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Top Crypto-Friendly Countries In The World

It is no longer news that traders see cryptos as game-changers in the finance scene. This is because crypto provides investors with the freedom that is absent in the traditional banking system. Digital assets have so much promise. Despite that, it still falls under two categories of ratings. The first is people who see the assets’ positive aspect, while the second sees the negative aspect. While we have that in terms of people, so do we have it in terms of countries. While some countries have adopted the assets, others are still hostile towards it. In this article, we will be taking an inside look into some crypto-friendly countries across the world.

What have cryptocurrency regulations meant for the top 5 cryptocurrencies? Since the first on May 19, negative news from the Chinese government about Bitcoin has been coming in succession. In 2019 Beijing already outlawed cryptocurrency trading to prevent money laundering, although this measure did not stop citizens from continuing to invest in cryptocurrencies. Current regulations in Beijing have put Bitcoin in check. The news we have been able to read in previous days about the restrictions on cryptocurrencies in China have been basically two: On the one hand, China will take energetic measures on Bitcoin mining. Chinese miners represent more than 75% of the Bitcoin mining network. The restrictions are aimed at reducing carbon emissions in the country. These data suggest that the Asian country will no longer be attractive for the development of cryptocurrency mining. On the other hand, several Chinese associations, among which we highlight the China National Internet Finance Association, the China Banking Association and the China Payments and Clearing Association, have warned cryptocurrency investors that given the volatility they represent, they constitute a risk for all investors who could lose their money and have no protection against any loss. They also claim that cryptocurrencies seriously violate the normal economic and financial order. Weekly price drops of the 5 most important cryptocurrencies Since May 17 these are the price drops suffered by the five cryptocurrencies with the largest market capitalization: Bitcoin registers -20% in one week and currently trades at $36,500. Ethereum has suffered -36% in the last week and trades at $2,260. Cardano is down 34% and trades at $1.45 Binance Coin has suffered a 46% drop in price and trades at $289 Dogecoin, Elon Musk's fetish coin has fallen 36% and trades at $0.33 How have other countries acted against cryptocurrencies? Unlike China, the United States has not spoken out against cryptocurrencies. Large financial firms such as Goldman Sachs and JPMorgan are considering including these types of investments among their wealth management options. In addition, we have recently seen the IPO of Coinbase, an exchange for the exchange and trading of cryptoassets. In Europe, the ECB (European Central Bank) has pointed out the risk of cryptocurrencies due to the extreme volatility and high carbon footprint. Although it has also stated that the risk to financial stability was limited due to the low exposure to these digital currencies.

List Of Crypto-Friendly Countries

Two factors are taken into consideration to measure how friendly a country is regarding digital assets. The first factor is how lenient the government is on traders in terms of tax, while the second is crypto regulation. Even though some countries are very rigid regarding the two factors above, below are some crypto-friendly countries.

Portugal

When it comes to crypto investments in Portugal, regulators are not as stringent as on other investments. The law regarding crypto in the country is said to be one of the most friendly worldwide. For instance, tax authorities do not levy capital gains tax on traders of crypto across the country. In addition, exchanging of one crypto to another is subject to free taxation.

Individuals who get their payments are also not levied with income tax. But companies that deal in crypto would be subject to pay the usual capital gains tax. Portugal is a very good destination for crypto traders due to its advantages in terms of tax payments. Asides from that, Portugal also has a few programs that would ease crypto investors into the country.

Switzerland

Switzerland is notable for its high rate of privacy and low-risk rate in its banking sector. It should also not come as a surprise that the country is one of the few crypto-friendlies. However, the region system that is being run in Switzerland determines the regulation of a particular sector. This is because the 26 regions across the country have their different view of digital assets.

A region might decide that it wants Bitcoin traders to pay tax, while another might make it tax-free. Zurich is a case study as the region does not levy tax on movable private wealth. This means that assets like Bitcoin and other digital assets are not taxed. However, miners have to pay income tax on the gains from their business. Notably, it is this way across the majority of the regions in the country, with only a select few being stringent on crypto.

Germany

Germany has refused to recognize Bitcoin as a legal tender across the money as it sees it as private money. Most of the laws that crypto abides by a tilt towards the side of traders who hold for a long time. Germany exempts citizens who hold any digital asset for a year and more from paying tax.

This exemption does not have a limit as traders can hold any amount that they want. Investors who hold their assets within a year would be subject to pay capital gains tax if they hold assets worth more than $712. Just like most crypto-friendly countries, investments holding crypto will pay capital gains tax. In a nutshell, long-term investors are the major winners of trading crypto in Germany.

Singapore

One of the most stable countries globally, Singapore provides businesses with the best place to grow. Singapore is also said to have one of the biggest FinTech across Asia. The Monetary Authority of Singapore says it wants to watch digital assets and encourage their growth. This has made many analysts regard the country as one the most balanced in regulating crypto.

Singapore does not levy capital gains tax on both individuals or businesses holding assets in terms of tax. Meanwhile, companies actively using crypto either for payments or trading will be subject to income tax. Authorities also regard Bitcoin as an intangible property instead of a legal tender. They regard the payment for goods with crypto trade by barter. Taxes are paid for services enjoyed and the goods bought but not crypto paid.

Malta

Malta has easily cemented its place as the go-to area for crypto investors if they decide to set up a business. Due to its crypto-friendly stance, many crypto exchanges and blockchain companies have their branch in the country. A notable resident is Binance, who entered the country on the back of stringent regulations in Hong Kong. One reason why investors turn to Malta is that it is in the European Union.

This means that crypto ventures in the country will be able to operate across Europe for free. Malta also recognizes Bitcoin as a store of value and a medium of exchange. For long-term holders of Bitcoin, there is no levy of capital gains tax. But traders are subject to pay a 35% income tax because trading crypto is the same as trading shares.

Cyprus

Cyprus is another country that is notorious for its less stringent attitude when it comes to Bitcoin usage. Even though digital assets are still unregulated, something like this is already in the works. As back as 2014, the central bank in the country rolled out guidelines for trading digital assets. At this moment, the only taxable entity in Cyprus is the ICO sector. Regulators class crypto from ICOs under the income tax category.

Bermuda

According to the Digital Asset Business Act released in 2018 in the country, Bermuda regulates crypto dealings. Trading and selling, providing payment via crypto, and a few others are not taxed. This is why the country is one of the most crypto-friendly nations. It also attracts a huge pool of traders and businesses into the country. A really good example is the Exchange Traded Funds aspects of the market. After frustrations with attempts to launch several ETFs in the U.S in 2020, Bermuda approved its first in the country. The launch of the Hashdex Nasdaq Crypto ETF shows that Bermuda is up there with other crypto-friendly countries.

Conclusion

Other worthy mentions are Slovenia, where traders pay capital gains tax on the sale of Bitcoin. However, countries that take payment in crypto are subject to corporate tax. Malaysia is another country that does not levy any tax on crypto holdings. Also, the country does not see crypto as legal tenders, so traders do not pay the capital gains tax. In the same vein, the country recognizes profits made from trading crypto, and holders are mandated to pay tax. El Salvador is the latest country to join this list as they regard cryptos as legal tender. Foreign investors who trade crypto in the country will not pay tax on their gains. This was regarded as a tactical move to lure investors into the country, which will help its economy in the long run.

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