12 Most Crypto-Friendly Countries in the World

The level of friendliness of a country towards cryptocurrencies can be assessed based on two factors: the extent of cryptocurrency regulation and taxation. This article will explore several most crypto-friendly countries where cryptocurrency is widely accepted.

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Top crypto countries

Portugal

Portugal is widely recognized for its favorable stance towards cryptocurrency laws. The authorities have shown a lenient attitude towards crypto investments, and individuals who gain profits from the sales and purchases of crypto are not subject to capital gains tax. Moreover, exchanging cryptocurrency for fiat or other cryptocurrencies is also taxation-free. This is particularly beneficial for individuals who receive payments in digital currencies as they can avoid heavy capital gains taxes.

Here is the reason Portugal is the best country for crypto tax. However, it should be noted that companies in Portugal receiving cryptocurrency payments are subject to regular capital gains taxes. Despite this, Portugal is still desirable for individual cryptocurrency investors due to its favorable tax policies. 

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Switzerland

Switzerland is also one of the excellent crypto countries renowned for its exceptional banking standards, often referred to as the “realm of finance,” offering high levels of privacy with low risk. Its lenient regulations for digital currency traders and investors add to its appeal. 

Swiss cantons may have different tax policies on cryptocurrency, with some exempting capital gains from movable private wealth in Zurich. In Bern, mining and trading are treated as regular income. Lucerne is similar to Zurich, with tax-exempt status for capital gains. Switzerland also offers an ideal environment for cloud mining, with a perfect system for the crypto mining industry, although mining gains are taxed as regular income. Despite this, the country remains an excellent place for crypto investors looking for low-risk, high-privacy standards and lenient regulations.

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Germany

Germany is considered one of the best countries for cryptocurrency due to its favorable laws for long-term investors. Cryptocurrencies are treated as private money rather than legal tender, making it a paradise for those looking to hold onto their investments for an extended period. However, day traders looking to avoid taxes should reconsider.

One of the most significant advantages of investing in cryptocurrency in Germany is that residents holding crypto for more than 18 months won't be taxed, regardless of the value. However, capital gains taxes are imposed on amounts above 600 EUR (approximately $712) for investors who hold a given crypto for less than a year.

Germany doesn't support high-volume crypto trading by individuals, as capital gains taxes are levied on amounts above the threshold. On the other hand, corporations in Germany are subject to capital gains taxes, unlike individual investors.

Germany's favorable laws for long-term investors make it one of the best countries for cryptocurrency, and it's an attractive nation for individual investors with a longer-term view.

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Singapore

Singapore's economy is one of the most stable and well-developed in the world, attracting many entrepreneurs and businesses. Singapore is considered one of the best countries for crypto due to its status as a fintech hub in Southeast Asia. This makes it an ideal location for those looking to develop their crypto businesses and benefit from balanced regulations legally. Moreover, Singapore sees cryptocurrencies as an experimental construct with significant growth potential.

Singapore does not impose any capital gains tax on cryptocurrencies, and individual and corporate crypto funds are not taxed. However, if a corporation operates as a crypto trading company or accepts crypto payments based in Singapore, it will be subject to income tax.

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Malta

Malta has emerged as one of the best countries for cryptocurrency, with its crypto-friendly approach attracting numerous blockchain projects and crypto exchanges. Following Hong Kong's tightening of regulations, Binance moved to Malta, and it's rumored that over $70 billion in crypto has passed through the country in recent years.

Despite concerns about the lack of a regulatory body, Malta has become a hot spot for traders and miners. The island has long been a proponent of cryptocurrencies, and authorities have passed multiple bills to establish a regulatory framework, including the Innovative Technology Arrangements and Services Act, Malta Digital Innovation Authority Act, and Virtual Financial Asset Act.

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Canada

Canada is currently regarded as one of the bitcoin-friendly countries, as it has no laws prohibiting the use of cryptocurrencies. This has allowed many crypto businesses to operate freely within the country. However, this leniency may only last for a while, and some speculate that regulations may be implemented in the future. Nevertheless, Canada is known for its open-mindedness towards new technologies, enabling individuals to explore and seize new opportunities. Additionally, with 1,464 bitcoin-friendly ATMs in the country, it is apparent that Canada has a strong presence in the cryptocurrency industry.

