“Bitcoin will do to banks what email did to the postal industry.”
Those were the words of Rick Falkvinge while commenting on the importance of cryptocurrency in the 21st century.
Since becoming increasingly popular in 2009, cryptocurrency has greatly impacted the world of finance and how we trade. Innovations like Bitcoin came onto the scene and introduced everyone to non-government digital currencies and decentralized financial (DeFi) services. With a strong internet connection, anyone can store up and explore crypto assets.
Surprisingly, not every country is thrilled by this digital gold rush. While some are going all out and embracing cryptocurrencies, others are cautious. From fraud to financial stability to illicit activities, there are several concerns responsible for this trend.
Yet, knowing which countries use digital technology the most can help you understand its spread and adoption across the globe. Kate Richardson, one of the foremost crypto and blockchain analysts, has put together a list of countries that accept cryptocurrency in this article.
Challenges for the Ultimate Crypto Investor: Why Measuring Crypto Exchange and Adoption in Friendly Countries is Difficult
The current state of crypto adoption globally is a mixed bag, with some countries leading the way while others lag behind. Despite the growing interest and initiatives in the industry, it remains difficult to track cryptocurrency adoption by country. Here’s why:
Anonymity and Decentralization of Cryptocurrency
A key feature of cryptocurrencies is their anonymity and decentralization. Transactions often hide users’ location, and this makes it difficult to determine where exactly the technology is being explored. A user in Brazil, for instance, could be making transactions that appear to originate from a server in Germany.
This raises questions about tax liability, precisely for crypto businesses and startups looking to minimize their capital gains tax. Some countries offer attractive tax rates and even a golden visa to foreign crypto entrepreneurs, while others are crypto tax-free.
Global and Borderless Nature
Cryptocurrencies run on a global network that bypasses traditional geographic boundaries. Anyone transacting in Japan may use an exchange based in the U.S. or Europe. This explains why it’s difficult to hang crypto activities in specific countries. Transactions can easily switch lines without leaving traces of their origin.
This complexity raises concerns regarding crypto regulations, particularly in areas such as fraud and money laundering. As a result, cryptocurrency exchanges are subject to strict guidelines to ensure transparency.
Besides, the adoption of Bitcoin as a legal tender in some countries has sparked debates about corporate income tax implications.
Inadequate Record of Crypto Transactions
The system for reporting cryptocurrency usage varies from country to country, and that’s a major challenge. While some nations may have detailed records of crypto transactions, others may have none at all. This inconsistency makes it difficult to compile accurate and comparable data on a global scale.
However, many countries are now adopting crypto-friendly policies, with some being the first in the world to do so. For instance, a few nations have abolished long-term capital gains tax on cryptocurrencies. As a result, we’re seeing a surge in the use of crypto in these regions. And, there’s a more widespread adoption of digital currencies globally.
Differences in Crypto Tax Regulations
Countries like China have very strict rules, with bans on trading, exchanges, and crypto mining, while others have more favorable regulations. These differences affect the use of cryptocurrency in such nations and determine how openly transactions are reported.
In contrast, crypto-friendly countries have clear tax laws and crypto regulations in place. They make it easier for individuals and businesses to navigate the crypto industry.
And speaking of crypto trading and crypto payments, it’s important to understand the tax on crypto so as to pay income tax accordingly. This way, you can take advantage of the benefits offered and grow your investments in the crypto market.
Measuring Crypto Adoption: How to Track Bitcoin Exchange Volume in the Crypto Countries Worldwide
Tracking crypto usage by country can be tricky, but with the following Chainalysis metrics, we can gauge the adoption of blockchain technology in several countries across the world:
- First, Chainalysis examines the total amount held in cryptocurrencies on popular centralized exchanges like Coinbase and Binance.
- The next step focuses on everyday trading activities. Specifically, it looks at non-institutional users—regular folks with less than $10,000 in transfer—on these centralized platforms.
- Next, the focus shifts to the frequency of crypto use for daily transactions by country. This emphasizes the grassroots level of cryptocurrency adoption.
- Analysts then turn to the decentralized finance (DeFi) space to measure the total amount of cryptocurrency invested in DeFi protocols by region.
- Finally, they assess the amount of crypto going into decentralized applications (dApps) and determine how much comes from retail traders across various nations.
