Just as it does in other financial markets, the regulatory approach to cryptocurrencies is wildly different in various countries around the globe.
While some nations have decided to try and block or completely control cryptocurrencies, others are taking a far more laissez-faire approach to the newest financial asset and the technology behind it. This article will take a look at five of the most crypto-friendly countries for your consideration.
It’s not surprising to learn that governments, which are notoriously slow to change, have had a difficult time keeping up with the evolution of blockchain, distributed ledger, and cryptocurrencies. Some countries have tried to avoid the issue by outlawing certain aspects of blockchain technology, or by trying to control the development of the cryptocurrency markets, while others have been more open to change in many ways.
The five crypto-friendly nations included below are just some of the nations that are embracing blockchain technology. They are being chosen not only because they are favorable to investors in cryptocurrencies, but because they are helping to create havens for the innovation and evolution of blockchain technologies.
Switzerland has long been known as both a neutral observer and a hub of private financial services and banking. Can you think of a better place to encourage the growth of the privacy-centric cryptocurrencies than the hub of private financial services?
In fact, Switzerland has a stated goal of becoming the “crypto-nation” according to the Economics Minister of the small Alpine country. This goal was made in connection with the “Crypto Valley” project. Zug, located in central Switzerland, is home to the “Crypto Valley” project, an independent, government-supported association that is aiming to create a “world leading blockchain and cryptographic technologies ecosystem.”
Besides its focus on the innovation and evolution of the blockchain industry, Switzerland has also become known as one of the top countries for successful ICOs.
Japan is well known as being one of the most accepting countries when it comes to blockchain and cryptocurrencies. This is very likely because of the technological advancements in Japan and the willingness of the population to accept new technologies.
Record BTC / JPY Volume
According to Japanese media reporting, Japanese Yen buying and selling accounts for more than 50% of worldwide Bitcoin volumes. Part of the reason for this is that Japan has officially acknowledged cryptocurrencies as legal tender back in 2017. It’s also helpful that cryptocurrency exchanges in Japan operate under a very liberal regulatory environment.
Japan is well known for its adoption of technology, and for its sometimes strange (to Westerners) fads. The Japanese have have easily adopted cryptocurrencies, and have even included them in another fad – J-pop. There’s now a cryptocurrency themed J-pop group known as the “Virtual Currency Girls”, and in case you’re thinking that’s strange, you’re not alone, it is quite strange if you’re not Japanese.
Japan has also created a self-regulatory body known as the Japan Virtual Currency Exchange Association (JVCEA). The entity was formed by the merger of the Japan Blockchain Association and the Japan Cryptocurrency Business Association in April 2018. The merger was meant to take advantage of allowances in the Payment Services Act that was passed in Japan in April 2017.
That Act allows for self-governing regulatory entities to set penalties for self-imposed rules. The JVCEA is comprised of 16 Japanese exchanges and looks to assess exchange securities and cryptocurrencies.
The rapid adoption of the technology and proactive stance on self-regulation of cryptocurrencies make Japan one of the most crypto-friendly countries in the world. The fact that technology is embraced heartily in Japan is almost certain to ensure that many new blockchain and cryptocurrency developments will occur first in Japan.
You may not have expected to see the United Kingdom on a list of the most crypto-friendly countries, but the truth is that regulators in the U.K. have so far left cryptocurrencies pretty much alone, leading to a thriving community of cryptocurrency users, businesses and developers. Plus the U.K. has the benefit of a highly developed infrastructure and skilled workforce, along with a positive reputation.
The United Kingdom has seen a similar development to that happening in Japan, with seven of the largest blockchain companies joining together recently to create a blockchain industry trade body in the U.K. known as CryptoUK.
UK Flying the Flag of Adoption
CryptoUK is the first self-regulating cryptocurrency organization in the U.K. and was created as a proactive way to circumvent any potential regulatory crackdowns on blockchain projects in the U.K. It has already released a Code of Conduct and seeks to promote industry best practices to make the U.K. a safe home for blockchain and cryptocurrency projects.