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Slovenia

Slovenia is one of the most crypto-friendly countries in Europe, as the government has openly expressed its support for Bitcoin and other cryptocurrencies. The country benefits individuals involved in Bitcoin trading, such as exemption from income tax on cryptocurrency gains. Additionally, cryptocurrency mining is not subject to VAT in Slovenia.

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The Netherlands

The Netherlands is recognized as one of the crypto countries due to its positive stance on cryptocurrencies. The Dutch government sees the potential benefits of digital currencies in boosting the country's economy and has yet to impose strict regulations on their use. However, the country adheres to the standards set by the Financial Action Task Force (FATF) to prevent money laundering and other illegal activities. The Dutch National Bank (DNB) regulates cryptocurrency in the country.

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Luxembourg

Luxembourg is considered one of the best countries for cryptocurrency. It recognizes cryptocurrency as a legitimate currency, and there are no restrictions on trading or using them within the country. Despite having no explicit cryptocurrency rules, the government takes a typically progressive approach toward them. The CSSF regulates cryptocurrency exchanges and imposes regulations like other financial organizations. Luxembourg is committed to keeping up with crypto trends and developing the best strategies to deal with them, making it one of the top crypto-friendly countries.

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Estonia

Estonia has emerged as one of the best countries for crypto tax. As a cryptocurrency-friendly country, it recognizes digital assets as a legitimate currency. The government does not impose corporate income tax if the profits are not distributed. Transactions with bitcoin and other cryptocurrencies are taxed in the same way as any other corporate activity. Estonia's digital-first approach has attracted many crypto businesses, making it one of the hottest spots for such firms in Europe. Moreover, Estonia's financial sector is more crypto-friendly, with banks like LHV Bank being among the first to embrace blockchain technology. LHV Bank even launched a Cyber Wallet app, enabling users to send digital representations of actual euros.

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Cyprus

Thanks to authorities' lenient approach to cryptocurrencies, Cyprus is a bitcoin-friendly country. While cryptocurrency is not yet regulated in the country, it is heading in that direction. The Central Bank of Cyprus is cautious about potential losses and issued guidelines on cryptocurrency risks in 2014. The Cyprus Securities and Exchange Commission established an Innovation Hub for knowledge sharing among regulated entities. Despite some legal jurisdiction over ICOs, most areas of crypto remain primarily unregulated in Cyprus. Additionally, there are no mining restrictions, reporting requirements, or legal framework for the estate treatment of cryptocurrencies. However, Cyprus is known for its low 12.5% corporate tax rate.

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Bermuda

Bermuda’s Digital Asset Business Act 2018 establishes a regulatory framework for individuals and entities engaged in issuing, selling, and redeeming cryptocurrencies and other digital assets, operating as a crypto payment provider, using a cryptocurrency exchange, providing wallet services, and operating a cryptocurrency services vendor. This legislation clarifies what qualifies as a digital business in Bermuda. This country does not impose any income or capital gains tax, making it an attractive destination for individuals and companies seeking a friendly regulatory environment for digital assets.

Bermuda’s crypto-friendly approach is evident in its approval of the Hashdex Nasdaq Crypto ETF, one of the first Bitcoin ETFs to be launched in the world. Despite years of unsuccessful attempts to establish a Bitcoin ETF in the US, Bermuda is a forward-thinking jurisdiction that welcomes innovative digital solutions.

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To summarize, how to choose crypto-tax-friendly countries?

The trend of licensing programs for regulating cryptocurrency exchanges is gaining momentum in many crypto-friendly countries. While some nations like China have completely banned cryptocurrencies and ICOs, others embrace digital currencies and support them worldwide.

Entrepreneurs looking to establish their blockchain-based businesses have several options to choose from, but they need to research and evaluate the regulations of these countries before making a final decision.