10 Crypto-Friendly Countries in the World
Based on their analysis, Chainalysis identified the top 10 countries with the highest rates of cryptocurrency adoption in recent times:
United Arab Emirates
The United Arab Emirates (UAE) is rapidly taking a position as a hub for digital assets. With a staggering 30.4% of its population jumping on the crypto bandwagon, the country is also among the top countries using cryptocurrency. About 3 million individuals in the UAE now boast a crypto investment portfolio.
Vietnam
With 21.2% of its population invested in digital assets, Vietnam is another country with many cryptocurrency users. The number of crypto owners in the country shows just how much interest there is in this new asset class.
United States
When it comes to cryptocurrency adoption, you might expect the world’s largest economy to be leading the charge. And while the U.S. isn’t quite at the forefront, it’s not lagging far behind either. In fact, a significant chunk of the American population – a whopping 15.6% – has joined the crypto trend. That’s about 53 million individuals within the country who are now invested in cryptocurrencies.
Malta
Malta recognizes crypto as a medium of exchange and a store of value. This means users are not bound to pay capital gains tax on all long-term profits generated from selling crypto. However, professional traders are subjected to a business income tax that is as low as 0% to as high as 35% on their profits, depending on the brackets they fall in on the Maltese Tax System.
Germany
Unlike some countries on this list, Germany recognizes crypto as private money rather than as an asset. The central European country exempts Bitcoin and other cryptocurrencies from capital gains taxes as long as they’re held for at least one year. The same goes for staking and lending rewards.
In the case that the assets are exchanged before a year elapses, they’ll remain tax-exempt if the profit is less than €600.
Singapore
Interestingly, capital gains in Singapore are not taxed. So, buyers of cryptocurrency who sell with profit can bypass paying tax, except in cases of regular trading.
Singapore’s monetary watchdog, the Monetary Authority of Singapore, has strict regulations for crypto but with a balanced system for easy operation. As a result, the country is home to several crypto projects, including Qtum, Bluzelle, Kyber Network, and many others.
Ukraine
As of writing, 10.34% of the total Ukraine population is trading crypto. This goes a long way to prove the country’s reception to emerging trends. Showcasing its rising crypto popularity, it earned a spot on Chainalysis’ Global Crypto Adoption Index in 2023.
Switzerland
In 2018, Swiss banks were the first to allow crypto companies to open business accounts. Like many other crypto-friendly countries, private investors in Switzerland do not pay Capital Gains Tax on their crypto profits. The Federal Tax Administration determines whether you’re a private investor by examining your trading volume and a few other details.
Switzerland is famous for its small city, Crypto Valley, which houses popular crypto projects, including Ethereum and Cardano.
Portugal
Portugal has set a good record for other European countries with its crypto-friendly laws. For starters, it currently views cryptocurrencies as a form of payment rather than an asset, so crypto transactions are exempt from VAT (Value Added Tax). However, income related to professional cryptocurrency activities is taxed.
While Portugal is considered a tax haven for crypto investors, the Portuguese government has recently proposed a new tax policy that will impose a 28% capital gains tax. On top of that, it also intends to impose a 10% tax on any free crypto transfers.
Canada
One of the most exciting things about Canada’s crypto scene is the widespread availability of BTC ATMs. With one of the highest numbers of BTC ATMs in the world, Canadians have easy access to cryptocurrency. Plus, several Canadian banks have embraced crypto, making life easier for investors and businesses.
The Final Verdict: Countries Leading the Future of Cryptocurrency
The growing global adoption of cryptocurrency is set to give crypto-friendly countries a major edge in the near future. However, not all countries are on the same page. Some, like New Zealand, are still grappling with the concept of cryptos, making it a slightly unfriendly terrain for enthusiasts. However, that doesn’t mean you can’t explore the world of crypto in NZ.
Some companies and industries in the country are starting to accept swift cryptocurrency payment methods. International retail companies like Amazon, Walmart, and IKEA already allow payments in Bitcoin and Tether.
Similarly, casinos and the sports betting industry are other people-facing sectors that have popularized cryptocurrency adoption. You can find apps for betting in NZ that accept crypto and even provide unique bonuses in your preferred currency. Cryptocurrency betting at New Zealand sites provides players with more privacy and anonymity when they gamble. The apps that offer this crypto betting feature are licensed and guarantee your security and that of your funds. Also, as the value of cryptocurrencies grows, for instance, in a bull market, so do your crypto deposit and winnings at casinos increase.
In the coming years, countries that adopt cryptocurrencies in growing industries like casino gambling and retail will soon become the face of the crypto revolution.
-+
