Friendly European Countries in Crypto World

Each country has its own attitude and vision of the blockchain technology and cryptocurrency, for example, Singapore, the United Kingdom, the United States, Iran and Venezuela have a positive attitude and take many actions to introduce and use new technologies in practice, they also have commissions, rules and laws for sale and purchase of cryptocurrency. While Russia, Korea and Croatia are countries with a neutral approach, they are not yet sure how to regulate new technologies, but at the same time, citizens can sell and buy coins, and the state does not prohibit it. In the case of China, Ecuador, Kyrgyzstan and Bangladesh, the cryptocurrency was prohibited by the state, and any purchase or use of crypto is considered illegal and the owner must be liable. Therefore, we can divide countries into 3 categories, those who are tolerated crypto and blockchain technologies, those who banned and third ones partially on their way of legalizing cryptocurrency and blockchain technologies.

This article will shed a light on countries policy, to analyze different factors, such as who is the beneficiary from those changes. Startups, politics or contributors?

A WORLD OF CRYPTOCURRENCIES

The new technology has widened all over the nations and creates tools to access your wallet all over the world without of borders. Crypto users were able to detour countries national regulation, which brought many discussions among politicians and finance groups.

Picture — 1. Source: https://www.investinblockchain.com/blockchain-friendly-countries/

Cryptocurrency is moving ahead worldwide, from South & North America, Europe, Eurasia to East & South Asia, mostly we can say, all over the world now is under the influence of cryptocurrency and blockchain.

Since 2012 bitcoin and blockchain startups from 43 countries have received $1.55 B in equity funding. The US dominates in both bitcoin and blockchain projects, bringing up to $1B since 2012, accounting for 55% of total deals in the sector.

The UK is second in the ranking of attracting investment for 6% for the same period, Singapore for 3% and Japan, South Korea, China for 2% each, while remaining 37 countries share left 29%. In given below pic. — 2 is given a map with global bitcoin and blockchain companies done by CBinsights, where most 23 well-funded and notable companies are listed.

Worth to mention, governments toleration and adopting new law, networking with bank system, still have some difficulties for startups and contributors, each. Many banks currently only planning to work with cryptocurrency, such as Bitcoin, but not all coins. But, they can choose which coin they are going to exchange. Bitcoin is dominating coin, no other coins are exchanges by banks. For example, Hong Kong banks are generally unfriendly to all crypto things, while Japanese banks works only with Bitcoin. China is the country who banned all the blockchain projects, for example: ICO projects, access to exchanges, publishing any materials, advertisement.

Picture — 2. Source: http://cbi.vc/2muYad2

CRYPTO AND BLOCKCHAIN TECHNOLOGIES ADOPTING COUNTRIES

Now let’s look which country announced legal use of cryptocurrency. In given pic. — 3 below, it is given a world map colored green, pink, orange colors. This map was published July 2018 and shows latest updated information. The green color is presenting legalized policy states, while orange color shows countries, which is neutral on crypto, and pink color displays restricted law, which means it is illegal to use cryptocurrency.

Next paragraph will analyze 4 countries legal policy on cryptocurrency and blockchain.

1. SECOND BIGGEST INVESTMENT ATTRACTING COUNTRY IS UK

The BaaS (blockchain-as-a-service) in UK has already being used in order to keep track of disburse student loan grants and welfare paychecks. The government is continuously supporting various blockchain based technologies by funding on projects. One of areas where UK wants to use blockchain tools is health technology.

THE UNITED KINGDOM’S DEFINITION OF AN ICO TOKEN

With the likes of Switzerland and Malta setting firm and understandable definitions for crypto, ICOs and blockchain, the U.S. — as well as the United Kingdom — have far more ambiguous regulations about different aspects of the ecosystem, as they continue to decide how much, or little, they need to step in.
In the U.K., the FCA [Financial Conduct Authority] still does not regard cryptocurrencies to be a currency or a commodity under MiFID II. They do, however, admit that some firms will be regulated where they offer products or service which are caught under existing financial regulations — e.g., Bitcoin futures. Where firms offer ICO tokens, they also concede that some firms might be issuing a regulated security.

Among all the policies all over the world, there is not yet agreed crypto asset definition and behave. At least tax issue will be cleared and agreed universally, the competitive advantages between states and jurisdictions will emerge. They are now some global players, as Malta, Netherlands, Gibraltar which leading in offering guidance and regulations for crypto companies. In this frame the U.K. is still looking promising.

The United Kingdom has seen a similar development to that happening in Japan, with seven of the largest blockchain companies joining together recently to create a blockchain industry trade body in the U.K. known as CryptoUK.

UK FLYING THE FLAG OF ADOPTION

CryptoUK is the first self-regulating cryptocurrency organization in the U.K. and was created as a proactive way to circumvent any potential regulatory crackdowns on blockchain projects in the U.K. It has already released a Code of Conduct and seeks to promote industry best practices to make the U.K. a safe home for blockchain and cryptocurrency projects.

