10 Best Crypto-Friendly Countries in 2024

Best Crypto-Friendly Countries

Some essential points must be considered when labeling a country as crypto-friendly. For example, you must ask if there are any restrictions on trading, mining, exchanging, or founding a crypto company. Regulations are other vital issues that can help investor insure their assets. Crypto taxes are another crucial point that must be analyzed. Some countries try to restrict the crypto industry by establishing heavy taxes. So, we will provide a list of crypto-friendly countries.

1. El Salvador

El Salvador was the first country to recognize digital gold, Bitcoin, as money and allowed people and organizations to use it for daily payments. Interestingly, the government loves Bitcoin because it considers it a powerful rival to the USD and tries to convince its people to avoid using the Dollar.

El Salvador offers businesses a chance to become pioneers in a market that has the potential to expand. By acquiring a crypto license, companies may put themselves at the forefront of the nation’s cryptocurrency market. El Salvador has demonstrated a dedication to advancing blockchain technology and cryptocurrencies. By getting a crypto license, companies can support government initiatives and perhaps work together on projects about digital payments, financial inclusion, or blockchain-based solutions. Opportunities for collaborative ventures, research alliances, or government contracts may arise from such relationships.

2. Switzerland

Switzerland is one of the other crypto-friendly countries with the most straightforward and flexible laws. Since 2016, Switzerland, one of the world’s most well-known banking and financial hubs, has promoted cryptocurrencies in financial transactions. As you know, the country is the capital of economic organizations, and all countries consider it a safe box. The government favors crypto and wants to distribute the industry in the country. So, tax laws are encouraging, and you can register easily in official bodies. 

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.

3. United States

Several government agencies and lawmakers have hailed the technology as a crucial component of the United States’ future infrastructure. They noted that the country must continue to be pioneering in its growth.

To clarify the developing cryptocurrency industry, the U.S. Congress has submitted numerous measures that will take effect in 2022, in line with the widespread adoption of cryptocurrencies in mainstream culture. Both parties introduced the Responsible Financial Innovation Act (“RFIA”) to integrate digital assets into current banking and tax laws, foster innovation in digital assets, and provide regulatory clarity for the organizations tasked with overseeing the markets for digital assets.

4. Germany

Germany is among the crypto-friendly countries that are highly concerned about regulations. Germany was among the first nations to recognize cryptocurrencies as a valid form of money, and it just released laws enabling companies to issue cryptocurrency shares. Additionally, Germany has implemented legal framework efforts to shield its populace from cyberattacks, money laundering, and consumer fraud. Furthermore, Commerzbank, a German bank, just became the first financial organization in the nation to be granted a custody license for cryptocurrencies.

BaFin, which oversees Germany’s financial markets, is also in charge of the safety and security of investors—having a BaFi license shields you from fraud and unlawful activity. Germany enacted legislation in December 2020 that allowed storing financial assets using blockchain technology. This implies that, as opposed to earlier requirements that securities transactions be documented in tangible form, issuers and holders can now record their securities on a blockchain-based register. Nevertheless, this only applies to bonds thus far; publicly listed stocks or shares are not covered.

The requirement to get a license has a moving target. This barrier may be quickly crossed if more service components use crypto values exclusively. Consequently, anybody who engages in activities that support, expand, or establish a market in addition to mining, buying, and selling cryptocurrencies to provide oneself with products or services on the market cannot avoid acquiring a BaFin license.

5. Malta

The government of Malta, a self-declared blockchain island, decided several years ago to formally recognize and regulate cryptocurrency-related businesses to foster the growth of the innovative technology sector in Malta. Malta is recognized as one of the best crypto-friendly countries with clear and easy crypto regulations. As a result, Malta is one of the few EU jurisdictions with an explicit regulatory framework for crypto assets and services.

The Malta Financial Services Authority (MFSA) oversees the maintenance of stability in the financial sector for the benefit and protection of consumers and the preservation of the industry’s integrity. It also oversees cryptocurrency businesses in the same manner as other financial service providers in Malta.

6. Canada

Canada, one of the first nations to acknowledge the potential of digital assets and enact legislation about them in 2014, has consistently taken a balanced stance toward cryptocurrencies, enacting clear regulations that have made the nation a desirable location for blockchain-based businesses. 

The nation has established precise laws, guidelines, and disclosure standards for organizations that deal with cryptocurrencies or are engaged in their issuance. Consequently, hundreds of cryptocurrency companies operate in Canada, creating decentralized applications (DApps) and offering services and blockchain knowledge related to Web3 development. A few Canadian-based cryptocurrency companies include Bitbuy and Newton, two exchanges. 

The CSA Regulatory Sandbox was created by the Canadian Securities Administrators (CSA), a significant agency in the nation, to encourage the growth of entrepreneurship. Businesses involved in the Bitcoin industry are invited to register with them.

7. Singapore

Singapore is the seventh name on the list of well-known crypto-friendly countries. The average percentage of people who hold cryptocurrency worldwide was 4.2% in 2022, although adoption rates in Singapore are far higher at 11.05. This is mainly attributable to the populace’s technological sophistication and the pro-cryptocurrency positions taken by Southeast Asian nations. 

Since Singapore was among the first nations to establish legal frameworks for cryptocurrencies and other digital assets, knowledge of their respective laws can benefit other countries looking to implement similar policies. 

Singapore is a hotbed of cryptocurrency invention and development. The Monetary Authority of Singapore (MAS) is frequently observed taking the lead in creating governance frameworks, technological standards, and infrastructure for the blockchain and cryptocurrency field.

