These five countries have led the way in driving cryptocurrency and blockchain adoption in 2020.
As the use of cryptocurrencies continues to spread around the world, a number of countries have established themselves as leaders in adoption.
COVID-19 has dominated 2020, and the effects of the ongoing pandemic have stifled many economies. However, the cryptocurrency space has enjoyed a year of resurgence that has seen decentralized finance become a major trend, while Bitcoin (BTC) has finally surpassed its former all-time high of 2017.
It is worth noting that governments, policymakers and financial regulators have become far more clued-in on cryptocurrencies and blockchain technology over the past two years. This has lent a hand to the ongoing development of the space.
There are, however, a few standout countries that continue to lead the way in creating environments that foster the development and use of cryptocurrencies. Let’s take a look at the top five friendliest countries to crypto and blockchain of 2020.
Switzerland (canton of Zug)
Zug, the small administrative area that has become known as the “Crypto Valley” of Switzerland, is certainly living up to that moniker. Home to around 120,000 people, the canton is also regarded as a stronghold for businesses due to its status as a tax haven, with one of the lowest tax rates in Switzerland. The area is a technology hub, specializing in medical development and the production of electronic components.
The Swiss Community website also notes that wholesale trade is another major industry in the canton of Zug, with a heavy focus on commodities. As a result, the area has attracted big corporations, financial service providers, as well as IT, architectural and engineering firms.
Zug’s moniker as the “Crypto Valley” of Switzerland is primarily due to the Crypto Valley Association’s formal establishment in the region in 2017. The organization has played its part in driving the adoption of cryptocurrencies and blockchain technology in Switzerland.
In September 2020, it was announced that residents of Zug would be able to pay taxes using cryptocurrencies, starting in February 2021. Companies and individuals will be able to pay up to 100,000 Swiss francs ($111,258) of their tax liability in cryptocurrency, with local cryptocurrency exchange Bitcoin Suisse AG facilitating the exchange to fiat currency and its transfer to the government.
On a macro level, Switzerland’s parliament adopted important financial and corporate law reforms in September 2020 that incorporated new legal frameworks for the cryptocurrency and blockchain space.
The laws included guidelines for the exchange of digital securities as well as legal processes for reclaiming digital assets from companies that file for bankruptcy. Legal requirements for cryptocurrency exchanges were also outlined — primarily focusing on introducing AML and KYC rules in an effort to reduce money laundering using cryptocurrencies.
Following that, the Swiss Federal Department of Finance began a public consultation on a proposed blanket ordinance that will take these legislative amendments into law on a federal level. Various Swiss cantons, businesses and parties involved in the blockchain space will be consulted up until February 2021. It’s envisaged that these amendments will then be enforced on a federal level in August 2021.
All of this work in 2020 has laid a strong foundation for the cryptocurrency and blockchain space to continue to thrive in Switzerland for years to come. According to Swiss Info, there are over 900 blockchains and cryptocurrencies operating in Switzerland, supporting around 4,700 jobs.
Singapore
Singapore has established itself as a hub for cryptocurrency exchanges, firms and blockchain enterprises in the Asia–Pacific region.
In an in-depth article published in the Asia Times, Wirex communications manager Lottie Wells provides a comprehensive breakdown of how the country has approached the burgeoning sector, starting with its proactive regulatory stance led by the Monetary Authority of Singapore.
The regulatory body’s Payment Services Act came into effect in January 2020, which provides clear-cut rules and regulations for cryptocurrency exchanges and service providers to operate in the country. Wells described the act as an important factor for the industry’s foothold in the country:
“The regulation and corresponding licence provides a progressive framework that regulates payments systems and digital payment token services in Singapore, allowing certain cryptocurrency businesses to continue operating in the country.”
The MAS also launched its blockchain payments platform called Project Ubin in July for commercial integration. The project took place over five years and explored and developed a blockchain-powered system for clearing and settlement of payments and securities. The MAS indicated that it will continue to use the prototype as a test network for future collaboration with other sovereign central banks as well as the financial industry.
