Global crypto regulation is confusing. Just understanding the applicable law and tax treatment in one’s own country is hard enough. I wanted to understand the global picture better. So I surveyed the information available and created a heatmap.
Let's dive into the ratings.
In this group are countries that are actively anti-crypto. This group includes China, where the government banned crypto mining in 2021. The PRC seems to enjoy announcing crypto bans and has been doing so on a regular basis since 2013. China’s neighbour, North Korea also makes it into this hostile group, as the state is literally sponsoring crypto hacks in an attempt to steal money from exchanges. Not crypto friendly at all! Other countries where crypto is still explicitly banned include: Algeria, Bangladesh, Bolivia, Iraq and Nepal.
In this camp are jurisdictions where the official reception to crypto is on the chilly side. These are countries where governments have announced crypto to be illegal, or where domestic banks are barred from serving customers involved in crypto. In most cases these governments seem to be content with issuing a few heavy handed statements without much follow-through (probably because implementing a crackdown on individuals holding crypto is practically difficult). This is the case across large parts of Africa and much of Central Asia, despite high levels of underground adoption. Two countries worth highlighting are Indonesia and Pakistan, the 4th and 5th most populous countries in the world. A positive change in regulatory stance by these two countries would bring half a billion people into the crypto fold.
2. Unregulated/Uncertain/Limited Info
Here we have countries that have yet to take a clear stance on crypto. In these jurisdictions crypto is not illegal, but neither is it regulated. This group also includes countries where the government has sent out mixed and confusing messages. In Russia, for example, the Central Bank proposed banning crypto completely this year whilst the Russian finance ministry came up with the country's first draft bill on the regulation of crypto. Nigeria is another popular crypto user country, where the messaging from authorities seem contradictory. The Central Bank of Nigeria has previously barred banks from dealing in crypto, but the Nigerian Securities and Exchange Commission has sought to regulate cryptocurrency investments. No wonder people are confused!
3. Conservative Regulation
Next are the countries that have sought to formally regulate crypto activity. For crypto companies, this provides much needed clarity, but additional red tape. For individuals, this generally means paying taxes on your gains. This list is largely made up of “The West” and includes most of Europe, the US and the likes of Australia, New Zealand and Canada. India is an important recent entry into this category after the country reversed its crypto ban in 2020, with a proposed regulatory framework put forward last year. Singapore is also a new addition to this group. Its government has recently taken a more conservative stance on crypto, leading to some high profile crypto companies exiting the jurisdiction.
These countries have taken an accommodative stance to crypto. This is a pretty varied bunch and makes for a good shortlist for “best jurisdictions for crypto”. Unsurprisingly, this includes the usual suspects of offshore tax shelters like Jersey, Guernsey and the Cayman islands (which hosts 1/3rd of crypto hedge funds). But it’s not all about tax, and some islands deserve a shout-out for developing favourable crypto regulatory regimes and attracting some large players. The Bahamas has been successful in attracting FTX, whilst Bermuda is providing a regulatory base for Circle. The heavy hitters in this group are Switzerland and Japan, who have both been early movers in crypto regulation and are generally viewed as crypto-friendly jurisdictions. In Europe, the likes of Portugal, Slovenia and Liechtenstein are worth highlighting for their favourable tax policies for crypto. Some countries have embraced crypto in other ways. Ukraine, for example, raised $100 million in crypto donations for the war effort. Meanwhile, the Central African Republic caused a regional stir by announcing bitcoin as legal tender (however, details remain scarce). A significant new entrant into this category is the United Arab Emirates which has recently created the Virtual Assets Regulatory Authority “VARA”, as part of the vision to become a leading jurisdiction for crypto. This has already attracted large crypto firms such as Three Arrows. Watch this space...
There's only one country in this category and it’s El Salvador, which became the first country to make bitcoin legal tender in June 2021. Following the legislation, the country has purchased over 2,301 BTC and announced the issuance of $1 billion Volcano Bonds - which will be used to finance bitcoin miners and build a “Bitcoin City” powered by geothermal energy. Other countries are certainly watching the situation carefully and the country's president, Nayib Bukele, has his eyes set on orange pilling a few of them, recently hosting a “Davos for Bitcoin” with over 40 countries represented.
So what next?
In the US, EU and orbiting states I expect the conservative stance to remain, with crypto further shoehorned into existing securities and payments regulation. In China, the focus will be the state’s own central bank digital currency and the authoritarian control it brings. This will leave no room for bitcoin. The most interesting areas to watch will be ambitious countries that sit midway between these two axes of power. In the Middle East, the UAE could well become a regional crypto powerhouse. In Asia, I expect India’s position on crypto to become increasingly progressive. In Central and South America I would not be surprised to see another country follow El Salvador’s lead and integrate bitcoin into their economy. Although whether history remembers El Salvador’s Nayib Bukele as a visionary or villain will likely be determined by the price of bitcoin over the next 24 months.
And that's it! Below is the full country list and here’s a link to the underlying data that I compiled. Feel free to use and share. Comments for improvements very welcome.
The Full List
Algeria, Bangladesh, Bolivia, China, Iraq, Nepal, North Korea.
Benin, Burkina Faso, Burundi, Cambodia, Cameroon, Chad, Colombia, Côte d’Ivoire, Democratic Republic of the Congo, Ecuador, Egypt, Equatorial Guinea, Gabon, Guinea-Bissau, Guyana, Indonesia, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Liberia, Libya, Maldives, Mali, Morocco, Myanmar, Namibia, Niger, North Macedonia, Pakistan, Qatar, Republic of the Congo, Senegal, Tajikistan, Tanzania, Togo, Tunisia, Turkmenistan, Uganda, Vietnam, Western Sahara, Yemen, Zimbabwe.
2. Unregulated/Uncertain/Limited Info
Afghanistan, Angola, Armenia, Azerbaijan, Belize, Bhutan, Bosnia, Brunei, Bulgaria, Cabo Verde, Costa Rica, Cuba, Dominican Republic, Eritrea, Ethiopia, Fiji, Ghana, Guatemala, Guinea, Haiti, Honduras, Hungary, Jamaica, Kenya, Latvia, Lebanon, Lesotho, Macao, Madagascar, Malawi, Mauritania, Mexico, Moldova, Mongolia, Mozambique, Nigeria, Oman, Papa New Guinea, Paraguay, Peru, Russian Federation, Rwanda, Saint Lucia, Samoa, Saudi Arabia, Sierra Leone, Somalia, South Sudan, Sri Lanka, Sudan, Suriname, Swaziland, Syria, Turkey, Venezuela, Zambia.
3. Conservative Regulation
Albania, Argentina, Australia, Austria, Bahrain, Belgium, Botswana, Brazil, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, French Guiana, Germany, Greece, Greenland, Hong Kong, Iceland, India, Iran, Ireland, Israel, Italy, Laos, Lithuania, Luxembourg, Malaysia, Montenegro, Netherlands, New Zealand, Nicaragua, Philippines, Poland Republic of Serbia, Romania, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Taiwan, Thailand, United Kingdom, United States.
Anguilla, Antigua & Barbuda, Bahamas, Belarus, Bermuda, Cayman Islands, Central African Republic, Georgia, Gibraltar, Grenada, Guernsey, Isle of Man, Jamaica, Japan, Jersey, Liechtenstein, Malta, Mauritius, Monaco, Norway, Palau Panama, Portugal, Puerto Rico, Saint Kitts and Nevis, Slovenia, Switzerland, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Vanuatu.