8. Estonia

One of the few nations in the world that initially allowed cryptocurrency activity is Estonia, which also keeps up with technological advancements and the emergence of new payment options. A new rule that went into effect in Estonia on November 27, 2017, allows business owners to apply for a license in two different ways: by exchanging virtual currency for FIAT or virtual currency or by offering virtual currency wallet services.

Under Estonian law, business owners can lawfully provide their clients with services for exchanging cryptocurrencies for fiat money, on-site at the company’s location, remotely from anywhere in the world, or through the company’s website.

Virtual currency, as defined under Estonian law, is a digital value that is not a form of money or legal tender in any state but can be exchanged, stored, and communicated by both natural and legal people. As a result, tokens and other cryptocurrency derivatives fit entirely the notion of virtual value.

Businesses that exchange cryptocurrencies for fiat funds are subject to laws in the Republic of Estonia that prohibit money laundering and the financing of terrorism, including AML/KYC procedures. Additionally, these businesses must obtain a state license as a virtual value service provider or cryptocurrency license (i.e., provider of virtual currency services).

9. Hong Kong

Due to the growing regulatory framework around crypto activity and services, the SFC has received more applications for and licenses from players (managers, traders, exchanges, etc.). So, the government had to do some activities to place the nation among crypto-friendly countries. As of August 7, 2023, the SFC has granted at least one hybrid license to a Type 9 asset manager so they may oversee a fund of cryptocurrency funds and eleven Type 9 VA licenses (for the administration of a portfolio of 100 percent VAs).

From everything above, it is evident that Hong Kong’s government views Bitcoin activity as inclusive and welcome as long as it is appropriately regulated. The fundamental (and noteworthy) change to provide retail access to “non-security” VAs traded on authorized VATPs shortly is noteworthy.  Additionally, the SFC has proceeded with its proposal to approve the public offering of VA futures exchange-traded funds (ETFs) (CSOP Bitcoin Futures ETF (3066), CSOP Ether Futures ETF (3068), and Samsung Bitcoin Futures Active ETF (3135) in December 2022, amidst the chaos surrounding the collapse of FTX. 

10. Portugal

Until recently, the Portuguese government’s position on cryptocurrencies was indifferent. Portugal allows cryptocurrency because it has not outlawed nor restricted the trade or possession of cryptocurrencies. Portugal is a well-liked travel destination for investors, enthusiasts, and companies because of its reputation as a somewhat crypto-friendly nation. 

Portugal’s cryptocurrency regulations do not forbid their acquisition, holding, or sale. Because of this, cryptocurrencies are allowed in Portugal, and the government has recognized their potential as a substitute for traditional payment and investing methods. 

Nevertheless, as cryptocurrencies lack legal tender status, they are currently neither regarded as “money” nor fiat. As of 2016, Portugal’s official stance on cryptocurrencies was that they should be handled like any other form of money. Finally, our selection of crypto-friendly countries finishes with a European country.

What To Look for In a Crypto-Friendly Country?

You can check these aspects of a country to understand if a country is crypto-friendly or not:

Regulations and Legal Clarity Regarding Cryptocurrency: Regulations refer to the government’s attitude toward all details of the crypto industry. For example, the government allows you to make transactions on payment gateways in the official bank account of the country’s financial system. You must also check how the government established tax laws for crypto earnings.

Favorable Tax Treatment: As mentioned at the top of the article, some countries have no direct prohibition laws for the crypto industry. However, they establish heavy crypto taxes to force people to avoid this field. So, you need to check the country’s tax calculation method and rates. We will explain some popular tax calculation methods in the following section of this article.

Government backing: The next issue you must consider is the government’s support. Suppose a crypto exchange goes bankrupt; how many investors must regain their assets? Who must support them? Conversely, if a company supports the crypto industry, it will provide the companies with subsidies and decrease the taxes for these firms.

Paying Taxes in Crypto-Friendly Countries

Taxation on cryptocurrency is comparable to that on stocks and other property types. Following the sale or disposal of cryptocurrencies, you must pay taxes on any gains you make. The capital gains taxes imposed on equities and cryptocurrency profits are applied at the same tax rates.

The legal definition of cryptocurrencies in a given jurisdiction and the tax code in place significantly impact how they are taxed.

For example, the Internal Revenue Service (IRS) in the United States has said that Bitcoin is subject to the same taxes as any other type of property. Penalties and interest are imposed on those who fail to disclose their trades through deliberate misrepresentation or a failure to maintain accurate records. In severe cases, they can even be charged with a crime.

Income Tax: Generally, it includes items like royalties, interest, dividends, and salaries. Earnings from mining, staking, lending, crypto-denominated wages, and even airdrops in the context of digital assets might also be subject to taxes based on their market value on the day they were received. Expenses are usually deductible (e.g., mining electricity costs).

NFT Tax: It is important to note that several crypto-friendly countries, including Belgium, Poland, and Spain, regard NFTs as virtual services, similar to Netflix, as long as the first sales are treated similarly. Value-Added Tax (VAT) is applicable in certain situations.

Wealth Tax: In addition to income and capital gains taxes, there is a third kind of tax that you may be subject to. Under this tax, your taxes are determined by the value of your portfolio on a specific date. For instance, every tax year, Spain, Switzerland, the Netherlands, Norway, and Argentina collect wealth taxes based on taxpayers’ net worth.

Capital Gains: These are the proceeds from selling assets like stocks or real estate. They are typically computed using the discrepancy between the purchase and sale prices. Sales of cryptocurrencies and NFTs are often considered capital gains and are usually taxed at a rate far lower than regular 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.