The Most Crypto-Friendly Countries

The emergence of Bitcoin in 2009 initiated a new industry that has changed the way we send and receive payments. Cryptocurrencies allow for lower transaction fees compared to traditional banking. In most cases, crypto transactions are fast and secure. Moreover, some digital coins can protect other assets against inflation. But more importantly, cryptocurrencies give access to financial services to anyone in the world, even to unbanked people.

With so many benefits, some countries have taken steps to make the adoption of cryptocurrencies easier. In these countries, there is a friendly climate that encourages the use of crypto as well as investments in these digital assets. Some of these countries have even made cryptocurrencies legal tender. However, not all jurisdictions are taking such a crypto friendly approach. So, if you are looking for a place to trade cryptocurrencies without any objections, we invite you to check the following list of the most crypto friendly countries in 2022.

What Are the Most Crypto-Friendly Countries?

To create a list of crypto friendly countries, we first must establish the criteria to measure the friendliness of a given country. We can consider two criteria: the degree of regulation and the degree of taxation. We have compiled the following list of top crypto countries by assessing these two factors.

Portugal

Portugal is one of the most crypto-friendly countries. Although this EU country taxes income in cryptocurrency, individuals who profit from crypto trading do not have to pay taxes on their capital gains. Changing your crypto assets to fiat money is not subject to taxes either. Because of this soft stance toward crypto investments and trading, Portugal has become essential to this industry. Foreign investors wishing to move to this country can apply for a Golden Visa, which allows obtaining a residency permit through investments.

Luxembourg

Luxembourg is another EU country with friendly policies toward cryptocurrencies. In this country, cryptocurrencies are legal currencies that can be used and traded without any restrictions within its territory. Strictly, Luxembourg does not have explicit crypto rules. However, the legislation takes a progressive approach. The Commission de Surveillance du Secteur Financier (CSSF) regulates crypto exchanges in Luxembourg.

Switzerland

Many regard Switzerland as the best country for crypto. In this European country, cryptocurrencies are considered assets. You do not have to pay capital gains taxes if you hold or trade cryptocurrencies in your own account as an individual trader. However, you must pay business income tax if you trade crypto through authorized professional traders.

The first place in the world where Bitcoin payments were accepted in 2016 was Zug, a Swiss city. Today, Zug is known as the “Crypto Valley,” a hub for blockchain startups, crypto-related shops, etc. Also, Switzerland was the first country to allow crypto companies to open business accounts in 2018. Currently, Bitcoin is legal tender in some locations in this country.

Germany

German law does not treat cryptocurrencies as a currency or commodity but as private money. As such, you will not be taxed for holding crypto for more than 18 months, regardless of the amount you own. However, you must pay taxes if you trade large amounts of cryptocurrency. Despite this inconvenience, Germany is a crypto-friendly country for individual investors.

The Netherlands

The Netherlands adheres to the Financial Action Task Force (FATF) standards, meaning there are no unnecessary, burdensome regulations against cryptocurrencies in this country. Dutch authorities hold a positive attitude toward cryptocurrencies since they believe these assets could help improve the country's economy. Moreover, the Dutch government actively supports blockchain projects to develop more environmentally-friendly crypto technology.

Estonia

In Estonia, cryptocurrencies are legal. This European country has become a hotspot for the crypto industry, with many firms operating in its territory. The LHV Bank in this country was among the first financial institutions to embrace blockchain technology. Estonia taxes transactions with cryptocurrencies in the same manner as any other corporate activity.

Slovenia

Slovenia is the most Bitcoin-friendly country in Europe. The government officially encourages the use and development of cryptocurrencies. As a result, this country has the highest market capitalization of blockchain projects per capita. Crypto investors do not have to pay capital gains in Slovenia.

Singapore

This Asian country is well-known as a fintech hotspot. So, it is not surprising Singapore is also a crypto-friendly country. The authorities of Singapore supervise the crypto industry closely to prevent money laundering and other criminal activity. Yet, authorities also believe that technological innovation should not be hampered. Therefore, individual and corporate crypto funds are not taxed. However, corporations based in Singapore operating as crypto trading companies are subject to taxation.

Malta

Malta was one of the first countries to use cryptocurrencies, recognizing Bitcoin as a “unit of account, medium of exchange or a store of value.” The government has passed several crypto-friendly bills, turning this country into a haven for companies in the blockchain and cryptocurrency industries. For example, Binance relocated from Japan to Malta because of more favorable conditions in this European country.

Cyprus

This Mediterranean island is known as one of the most crypto-friendly countries. In 2018, Cyprus and seven other EU countries signed a declaration to promote blockchain technology. Although Cyprus does not regulate cryptocurrencies, the Central Bank of Cyprus has issued official guidelines to protect crypto investors and prevent fraudulent activity. Also, there are no restrictions on crypto mining in this country. Only funds earned through initial coin offerings (ICOs) are subject to taxation.

Canada

In this North American country, crypto businesses can operate without any objections. For instance, there are nearly 1,500 Bitcoin-friendly ATMs in Canada. The Canadian government has not enacted any law making cryptocurrencies illegal. However, this crypto-friendly attitude might not last long.

Panama

It is not a secret that some Latin American countries are tax havens. Panama is one such country and has recently become a crypto haven also. This country’s National Assembly passed a bill to regulate the usage of cryptocurrencies in April 2022. This bill allows citizens, banks, and legal entities to use Bitcoin and eight other cryptocurrencies as payment methods. However, the bill does not make it mandatory to accept crypto, meaning these digital assets are not legal tender. To ensure safe crypto transactions, Panama will launch an official digital wallet.

