Cryptocurrency is a digital currency whereby the generation of units and transfer of funds are controlled by encryption techniques. Cryptocurrency is a decentralized asset operating independently of a central bank of any given country. The market and regulation of cryptocurrencies vary in different countries based on specific laws imposed by their governments. The cryptocurrency friendly countries have favorable features such as quality technology that facilitate growth and spread of all virtual currency businesses. The following are cryptocurrency-friendly countries:
The Financial Supervisory Authority (FSA) in Denmark declared that cryptocurrency is not regulated by any country and thus it will not control its use within the territory of Denmark. In 2013, the FSA stated that individuals operating cryptocurrency related businesses will not be controlled because such business does not descend under its financial regulatory authority. The principal legal adviser of the FSA stated that Denmark will consider changing existing financial laws to cover trading of cryptocurrencies. Such non-interference with cryptocurrency activities implies that it is safe to invest and mine these coins in Denmark at this point in time. It has even been said that Denmark wants to use blockchain and cryptocurrencies to fight for human rights.
Japan is well recognized to be a cryptocurrency-friendly country, trading a very large volume of cryptocurrencies compared to other countries. In 2014, following a sequence of questions asked concerning cryptocurrency, the Japanese government responded by encouraging treatment of bitcoin and other currencies as legal. In May 2016, Japan enacted a detailed regulation recognizing bitcoin and other cryptocurrencies as means of payment that are not “authorized currency” under Japan Payment Services Act. The current financial instruments and banking Act in Japan does not prohibit securities companies and banks from trading bitcoins. Even though bitcoins may be subjected to taxation, there are no laws restricting legal entities or individuals from using bitcoins as a medium of exchange.
Japan is ranked among the safest countries to trade cryptocurrencies. Hirosaki is openly accepting cryptocurrency donations from international individuals, therefore attracting more investors and traders to the country.
This Western European country is known for having a Bitcoin embassy located in Amsterdam. The key objective of this embassy is to spread the use of cryptocurrency to all people living and visiting the Netherlands. The financial authorities in the Netherlands do not regulate or prohibit trading bitcoins. There are numerous bitcoin restaurants and coffee places that allow customers to make payment using bitcoins. The government in Netherland has not taken any restrictive measure towards regulation and operation of Bitcoin, even though it’s national bank had earlier warned against trading cryptocurrencies.
The government of United Kingdom stated that the operations of Bitcoin are unregulated at both national and international levels. For purposes of GST/VAT, cryptocurrencies will be treated as a foreign currency. Because cryptocurrency exists as private money, it implies that no tax will be imposed when transacting with other currencies, such as dollars and euros. The cryptocurrency trading and it’s related business activities are completely legal in the UK. After cryptocurrency trading, the regulatory authority in the United Kingdom recognizes profits and losses obtained as subject to capital gains tax. As a result of this acceptance, Investing and Mining cryptocurrency is legal and safe business to operate in the United Kingdom.
On the other hand…
There are other countries whereby operations such as mining and investing cryptocurrencies has been officially banned by the government. In these countries, trading any cryptocurrency such as Bitcoin, Ethereum and Litecoin is forbidden and punishable by law. The following are among the countries whereby cryptocurrency is banned:
In 2017, the Moroccan government outlawed bitcoin operations after a digital services company known as MTDS declared that it will be accepting bitcoin for its services in Morocco. After five days, the exchange office warned that strict fines and penalties will be imposed to anyone found transacting bitcoin within Morocco. The monetary authorities also warned the general public against the risks associated with using bitcoin as a mode of payment, such as financing terrorists and money laundering among other outlawed activities.
In mid-2014, the Ecuadorian government prohibited recognition of all cryptocurrencies within its territory. The National Assembly issued an official statement banning the operation of digital currencies used in performing various business activities. The assembly added that the country recognized the local currency controlled by the government. The government also established electronic money tied closely to the local currency to help supplement the numerous online businesses. The banning of cryptocurrency in Ecuador was aimed at reducing competition to the existing Sistema de Dinero Electronico, which is a digital money operated using the blockchain technology by the government.
In 2014, the Central Bank of Bolivia declared both mining and investing in cryptocurrencies within Bolivia as illegal and punishable by law. This country has occasionally punished different investors charged with mining and trading of cryptocurrencies.
In 2017, Nepal Rastra Bank declared the trading of cryptocurrencies as illegal and as a result arrested various bitcoin traders the same year. Trading cryptocurrency within this country has occasionally attracted jail terms and fines to those involved.
In 2013, the United States categorized cryptocurrency as a decentralized digital currency. In 2015, The Commodity Futures Trading Commission sorted cryptocurrency as a commodity while International Reporting Standards perceive cryptocurrency as a property for tax purposes. The standing point of United States support operations such as mining, investing and trading of Cryptocurrencies.
The United States is recognized as the top nation with a large number of cryptocurrency traders and facilities such as Bitcoin ATMs worldwide. In the US, the operations of cryptocurrency vary in different states with Tennessee, Montana, Texas and South Carolina having favorably regulation to support cryptocurrency trading and other states such as Georgia, Washington, and Hawaii which have regulations that do not favor the trading of these digital currencies.