Incorporating cryptocurrency and a nation’s perspective on blockchain technology plays a crucial role in determining its position within the technology and innovation industry. Regulatory frameworks in crypto-friendly countries promote the adoption of cryptocurrency by making it easily accessible and driving innovation in the industry.
The article introduces a cryptocurrency legal countries list in 2023, highlighting countries that accept digital money and provide the best environment for DeFi.
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How To Recognise A Crypto-Friendly Country
A country’s crypto-friendly status is determined by three key factors: acceptance of digital funds, regulatory framework supporting it, and adherence to crypto-friendly regulations.
- People are usually obligated to pay taxes on their Bitcoin investments in countries where it is legal. However, in crypto-supportive countries, the taxes on trading and investing are either very low or non-existent.
- Crypto-friendly countries offer favorable tax policies and a regulatory environment that encourages the growth of cryptocurrency businesses, fostering a supportive system for their development.
- Countries like China, Bangladesh, Indonesia, and Egypt have banned crypto, indicating that a country must first accept and legalise it to be considered crypto-friendly.
Countries Where Crypto Is Legal
Cryptocurrency adoption is reaching new heights around the world every day. Here are the 5 most crypto-friendly countries.
Portugal
Portugal is best known for its picturesque coastline. However, investors, traders, buyers, and sellers can take advantage of tax-free cryptocurrency investments in the country, with VAT and income tax exemptions, making it a valuable choice for them.
Businesses in Portugal may face a potential 28% flat tax rate on short-term crypto gains, so it’s crucial to consult current tax guidelines.
These benefits make Portugal an attractive destination for traders and investors since the country’s authorities are fostering digital business transformation and blockchain technology innovations.
Germany
Germany is a favourable country for crypto investors, as it has treated crypto investments as private money for over a year, resulting in no taxes on long-term gains and tax-free short-term gains below €600. This makes Germany a favourable destination for crypto investments.
Germany has implemented strict regulations to protect the cryptocurrency industry from fraud and money laundering, aiming to increase security and protect users and investors. The country also supports a secure and open crypto industry by addressing potential risks and enforcing strict compliance standards.
Those seeking to hold their investments and casual crypto investors may find Germany appealing due to its lower cost of living index and more lenient crypto tax laws.
Japan
Japan was one of the frontrunners in utilising digital currency. In 2017, the allowance of many venues to trade crypto coins led to an increase in businesses accepting digital currency. BTC is accepted nationwide for transactions. You don’t have to pay taxes if you make less than 200k JPY from crypto. If you make less than 1. 95M JPY, you only have to pay a 5% tax.
The Japanese government launched a pilot project in 2016 to improve administrative processes’ transparency and efficiency using blockchain technology. The government now supports its development through partnerships with private companies and institutions.
Malta
Malta’s favourable regulations create an ideal environment for investing in cryptocurrency, enabling well-known exchanges like Binance to conduct business there effortlessly. The money earned from the sale of an investment that has been held for an extended period is not subject to taxation. But if the investment is sold quickly after buying it, the profit is taxed at a rate of 0-35%.
Malta is known as ‘Blockchain Island’ since its government is actively promoting the use of crypto assets as an option to traditional currency, enabling the purchase of goods and services using digital assets.
Malta’s pro-crypto stance, evident in its favourable taxation policies, is a significant strength. The country offers a favourable tax structure for blockchain and cryptocurrency businesses, allowing them to grow and attract investment. Financial incentives, such as tax exemptions and lower rates, encourage companies to retain profits and reinvest in expansion.
Switzerland
Switzerland boasts the world’s foremost blockchain community and is renowned for its contributions to ETH and Bitcoin Suisse projects. Due to its welcoming tax regulations and resilient economy, Switzerland is a prime destination for crypto ventures. Individuals and businesses are obligated to pay taxes on the value of their crypto assets and any mining income.
Switzerland’s Lugano city has embraced digital currency adoption by accepting taxes in digital money, demonstrating its commitment to promoting the use of digital currencies.
Conclusion
There is a widespread controversy surrounding digital coins across the globe, with diverse policies and tax perspectives. Digital assets in some countries are subject to multiple taxes, but in others, digital investments are tax-free, leading to the establishment of headquarters for crypto companies in these countries. Nevertheless, these laws can be flexible and may change, affecting how a country deals with cryptocurrencies.