El Salvador

This Central American country occupies the top place in the list of countries implementing crypto regulations. In 2021, the government made Bitcoin a legal tender, meaning you can use this digital coin to pay for goods and services. Moreover, Bitcoin holders do not have to pay capital gains tax. The Salvadoran government has significantly invested in Bitcoin and plans on building the world’s first Bitcoin City.

Puerto Rico

Puerto Rico has always been attractive to American citizens because of its overseas territory status, resulting in the absence of federal income tax. Tax residents do not pay capital gains tax on their cryptocurrency holdings either. However, you must pay income tax for any cryptocurrency you buy before moving to Puerto Rico and becoming a resident.

Argentina

This South American country has the sixth-highest crypto adoption rate worldwide. More than 20% of the Argentinian population has owned or used cryptocurrencies. With such a sizable crypto-forward population, two of the largest banks in the country started to allow customers to buy crypto assets. Moreover, the government’s public financial services in Buenos Aires will accept crypto payments shortly.

The Bahamas

This Caribbean country has taken significant steps to move up the list of crypto-friendly countries. The Bahamas has traditionally had low taxation. Now, this country plans to launch a central bank digital currency (CBDC). Because of regulatory changes favorable to the crypto industry, the crypto exchange FTX moved from Hong Kong to Nassau in September 2021. Other blockchain and crypto companies will likely follow suit.

Vanuatu

This archipelago in the Pacific is one of the top Bitcoin-friendly countries. It has recently unveiled Satoshi Island, a private crypto utopia. Satoshi Island is expected to attract foreign tourists and investors looking for new opportunities. Residents of Satoshi Island will live in sustainable homes with NFT-represented ownership. Also, Vanuatu is the first country to accept Bitcoin payments to issue citizenship. Eventually, Vanuatu plans to become a crypto tax-free paradise.

Bermuda

Bermuda is another Caribbean country with a very lenient approach to financial regulations. There are no income or capital gains taxes for cryptocurrencies in this country. If you incur tax on another source of income, you can pay them with the stablecoin USDC.

How Is Crypto Taxed around the World?

As seen in the previous list, crypto-friendly countries have different tax rules and regulations for cryptocurrencies. What taxes apply to crypto holdings? In most cases, crypto assets are subject to one or two of the following:

• Income Taxes. These taxes apply to any earning in cryptocurrency. These taxes comprise crypto payments, mining rewards, staking gains, interest on crypto lending, etc.
• Capital Gains Taxes. If cryptocurrency is regarded as a capital asset, any profit earned through selling, trading, spending, or gifting crypto is subject to capital gains taxes.

Some lucrative activities can deplete your earnings quickly if you pay the two taxes above. For example, you usually earn and promptly sell crypto in day trading. In some countries, you must pay income and capital gains tax on the same crypto amount. This scenario is the worst case for traders and investors. That is why high-volume traders constantly look for countries with more favorable tax regulations regarding cryptocurrencies.

Crypto Tax-Free Countries

So, what is the ideal scenario for crypto trading and investing? Obviously, it is a place where one does not have to pay any tax for earning, holding, or trading crypto. The good news is that such countries exist. Below, we list the countries with no crypto taxes in 2024. However, remember that tax regulations regarding cryptocurrencies can change rapidly. You should consult a tax expert or financial advisor from the relevant country before you relocate or make a commitment.

El Salvador

El Salvador is at the top of crypto-friendly countries. It is also a tax-free country for cryptocurrencies. Crypto holders do not have to pay either income tax from payments in digital coins or profits from trading or other crypto-related activities.

Cayman Islands

The Cayman Islands have been a tax haven for many years. Now, this tax-free approach also applies to cryptocurrencies.

Bermuda

No income or capital gains taxes in Bermuda. All crypto transactions are tax-free in this Caribbean country.

Conclusions

If you plan to invest in cryptocurrencies or perform other lucrative activities with these digital assets, make sure crypto-related activities are legal in your country of residence. If so, you must check tax regulations to ensure you do not get into trouble with local authorities. To maximize your gains, you can hold your crypto assets and perform crypto-related activities in a crypto-friendly country. If possible, you can consider relocating to a crypto tax-free country. However, before you make any move, talk to a tax lawyer or financial advisor from the country you are interested in.

FAQs about Crypto-Friendly Countries

Which Country Doesn’t Tax Crypto?

As of September 2022, the countries that do not tax crypto are El Salvador, the Cayman Islands, and Bermuda. However, tax regulations can change rapidly.

Is Dubai Crypto Friendly?

Yes, it is. Dubai has a well-established regulatory framework for cryptocurrencies. Crypto investors can operate with legal certainty and without income taxes and reporting requirements.

What Country Has the Lowest Crypto Tax?

Except for tax-free countries, Germany has the lowest crypto taxes. But as said, tax regulations usually change rapidly. Hence, we recommend consulting a tax lawyer before committing.

Do You Have to Pay Crypto Taxes?

Depending on your country of residence, you might or might not need to pay crypto taxes. To avoid trouble with local authorities, checking tax regulations before performing any lucrative operation with cryptocurrencies is advisable. You can buy cryptocurrencies at competitive rates from LetsExchange.io. Our service is fast and reliable.

Disclaimer

Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.

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