A number of industry participants in Singapore told Cointelegraph earlier this year that the completion of the project and its availability for public use could play a role in the ongoing development of cross-border, interoperable blockchain systems.
Data also backs up the assertion that Singapore is becoming an increasingly attractive home for blockchain and fintech companies. According to the FinTech Times Blockchain Map, 234 blockchain companies are now operating in the country, having added 91 newcomers in 2020.
Singapore also plays host to a number of major events and conferences including, Singapore Blockchain Week and the Singapore FinTech Festival. The latter attracts major participants from the world of finance, IT and banking — and some of the world’s brightest minds in the blockchain and crypto space.
Last but not least, Singapore is one of a handful of countries that has zero capital gains tax on cryptocurrency income. All of this makes Singapore a crypto-friendly country that is attracting top firms to a location that has long been known as a financial and economic center of the Asia–Pacific region.
Japan
Harkening back to the days of the now-defunct Mt. Gox exchange, Japan has been home to a healthy cryptocurrency trading community. This seemingly spurred on Japan’s Financial Services Agency, or FSA, to draw up regulations that were intended to provide stability and security for traders in the country, while snuffing out illegal operators and nefarious actors. The use of cryptocurrencies as a means of payment is legal, although “crypto assets” are not considered legal tender.
As a result, Japan has enforced strong regulatory parameters for the cryptocurrency industry, which the majority of exchanges and other crypto-related companies have welcomed. The latest of these regulations came into effect in April 2020, which require cryptocurrency exchanges to obtain licenses to operate in the country. Some major hacks have also led to the creation of policies that require exchanges to protect their customers’ cryptocurrency holdings in cold wallets.
These amendments to the Payment Services Act and the Financial Instruments and Exchange Act were largely welcomed by a number of exchanges that were contacted by Cointelegraph Japan. There was an over-arching belief that clear-cut rules and regulations would benefit the space and potentially drive institutional investment into cryptocurrencies.
A number of the country’s biggest cryptocurrency exchanges also formed a self-regulatory body called the Japan Virtual and Crypto Assets Exchange Association, which essentially sees the industry governing itself. According to the organization, 24 exchanges are currently licensed in Japan.
The Japanese FSA also launched its global Blockchain Governance Initiative Network in March 2020, which is aimed at driving development of the blockchain sector through open-source information sharing among a wide variety of stakeholders in the space.
With a highly regulated but crypto-friendly environment, Japan now has 430 crypto and blockchain-related companies operating in the country, which was a reported 30% increase from the amount of companies registered in 2019.
South Korea
South Korea is another Asian nation that has developed a thriving cryptocurrency community. Its traders’ appetite for Bitcoin in years past that has led to the famous “kimchi premium,” but this has since waned after the country began imposing strict regulatory measures on the cryptocurrency space.
The South Korean National Assembly passed new legislation in March 2020 that finalized the framework for the regulation and legalization of cryptocurrencies and exchanges. While the new law will only have been fully implemented by March 2021, blockchain and cryptocurrency companies will have a six-month period to meet the stipulations set out in the new legislation.
Cryptocurrency exchanges, funds, wallet service providers, companies conducting initial coin offerings and other industry participants will need to meet some fairly strict financial reporting requirements. This includes the mandatory use of real name bank accounts, enforcing AML/KYC requirements for customers, and the use of certified information security management systems.
The result of these initial regulations has ended up creating a progressive attitude to promote the development and usage of blockchain technology and cryptocurrency in the country. In August 2020, the office of the president released a statement on its efforts to combat the ongoing economic effects of the COVID-19 pandemic. Part of its scheme to reinvigorate its local economy is to foster blockchain technology and the use of cryptocurrencies — with plans to invest over $48.2 billion in blockchain and other Industry 4.0 technologies by 2025.
The country also instituted special regulation-free zones in various cities across the country in 2019, with Busan becoming a blockchain sandbox for the country. This laid the foundation for some ambitious plans this year, including giving citizens access to government services using a blockchain-based identification app. The city also rolled out cryptocurrency-payment support for various services at its most popular beaches. A private consortium of companies in Busan also indicated that it will turn to blockchain technology to power a planned platform for medical tourism.
