Bybit Learn
Bybit Learn
Apr 6, 2022

12 Most Crypto-Friendly Countries for Crypto Investors and Traders

Cryptocurrency has changed the way we send and receive payments, providing lowered transaction costs, virtually instant payments, reduced risks, and unparalleled accessibility — even for those who are unbanked. While not every jurisdiction has made the adoption of cryptocurrency a priority, a few countries have gone above and beyond, not only taking steps to legalize cryptocurrency but even nurturing a crypto-friendly climate designed to encourage innovation and investments in the world of digital assets. 

If you’re an avid crypto investor or trader, these most crypto-friendly countries could be perfect for you as they embrace the inherent volatility of cryptocurrencies. From Singapore to the Netherlands, these are among the most Bitcoin-friendly countries in the world.

What Is a Crypto-Friendly Country?

A crypto-friendly country can be defined as one that actively creates a legal framework in which cryptocurrency can thrive, while boosting consumer confidence and reducing the risk of fraud.

While many countries are scrambling to better accommodate the rapidly evolving world of decentralized finance, some have quickly become frontrunners. These countries have stepped up to support the use of digital assets — much like fiat currency, for example — supporting a variety of digital payment options, or updating and outlining legal definitions to ensure they apply equally to both fiat and cryptocurrencies.

The best countries for crypto taxes aren’t simply expanding definitions and access to cryptocurrency users and providers, but are also actively encouraging the use of cryptocurrency. Bitcoin-friendly countries do this by supporting crypto-friendly tax laws, such as minimizing or eliminating the taxes on cryptocurrency when trading or staking cryptocurrency, or when buying or selling crypto or digital assets. Through such policies, these most crypto-friendly countries reward such investing or trading behavior by creating a less tax-heavy environment.

Which Countries Are Most Crypto-Friendly?

As our world becomes increasingly connected and turns toward digital solutions to everything from communication to currency, countries that adopt forward-thinking policies will pave the way for emerging and developing technology — promoting more opportunities for entrepreneurs, investors and consumers. At the end of the day, this is what makes these 12 countries the most Bitcoin-friendly countries in the world.

1. Singapore

is recognized as one of the world’s most crypto-friendly countries, and has achieved this reputation with good reason. As a highly developed and business-friendly economy, the policies in play have been designed to help entrepreneurs, start-ups and multinational corporations grow and flourish. The nation has developed a strong system of laws to support and encourage an equally thriving crypto ecosystem. In doing so, it has attracted investors and organizations, making it powerfully attractive to crypto investors, traders and organizations — and one of the best countries for low crypto taxes.

The Monetary Authority of Singapore, the Asian fintech hub’s central bank, is developing a series of regulations designed to create a balanced system in which crypto can operate. This is not intended to regulate cryptocurrency heavily, but rather to prevent illegal activities such as money laundering. Singapore views crypto not as currency but as barter trades, and individuals holding the payment tokens aren’t required to pay capital gains taxes.

2. Switzerland

Switzerland was one of the initial shining stars in the world of cryptocurrencies. In 2018, Swiss banks were the first to allow crypto companies to open business accounts, which was a big step in encouraging legitimate uses of cryptocurrency and reducing fraud. Today, Switzerland classifies cryptocurrency as an asset, and some locations even consider Bitcoin as legal tender, making it one of the most Bitcoin-friendly countries.

Each Swiss canton (or region) has its own regulations and legal definitions surrounding cryptocurrencies, but most are highly crypto-friendly. Zug has become known as “Crypto Valley,” thanks to its numerous crypto entrepreneurs, start-ups, enterprises, shops and investors. The Swiss banking environment minimizes risk while maximizing privacy, which transfers to crypto investors as well. It’s this dedication to embracing cryptocurrencies that earns Switzerland its title of one of the world’s most crypto-friendly countries.

3. The Netherlands

The Netherlands follows the standards of the international Financial Action Task Force, or FATF, not adding any unnecessarily burdensome regulations against cryptocurrency. This makes it one of the friendliest countries when it comes to cryptocurrency, which is currently regulated by De Nederlandsche Bank NV (Dutch National Bank). Authorities hold a lenient attitude toward crypto, believing that it has the potential to boost the country’s economy. Because of this, the population uses cryptocurrency with confidence.

The government is not only taking a largely hands-off approach, but is actively supporting blockchain projects with a special research unit designed to determine if blockchain technology could be made more sustainable from an environmental point of view. This makes the Netherlands one of the more advanced countries when it comes to attitudes toward cryptocurrency. Such behavior positions them as a leader in the field, and makes them one of the most crypto-friendly countries.

4. El Salvador

El Salvador is not merely taking a hands-off approach to Bitcoin and other cryptocurrencies. The country has become actively involved in the market, with President Nayib Bukele proposing bonds backed by cryptocurrency. Recently, El Salvador made headlines when it became the first country to adopt Bitcoin as legal tender alongside the U.S. dollar, which was their national currency. El Salvador is crypto tax-free in that the country does not tax income or profit from crypto-related investments or trades. As a Bitcoin-legal country, it’s a top destination for crypto investors and users.

Bukele’s proposed bond launch was initially slated for March 2022, but has been delayed due to the conflict in Ukraine, as well as market volatility. However, Bitcoin remains enormously popular in El Salvador, where many people lack access to traditional banks and rely on cryptocurrency as an alternative. El Salvador maintains low crypto taxes, making it one of the most crypto-friendly countries in the world.

5. Vanuatu

This little island-state in the Pacific has a well-deserved spot on our list of Bitcoin-friendly countries after its recent unveiling of Satoshi Island, a private crypto utopia. As the first country that will accept Bitcoin payments for issuing citizenship, Vanuatu foresees Satoshi Island as a vibrant tourism opportunity, allowing it to attract new people and investments to their country.

