The main issue for crypto investors in the United States right now is that the future of the industry has never been as uncertain as it is right now.
Unfortunately, the battle for crypto regulations has never been as volatile as it is today. It is no secret that when it comes to crypto in America, tensions are high, people are scared, and many are wondering what they should do if regulators push crypto innovation outside of their borders.
We have just witnessed the next phase of Operation Choke Point 2.0 commence as the Securities and Exchange Commission (SEC) has gone after Binance and Coinbase. With these new “regulation by enforcement” type cases, the SEC is also trying to call altcoins as securities as they possibly can.
On the contrary, there are crypto-friendly countries that have gone a step further with generous tax laws and regulatory environments to encourage adoption and ensure access among the general public. Let’s check some of them out.
A city in Switzerland called Zug is known for being the “Crypto Valley” with its favorable regulatory environment and supportive crypto infrastructure. This city is the first in the world to start accepting Bitcoin payments for local taxes.
A lot of people credit Switzerland’s openness with digital assets to the fact that it is not part of the European Union (EU). The EU has always been cautious about its crypto stance, and since Switzerland is not part of any of it, it has been extremely welcoming to crypto.
The nation is even a home to some of the best cryptocurrencies and blockchain companies around the globe—Ethereum (ETH) and Cardano (ADA) just to name a few.
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 Swiss Federal Tax Administration determines whether you are a private investor or not by looking at your trading volume, the time period you own the assets before disposing of them, and the size of your investment profits.
Additionally, buying and selling cryptocurrencies is completely exempt from taxes in Switzerland as long as you are considered to be a private investor by the Federal Tax Administration.
2. El Salvador
El Salvador made headlines in September 2021 when it became the first country to adopt Bitcoin as legal tender alongside the US dollar, which was their national currency.
The Central American country was hailed to be one of the best crypto tax-free jurisdictions in the world. On May 4th, 2023, President Nayib Bukele signed into law the complete removal of business taxes from tech businesses.
The government did this to market itself as one of the few countries without crypto taxes and attract more investments to the region. They announced that all foreigners would also be exempted from paying taxes on any income from their Bitcoin gains.
President Bukele is all about breaking the wheel and has made lots of progress in making El Salvador independent from the banking vultures that prowl Central America.
3. Hong Kong
Hong Kong was once an ardent supporter of the crypto industry and went a complete 180° when China initiated a crackdown on crypto during the 2017-2018 bull market. Because of this, Hong Kong’s crypto journey experienced a shift towards hostility.
This persisted until an unexpected twist in October of last year, when the city-state hinted at the potential revival of retail crypto trading. Notably, 93% of Hong Kong’s 7.4 million inhabitants belong to the retail investor category.
Over just a few months ago, Hong Kong legalized retail crypto investing and trading, with new regulations that came into effect last June 1st, 2023.
Propelled by a vision to emerge as a preeminent global hub for virtual assets, the city-state’s regulator, the Securities Futures Commission (SFC), ushered in a framework that will allow the purchase, sale, and trade of select higher market cap cryptocurrencies, such as BTC and ETH.
In Singapore, if you buy crypto and sell it with profit, you do not have to pay taxes as capital gains are not taxed. However, if you trade on a regular basis, then you will be taxed.
Singapore’s monetary watchdog, the Monetary Authority of Singapore (MAS), has stringent regulations to safeguard cryptocurrency investors but at the same time create a balanced system in which crypto can operate.
As a result, the country is home to several crypto projects, including the likes of Zilliqa (ZIL), Qtum (QTUM), Kyber Network (KNC), and many others.
5. United Arab Emirates
UAE knows that digital assets are the future and is taking huge steps in making its crown jewel, Dubai, a crypto hub of influence and innovation.
For evidence of that, look no further than the first crypto regulation body of its kind, the Virtual Assets Regulatory Authority (VARA).
This kind of legal clarity and proactive governance is exactly what makes crypto flourish in Dubai. On top of the responsible leadership, there is no income tax, no capital gains tax, no corporate tax, and only a 5% value added tax (VAT) for goods and services.
These were some of the countries that have warmed up to crypto and are even using the industry to fuel their economies.
While there are still many countries that are still skeptical about the technology or have even outright banned crypto, others will nevertheless be focused on creating an environment for the industry to flourish.
What do you think about each crypto-friendly country mentioned? Do they sound like places you would want to live in? Let us know!
Frequently Asked Questions (FAQs)
El Salvador became the first country to adopt Bitcoin as legal tender alongside the US dollar making it one of the best crypto tax-free jurisdictions. The El Salvadoran government also eliminated business taxes for tech businesses and exempted all foreigners from paying taxes on income from Bitcoin gains.
Hong Kong’s crypto stance turned a complete 180° when China conducted a crypto crackdown in the 2017-2018 bull market. In June 2023 the city-state legalized retail crypto investing and trading with favorable regulations, allowing the purchase, sale and trade of selected cryptocurrencies like Bitcoin and Ethereum.
Whether you should live in one of these countries entirely depends on your individual preferences, current circumstance and business interests. Consider other various factors like the business opportunities, taxation and regulatory environment when deciding if it is the right place for you!