.

What To Look for In Crypto-Friendly Countries?

You may determine whether or not a Friendly country is receptive to cryptocurrencies by looking at the following features of that country:

Regulations and Legal Clarity Regarding Cryptocurrency

The term “regulations” refers to the government’s approach toward the whole cryptocurrency business. For instance, the government grants permission for you to conduct transactions on payment gateways using the official bank account associated with the nation’s financial platform. Also, it would be best to investigate how the government constructed tax regulations for cryptocurrency revenues.

Favorable Tax Treatment

Some nations do not have crypto industry-specific ban laws, as stated at the beginning of the article. But they impose hefty crypto taxes so that no one will participate. Accordingly, you should research the process and rates of the country’s taxation. In what follows, we’ll explain a few common tax calculation approaches.

Government backing

Government backing is the next factor to consider. How many investors would need their money back if a cryptocurrency exchange went bankrupt? Who is liable to keep it afloat? The inverse is also true: businesses that back the cryptocurrency sector will have their taxes cut and receive subsidies.

Paying Taxes in Crypto-Friendly Countries

Cryptocurrency is subject to the same kinds of taxes as stocks and other forms of property. Gains from the sale or other disposition of cryptocurrency are subject to taxation. Equities and cryptocurrency profits are subject to the same capital gains taxes. How cryptocurrencies are taxed depends significantly on the local tax code and how they are legally defined.

For instance, according to the US Internal Revenue Service (IRS), Bitcoin is taxable like any other property. Failure to declare trades due to intentional misrepresentation or inaccurate record-keeping is punishable by penalties and interest. They may face criminal charges in extreme circumstances.

A person’s salary, interest, dividends, and royalties are taxable as income. In the context of digital assets, it is possible to tax earnings from airdrops, crypto-denominated wages, lending, mining, and staking at the market value on the day they were received. Expenses, such as the cost of power for mining, are typically deductible.

Taxes on NFTs

Some crypto-friendly countries, including Belgium, Poland, and Spain, see NFTs as virtual services, like Netflix, so long as the first sales are handled similarly. Regarding some things, the Value-Added Tax (VAT) rules.

A wealth tax is a third type of tax that could apply to you, in addition to income and capital gains taxes. Under this system, your taxable income is calculated using the market value of your assets as of a specific date. For example, Argentine, Spanish, Swiss, Norwegian, and Dutch citizens pay wealth taxes proportional to their net worth each fiscal year.

The term “capital gains” refers to the money investors get when selling assets like stocks or property. They are usually calculated by taking the difference between the selling and buying prices. Capital gains from selling cryptocurrencies and NFTs are typically subject to a much lower tax rate than ordinary income.

Capital Gains Calculation

One of the most popular approaches, FIFO, computes profits by assuming that the asset’s earliest units are sold first. This implies that someone who acquired one Bitcoin for $10, one for $100, $1,000, and $10,000 over five years, and then sold one of them for $20,000 in 2022 would be subject to taxation as though. They had sold the first Bitcoin for $10, generating a $19,990 taxable gain.

Another approach is average cost, using the assets’ average cost as the purchase price. In the scenario above, the average price of a Bitcoin would be $2,222, where a buyer paid $11,110 for a total of five BTC. This implies that the taxable gain from selling a fifth of the assets in 2022 would be somewhat less, at $17,778.

Although LIFO sounds almost precisely like FIFO, it is the contrary. This means that our trader would benefit far more with LIFO since their taxable gain would be just $10,000 because. The profits would now be determined by their most recent buy rather than their oldest.

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