More than 1 million South Koreans have also shifted from holding physical driver’s licenses to a digital, blockchain-based alternative in a government-sanctioned project that only launched in May 2020. South Korean drivers could also be passing through blockchain-powered toll gates in the next few months, with a local bank and the Korean expressway corporation launching the project in August. Four of South Korea’s biggest banks are also planning to offer cryptocurrency custody services, as reported by Cointelegraph earlier this year.
Cryptocurrency exchanges and individual users also breathed a sigh of relief in December, as the government decided to postpone a new tax regime for the industry until 2022. South Korean legislators had finalized new tax rates for cryptocurrency trading in July, which will see investors in the country pay a 20% tax rate on income from crypto trading worth more than 2.5 million won ($2,260) a year. Various local industry participants played a role in the postponement after lobbying against the new tax regime being implemented this year.
The sheer amount of progress made in the blockchain and cryptocurrency space in South Korea has reaffirmed the country’s spot as a global leader in 2020.
United States
The United States makes this list not for its regulatory measures but for the role that the traditional financial sector has unwittingly played in the promotion of cryptocurrency use this year.
Earlier this year, the U.S. Commodity Futures Trading Commission made it clear that Bitcoin and Ether (ETH) are classified as commodities in the eyes of the state. With regulatory parameters pretty clear, both have been actively traded and accumulated, and healthy futures markets and other products have been developed as a result.
On the flip side, the U.S. Securities and Exchange Commission dropped a bombshell on Ripple and its XRP token in December, filing a lawsuit against the company for allegedly carrying out an unregistered securities offering over the past few years. Ripple CEO Brad Garlinghouse has vowed to fight the SEC in court and went as far as labelling the allegations against Ripple and XRP as an attack on the entire cryptocurrency industry.
The situation is a stark reminder to the blockchain and cryptocurrency space that regulators in America are keeping a keen eye on initial coin offerings and fundraising initiatives that could fall under the jurisdiction of commodities and securities laws.
Brushing aside regulatory concerns, 2020 has been a massive year for Bitcoin and Ether in particular in the U.S., as a number of industry participants and big players from the traditional business and finance sphere have aggressively entered the crypto markets.
Business intelligence firm MicroStrategy grabbed headlines for its decision to make Bitcoin its primary treasury reserve asset this year. Its CEO, Michael Saylor, has been especially bullish about the cryptocurrency’s role in offsetting potential fiat currency devaluation due to ongoing fiscal stimulus measures by the U.S. Federal Reserve.
MicroStrategy has bet big on Bitcoin, having bought over $1 billion worth of the cryptocurrency in the past five months, which was facilitated by American exchange Coinbase. The firm also completed a $650-million private bond sale in December that will be used to buy more Bitcoin. The firm now holds 70,470 Bitcoin, according to Saylor.
A number of major asset management firms has also climbed into the cryptocurrency markets. The Grayscale Bitcoin Trust had its biggest year to date and now holds over $10 billion worth of BTC; One River Digital is aiming to own over $1 billion worth of Bitcoin and Ether in 2021; and life insurance provider MassMutual purchased $100 million of Bitcoin to achieve “meaningful exposure to a growing economic aspect of our increasingly digital world.”
Global payments giant PayPal also played a role in the resurgence of Bitcoin in 2020 as it announced that it would offer cryptocurrency custody and payment support through select vendors that use the platform. The move essentially takes cryptocurrency toward real mainstream use — considering that the platform has over 340 million users worldwide.
Coinbase also revealed in December that it is planning an initial public offering that will take the company public after the SEC completes its review process of the filing. The move is a major one, considering that the world is yet to see one of its major cryptocurrency exchanges publicly traded.
With a healthy cryptocurrency trading environment and a variety of cryptocurrency-focused financial products such as futures available to the public, the U.S. has been a driving force for cryptocurrency adoption and use in 2020.
