Adoption or prohibition?
These are the most friendly (and hostile) countries for crypto
As cryptocurrency becomes ever more popular, governments from different countries take stances on it. Some have welcomed it, trying to harness the potential of a booming industry. Others feel threatened by it, making significant efforts to ban it altogether. Here are the most relevant cases from both sides.
Crypto-friendly countries
Some countries have opted for welcoming the crypto industry from merely issuing a statement recognizing mining as a legitimate business to declaring bitcoin legal tender.
Venezuela
The Latin American country saw a tremendous increase in Bitcoin miners due to its cheap electricity and astronomic inflation rates.
Far from banning it, the government created a specific branch regulating crypto mining and related activities, called SUNACRIP.
Since then, SUNACRIP has released several declarations and documents recognizing crypto mining as legitimate business activity and establishing a legal framework to bring regulatory clarity to the industry.
Among other things, SUNACRIP determined:
- All crypto miners have to register for a mandatory “operation license.”
- Hardware manufacturers will be evaluated and granted a “quality certificate” should they meet the organization’s standards.
- Creating an “integral registry for miners” where all who want to take up cryptocurrency mining activities have to apply for the pertinent licenses.
- Creating a national mining pool operated by SUNACRIP, against which all miners located inside Venezuelan territory must be mining to avoid sanctions.
Venezuela is one of the leading countries regarding crypto adoption. Although the government’s friendly policies benefited miners primarily, it hasn’t taken any restricting measures facing the surging crypto usage within the country.
Here’s hoping that Venezuelans will remain free to use and save in crypto for many years to come.
If you want to learn more about what’s going on in Venezuela, check out our article below.
Laos
A month after Laos’ central bank warned against cryptocurrencies, the government issued a statement authorizing crypto mining and trading.
Laos took a big hit after the coronavirus pandemic. The communist-ruled country saw its tourism industry struggle dramatically, which led to a drop in hydroelectric power consumption.
Hydroelectric energy generation is a robust industry in Laos, but its internal production significantly exceeds demand.
The shift in its stance on crypto comes as a consequence of the combination of two factors. The unpostponable need of recovering from the pandemic and its implications and the available surplus of clean energy that Laos produces. In that scenario, crypto mining fits perfectly as a solution.
Laos’ prime minister has authorized six companies to begin crypto mining and trading operations. On the other hand, the government has started working with the country’s central bank and national electricity company to ensure that everything goes smoothly, follow the case closely, and further develop a legal framework according to the outcomes of this first experience.
Did you know Bitcoin miners and the energy industry could team up to balance large-scale power grids? Learn how below.
Portugal
The most western country in the European Union has become a popular destination for crypto investors worldwide and a base of operations within the continent.
The Portuguese tax authorities have taken a soft and amicable approach towards cryptocurrency investments.
Crypto traders can enjoy a 0% capital gains tax on their profits, whether on crypto-to-crypto or crypto-to-fiat exchanges.
Independent workers, contractors, or freelancers who want to make Portugal their home and get paid in crypto can also do so without additional taxes. Companies don’t enjoy the same benefits, though, as regular capital gains apply in those cases.
The Portuguese government is committed to becoming leaders in innovation, which is why they have also deployed several Bitcoin ATMs throughout the country and enabled private companies to provide citizens with crypto-payment options for businesses.
Finally, investors can combine Portugal’s friendly stance on crypto with its Golden Visa program to acquire legal residency within its territory, Portuguese citizenship, and a European passport.
El Salvador
This list couldn’t be complete without the most significant case in the history of crypto adoption. Of course, we’re talking about El Salvador adopting Bitcoin as legal tender.
El Salvador has introduced a series of initiatives to go full-Bitcoin, among which there are:
- Constructing Bitcoin mining facilities using geothermal energy from El Salvador’s volcanoes.
- Developing a wallet called Chivo, enabling Salvadorans to trade Bitcoin with zero fees.
- Deploying over two hundred Bitcoin ATMs throughout the country.
- Implementing 0% capital gains tax on Bitcoin since it’s now a national currency.
- Buying 750 BTC to keep in the national reserves.
So far, Chivo wallet has reached over 2.1 million users, which is more users than any centralized bank in El Salvador.
It’s worth mentioning that citizens can also use other wallets besides Chivo, so it’s logical to assume that Bitcoin users within El Salvador are even more. Furthermore, the president believes that if the current trend continues, Chivo will have more users than the country’s entire banking system.
Many Salvadorian families rely heavily on remittances and have no access to banking services, which sparked the Bitcoin initiative in the first place.