The intention at CryptoUK is to work together with U.K. government regulators to create a secure environment for both blockchain companies, and the people that invest in them. There is a focus right now on U.K. based blockchain startup companies and ensuring that their platforms are compliant with Know Your Customer and Anti-Money Laundering regulations.
Iqbal Gandham, the Chairman of CryptoUK, stated that the alliance intends to “promote best practice and to work with government and regulators,” adding that the organization can become “the blueprint for what a future regulatory framework will look like.”
U.K. financial institutions are governed by the Financial Conduct Authority (FCA), however current laws do not have cryptocurrency exchanges, brokers or businesses under the oversight of the FCA. This has left cryptocurrency related business in a somewhat grey area that has left them with a great amount of freedom in the way they operate and conduct business. This laissez-faire outlook makes the U.K. a very attractive location for blockchain startups and even existing organizations.
The CryptoUK alliance wants to be a positive force in the cryptocurrency movement in the U.K., assisting the British government in creating a regulatory framework that will not only help integrate existing cryptocurrencies into the society and financial markets, but also ensure that the U.K. remains a hub of innovation and development for the blockchain community.
The Netherlands, and specifically Amsterdam, have long been known for free-thinking and a liberal lifestyle. More recently, Amsterdam also became the home to the Bitcoin Embassy. This Bitcoin Embassy is the home to a hard-working and active community of crypto-enthusiasts who have been working to spread awareness of the oldest cryptocurrency.
The Dutch are Bitcoin Crazy
You might not have heard it before, but Amsterdam is also known as the best technology startup city in Europe, and thanks to widespread adoption of cryptocurrencies it boasts the densest concentration of Bitcoin ATMs of any city in the world.
Even with the widespread adoption and popularity of cryptocurrencies in the Netherlands, the government hasn’t been swift to push regulations on the fledgling asset class. In fact, the Netherlands government has even been experimenting with its own cryptocurrency known as the De Nederlandsche Bank Coin, or DNBCoin. Currently there is no government or self-regulation in this progressive Northern European country.
This could be changing however as the Dutch Blockchain Coalition (DBC) has been working on a regulatory structure that not only provides regulation, but also ensures that the development of blockchain and cryptocurrency projects is responsible. The DBC is an alliance of more than 20 different organizations, and one of its primary current goals is to create a method for enforcing digital identities that will keep pace with the rapidly changing Know Your Customer and Anti-Money Laundering regulations.
The Dutch Authority for the Financial Markets has the responsibility for regulating financial products in the Netherlands, but does not regulate Initial Coin Offerings (ICOs) at this time. Instead, it has informed the European Securities and Markets Authority that the cross-border nature of token crowdsales requires responsible action at a European Union level.
Here’s another developed European country that you might not immediately think of as a top crypto-friendly country, but in fact the 0% tax on cryptocurrencies has made it extremely attractive to cryptocurrency enthusiasts. The National Bank of Denmark has even gone as far as exempting cryptocurrencies from regulation after ruling that they are not legal tender currencies since they have no central issuer.
That hasn’t kept the Danish government from issuing several warnings to its citizens regarding the speculative nature of investing in cryptocurrencies. Even so, they seem to be keeping their distance from actually regulating cryptocurrencies, instead deferring to the European Union for regulation. Since the EU hasn’t provided any regulation yet this leaves cryptocurrencies unregulated and untaxed in Denmark, hence the crypto-friendly designation of the country.
All the countries mentioned above offer benefits to individuals and companies looking to invest in or develop cryptocurrency based projects. One commonality shared by these countries has been the proactive formation of self-regulating entities that are trying to steer the developing regulatory environment in a positive direction.
The coalitions and alliances being formed are working closely with governments to help create a regulatory framework that maintains the innovation that blockchain technology brings us. In the long run we see this as a very positive development that can hopefully keep blockchain projects from being stifled.
While these are my top picks for crypto-friendly nations, there are others that have been very accommodating for blockchain startups.
Among them are Puerto Rico, Malta, Estonia, Singapore and some Caribbean Islands.
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