Countries are becoming ever more “crypto friendly.” Not only regarding the buying, selling, and using of cryptocurrencies, but also in encouraging local blockchain startups.
Technological innovation thrives in friendly regulatory environments. It’s no surprise, then, that many of the world’s leading tech companies come out of these environments. From places like Silicon Valley, Malta, Singapore, and Switzerland.
A lack of clear regulations has impeded the Blockchain industry from reaching mainstream adoption. Thankfully, 2019 was “the year of regulation,” a lot of which will come into effect in 2020.
Each country has to contend with politics, leaders’ personal beliefs, and lobbying groups when deciding their stance on cryptocurrencies. Accordingly, results vary wildly, ranging from absolute prohibition to wait-and-see stances.
Until now, no central government backs a cryptocurrency. In parallel, standards differ greatly from one place to the next. That said, China is currently working on a Central Bank Digital Currency that may go live as early as 2020.
With the interest for cryptocurrencies on a steady rise, regulators are divided on how to regulate the industry. These regulators actively look for ways to fairly regulate blockchain projects, exchanges, payment processors and gateways, and wallet providers.
Adding to this, differing governmental agencies often disagree on which coins or tokens are securities, utilities, commodities, assets, or income. Likewise, they are unsure of which should be taxed for capital gains, earnings, income, or not at all.
Unfortunately, there is still no unified consensus or regulatory practice on how all cryptocurrencies and companies should be viewed.
Some of the friendliest countries for blockchain technology and crypto include:
The first move towards regulation came after the infamous Mt. Gox heist in 2014, in which hackers stole approximately $400 million worth of cryptocurrencies from the exchange. Despite this, Japan has become a trendsetter by allowing the crypto industry space to self govern in a way that is both compliant and adaptive.
The Japanese Virtual Currency Exchange Commission (JVCE) consists of over twenty organizations that work alongside the Japanese Financial Services Agency (FSA) to practice and enforce regulations and standards.
Under the most recent regulations, exchanges must get approval to open and operate, as well as approval to list specific coins or tokens. This is done in the hopes of finding a middle-ground with the FSA to ensure transparency, prevent insider trading, and offer better consumer protections.
For this reason and all those above, Japan is not only worth a mention as one of the most progressive and friendliest countries for crypto but also as one of the leading pioneers for the industry.
Singapore has earned a reputation for being a supporter of the burgeoning Blockchain industry.
Despite not going so far as to classify cryptocurrencies as legal tender, Singapore has witnessed the development of a rapidly evolving ecosystem. According to the annual PWC report of 2019, two of the top 15 largest coin offerings were initiated in Singapore.
Singapore’s Central Bank stated that there is no strong case to ban cryptocurrencies, and concluded that, “it is too early to say if they are going to succeed.”
Regardless, The Monetary Authority of Singapore (MAS) urged citizens to “act with extreme caution and understand the significant risk they take on if they choose to invest in cryptocurrencies.”
Switzerland, like Singapore, has also been hailed as a paradise for blockchain startups, cryptocurrency issuers, and ICOs. Swiss regulators have a reputation for being some of the most crypto-friendly in the world.
According to another PWC Report, four in 10 of the largest proposed ICOs are based in Zug, affectionately nicknamed “Crypto Valley.” Zug is a “hotbed for blockchain-based companies and advisory services.” Zug houses major blockchain companies, including The Ethereum Foundation and Cardano.
The Swiss Financial Market Supervisory Authority developed clear guidelines for ICOs, and Economics Minister Johann Schneider-Ammann said he hopes Switzerland will become a full-fledged “crypto-nation.”
Unlike in Singapore, Bitcoin is considered legal tender in Switzerland. Exchanges are also legal but do require registering with the Swiss Financial Market Supervisory Authority.
Located in the heart of the EU, Liechtenstein joins the short list of countries who granted legal status to cryptocurrencies.
The government even recently passed a motion to create a new law on Tokens and Virtual Token Service providers, called The Blockchain Act.
This motion, passed in May of 2019, allows for any asset to be tokenized. Meaning, that everything from real estate to bonds and securities can be tokenized as digital assets and listed on crypto exchanges.
With three new bills recently passed, Malta cemented its status as a crypto-friendly nation.
The problem in Malta, however, is that banks are hesitant to grant blockchain-based startups and crypto issuers bank accounts unless they are licenced by the MFSA (Malta Financial Services Authority). The licensing process can take up to 6 months simply for a first-round hearing, forcing startup companies to operate without using the local banks.
Nonetheless, many major startups and crypto companies such as Binance and Bittrex shifted their operations to Malta to avoid more hostile regions.
Just like Malta, islands such as Gibraltar, Bermuda, Vanuatu, Venezuela, Mauritius, the Cayman Islands, and Seychelles have all taken an aggressively pro-crypto stance towards regulation. Each country seeking to become the next crypto haven.
We hope to see more countries stepping forward in 2020 to finally legalize cryptocurrencies, and set an infrastructure for regulation. In this way, making it possible for innovation and adoption to speed up.