Satoshi Island will not only become a tourist hot spot, but a place to live with sustainably built homes and NFT-represented ownership. This undoubtedly puts Vanuatu on our list of the most crypto-friendly countries. However, the country is largely keeping its plans under wraps until its government is ready to unveil their vision for a crypto tax-free paradise.

6. Germany

Unlike other most crypto-friendly countries on this list, Germany is one of the few countries that is already crypto tax-free. Unlike much of the European Union, Germany encourages individual investors to hold onto their crypto earnings by exempting Bitcoin and other cryptocurrencies from capital gains taxes — as long as they’re held for at least one year. Funds that are exchanged before a year has elapsed are still tax exempt if the profit is less than €600. In addition, companies are still subject to the same taxes for crypto gains that they would pay for other incomes.

The laws in Germany — especially pertaining to taxes — have made it one of the most Bitcoin-friendly countries, and nearly half of Germans invest in cryptocurrency today. More than a third of the population has an even longer history of investing in cryptocurrency, and demand remains high. Germany has positioned itself as an EU leader in the realm of crypto, earning a well-deserved spot on our list of Bitcoin-friendly countries.

7. Malta

Malta is a small country, but in the world of cryptocurrency, it’s a major player. Located in the Mediterranean, it’s home to both blockchain projects and exchanges, including Binance, offering both a strategic location and a friendly regulatory environment. Malta is part of the European Union, so crypto projects based here can operate anywhere in the EU.

Since 2018, Malta has been trying to position itself as one of the world’s most crypto-friendly countries by working to attract more crypto businesses and creating a “digital island.” As one of the top Bitcoin-legal countries, it attracts crypto investors and innovative thinkers with regulations designed to discourage fraud, without impeding healthy growth and expansion. So far, their strategy has worked, attracting billions in crypto investments to their shores. Today, Malta is considered one of the best countries for crypto taxes. It offers rich benefits for residents, companies and foreign entities involved in decentralized finance.

8. Cyprus

In 2018, Cyprus — along with seven other members of the European Union — signed a declaration to collaborate and promote blockchain technology. Since then, the little island nation in the Mediterranean has been recognized as one of the most crypto-friendly countries in the world, and has made great leaps in the realm of Bitcoin-legal countries. Although it doesn’t regulate cryptocurrency, the Central Bank of Cyprus has issued a series of official guidelines intended to protect investors and minimize the risk of losses associated with fraudulent activity. Furthermore, the Cyprus Securities and Exchange Commission has established an Innovation Hub to promote and maintain the open sharing of knowledge.

Currently, funds earned through initial coin offerings are taxed as income, but Cyprus' corporate tax rate is comparatively low. Furthermore, the country has no mining restrictions, reporting requirements or burdensome legalities for cryptocurrency estates, making it an attractive country for cryptocurrency holders and users and earning it a spot on our list of best countries for lower crypto taxes.

9. Bermuda

Bitcoin-friendly Bermuda signed the Digital Asset Business Act in 2018. By doing so, it became one of the most crypto-friendly countries known to investors, creating a legal framework in which individuals and entities could buy, sell and invest cryptocurrency and other digital assets and operate cryptocurrency exchanges or payment services. Bermuda is crypto tax-free, which means that it does not currently tax income or capital gains, making it even more attractive to digital enterprises. Continuing with its forward-thinking action, in 2020 the Bermuda Stock Exchange approved the Hashdex Nasdaq Crypto ETF, one of the first Bitcoin exchange-traded funds, which was then launched in February 2021.

10. Portugal

As far as the best countries for crypto taxes are concerned, Portugal ranks as one of the top few because it treats cryptocurrency not as an asset but as any other legal tender. This means that most transactions are crypto tax-free, and only income related to professional cryptocurrency activities is taxed. This approach makes Portugal one of the world’s most Bitcoin- and crypto-friendly countries. The Portuguese government also allows employers to pay wages using cryptocurrency, and makes it easy to purchase crypto on a variety of platforms.

To benefit from these generous policies, crypto holders do need to be residents or citizens. However, Portugal offers a Golden Visa Program that simplifies the process, allowing people to become residents through investment.

11. Slovenia

Slovenia is currently in the process of creating clearer tax laws for digital assets. As of now, however, this small European country does not view capital gains on cryptocurrency as income, which means that individuals are not taxed when selling Bitcoin or other cryptocurrency. A recently proposed law will exempt up to EUR 10,0000 of cryptocurrency income annually, and tax any excess at a 10 percent rate. While Slovenia is not crypto tax-free, it’s still one of the most crypto-friendly countries when it comes to crypto taxes, thanks to its low tax rates and generous policies.

As one of the top Bitcoin-legal countries, Slovenia focuses most regulations on corporations and businesses rather than individuals. Businesses and ICOs may be subject to corporate income taxes. Cryptomining may also be subject to taxation.

12. Belarus

Belarus hopes to make the top spot on the list of Bitcoin-legal countries. In 2017, President Alexander Lukashenko signed legislation to legalize cryptocurrency and exempt both individuals and businesses from taxes on crypto earnings until 2023, at which time the law would be reviewed and either renewed or updated as needed. Investments and mining income were also designated as crypto tax-free. However, with the signing of the law, capital gains were also specified as crypto tax-free, making Belarus one of the most lenient countries for crypto taxes in the world.

The Bottom Line

While cryptocurrency is legal for us in much of the world, legality alone is not enough to make a country crypto-friendly. Bitcoin-legal countries offer access, but the most crypto-friendly countries go a step further with generous tax laws and a regulatory environment promoting innovation, encouraging adoption, and ensuring access especially among the unbanked and the general public. As more countries adopt cryptocurrency, more of them will adapt to the ever-changing needs of an evolving world.