According to the data we just mentioned, it seems to have gotten back on course after a rough start — the implementation date coincided with a steep fall in bitcoin’s price. The Chivo app also experienced a couple of bugs and errors on the user end at launch.
Who is the man that pushed for bitcoin to become legal tender in El Salvador? Check out our profile on Nayib Bukele below.
Businesses, on the other hand, have incorporated Bitcoin with surprising ease. Thanks to the Lightning Network, people can instantly buy a coffee and pay with bitcoin by scanning a QR code.
The Bitcoin implementation in El Salvador is a long-term bet, although many benefits are already starting to show, especially for the country’s citizens, who could save up to $400 million.
If you’re out of the loop about El Salvador’s Bitcoin initiative, you can’t miss our article below to learn all there is to know.
Crypto-hostile countries
On the other hand, many countries see cryptocurrency as a threat to the government’s control and power and have opted to restrict its use or even ban it altogether.
Bolivia
Contrary to the current trend of Latin American countries — which are becoming more crypto-friendly — , Bolivia has had an ongoing cryptocurrency ban since 2014.
The Bolivian Central Bank (BCB) released a circular prohibiting all digital assets under the excuse of “protecting the population against Ponzi schemes.”
Since then, Bolivian citizens have had their accounts shut down, their credit cards canceled, their funds seized, or were even arrested for engaging in crypto transactions.
Bolivia underwent a brief political crisis in 2020, where President Evo Morales was exiled to Argentina after a coup. The new government was short-lived, though, as economic and sanitary problems quickly depleted its popularity.
In the next elections, the socialist party — led by Morales’ former economic minister — returned with an overwhelming majority.
The new government didn’t lift the ban, and the prohibition over cryptocurrency remains unchanged.
However, with the growth of the crypto community both within Bolivia and the region and the people becoming increasingly educated on the matter, crypto advocates have reasons to be optimistic.
Crypto’s growth in Latin America keeps hopes high. To read more about adoption in the region, check out our dedicated article.
Turkey
Turkey was one of the countries in the world with the most exposure to cryptocurrency. Statista estimated that around 16% of the population either held or traded cryptocurrency.
Additionally, daily market transactions volume reached $2 billion, and the use of Bitcoin increased 600% compared to the previous year.
Against its rising popularity, the Turkish government pushed back and decided to restrict crypto usage.
The Central Bank of the Republic of Turkey (CBRT) approved legislation declaring that using cryptocurrencies and other blockchain-based digital assets as an instrument of payment was strictly illegal. Companies that handle payments and electronic fund transfers were also forbidden from processing transactions involving cryptocurrencies.
“Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance,” said the CBRT.
The government also sent a notice to cryptocurrency exchanges operating in the country requesting user information — an event that raised tax concerns among crypto users.
China
The entire world knows that China firmly opposes cryptocurrency. That hardly comes as a surprise, given that it’s led by an authoritarian, communist party — the CCP.
The story between China’s bans of crypto is so long and with so many chapters that it has become a running gag within the crypto community.
The most recent ban, however, has proven the most rigorous so far. It started with the crackdown on mining, which led to miners abandoning the country searching for a new base of operations.
This unprecedented event led to the most significant hashrate drop in Bitcoin’s history.
A few months later, the government doubled down, restricting citizens from performing any kind of trades or transactions of cryptocurrency and exchanges from operating within the country. It even launched its own central bank digital currency (CBDC), the digital yuan, over which they have complete control.
Cryptocurrencies are the most recent addition to the extensive list of bans in China, along with Google, Facebook, Wikipedia, and several movies, TV shows, and books, to name a few.
The United States, in a grey area
A very particular case in this matter is the USA. There are several factors in play regarding the cryptocurrency advancement in the country, which leaves it in a grey area.
While many states are trying to attract the cryptocurrency industry — Texas, Wyoming, and Florida, to name a few — , others are still refusing to welcome it — New York is the most relevant example.
The federal government, on the other hand, has taken many steps in the opposite direction.
A heated debate has arisen after the confusing language of Biden’s infrastructure law, which would impose impossible requirements to cryptocurrency companies and platforms, basically impeding them from functioning within the country.
Another aspect of the dilemma regards the SEC and whether it considers crypto assets a “security.” All tokens and coins that fit that definition have to abide by the laws that regulate them and be registered and traded on authorized stock exchanges.
Nevertheless, the country is still defining its stance towards crypto. The infrastructure law hasn’t passed yet, and many crypto-friendly representatives are making efforts to submit amendments that would “save” the industry. Time will tell if they’re successful.
North America is becoming a very popular destination for Bitcion miners. If you want to know why, read our article below.
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