The intention at CryptoUK is to work together with U.K. government regulators to create a secure environment for both blockchain companies, and the people that invest in them. There is a focus right now on U.K. based blockchain startup companies and ensuring that their platforms are compliant with Know Your Customer and Anti-Money Laundering regulations.

U.K. financial institutions are governed by the Financial Conduct Authority (FCA), however current laws do not have cryptocurrency exchanges, brokers or businesses under the oversight of the FCA. This has left the cryptocurrency related business in a somewhat grey area that has left them with a great amount of freedom in the way they operate and conduct business. This laissez-faire outlook makes the U.K. a very attractive location for blockchain startups and even existing organizations.

The country recognizes that cryptocurrencies are rising and expanding. Because of this, the UK Treasury Committee decided to open a new inquiry into this technology back in February of this year. The goal was to explore the potential roles of cryptos within the UK. This includes all potential risks and opportunities for businesses, consumers, as well as the government itself. The potential impact of distributed ledger technology, or DTL, was also to be examined. The blockchain technology has started changing the world, and the UK government wanted to know its potentials as well.

2. BLOCKCHAIN ISLAND — MALTA

Malta is a Southern European island nation of an estimated 450,000 people. Malta is part of the eurozone and uses Euros as their currency.

Maltese economic minister wishes to Malta will be called “Blockchain Island”. So says the Parliament of Malta, which has long been working to cement the European island nations standing as pro-Bitcoin, and which passed three bills establishing a framework for blockchain technology in July 2018.
The benefit of Malta doing this is that it will open up their economy for further investment in a region where offshore investment, in general, is difficult. Malta’s banks have slowly been removing themselves as an offshore banking center, with many now refusing to accept foreign companies or even non-EU resident individuals for bank accounts. Now, Malta will offer crypto startups an established regulatory body along with low net corporate rates and the possibility for EU bank account opening.

The biggest indicator was probably when Binance, the world’s biggest cryptocurrency exchange. Since then, there has been an impressive level of growth for ICOs and blockchain projects. Other exchanges — including OKEx — have moved there, as well as Polish exchange BitBay. The positive regulations for virtual currencies are clearly being gratefully accepted, but even the smaller blockchain projects are cashing in too.
The Maltese government put forward a legal framework for distributed ledger technology (DLT) as of March 12, 2018, which included three crypto-positive bills. These include: Malta Digital Innovation Authority (MDIA) Act, Innovative Technology Arrangements and Services (ITAS) Act, and the Virtual Currencies (VC) Act.
The result of these positive pieces of legislation has seen a flood of interest in Malta as a premier destination for blockchain and ICOs.
Jonathan Galea, a lawyer in Malta, in his interview to Cointelegraph, stated what makes Malta different from other countries. In his opinion, the fact that the government, the opposition and all regulatory authorities are chasing one single vision: making Malta one of the leading countries in the space. With the ease of accessibility to top officials in relevant positions that are there to promote and aid business activities rather than to hinder it, makes Malta an attractive destination for all blockchain-related matters.

Virtual Financial Assets Act was creating the Fittest for classification of the various cryptocurrencies and tokens, the Malta Financial Services Authority took the lead in Europe. It is a positive signal not only for ICO startup groups but for investors.

The Maltese policy has been fostering growth and development in the crypto market. Putting protections in place to cover ICO participants and ensure a dramatic reduction in the stories of fraud and scams that have prevented many new adopters of crypto.”

3. EUROPEAN CRYPTO VALLEY — SWITZERLAND

This is another country which has the perfect regulatory and political support which will help blockchain based startups to evolve. Switzerland is home to hundreds of blockchain startups, mostly headquartered in the low-tax canton of Zug which called as “Crypto Valley”. It’s also attempting to become a “crypto nation” according to Switzerland’s economics minister. This place attracts a huge number of foreign investments and also the home of various blockchain based startups such as iProtus, Bancor, Melonport, ShapeShift and Status.

ICOs are also nothing new in Switzerland, as they have seen the Ethereum Token Generation Event back in 2014 and have been gaining experience ever since. Famous the Ethereum Foundation is based in Zug. Switzerland has become a hub for initial coin offerings, and the exchange Shapeshift also chose to incorporate in Zug several years ago. It is claimed that the influence of Nikolas Nikolajsen, founder of Bitcoin Suisse, drove the region to be an early pioneer in welcoming cryptocurrency businesses.

In July last year, Switzerland put in place options for companies that accumulated around $1 million in third-party funds to test out their innovative financial technology ideas without the usual regulation surrounding finance and digital currency.

Switzerland also claims that banking licenses would be re-evaluated in order to allow these companies earning less than $1 million to obtain licenses for depositing and allowing crowdfunding donations to be withdrawn over a period of 60 days rather than the previous seven days.
In the year since Switzerland started making life easier for blockchain and fintech companies, there has been a big boom in these innovative projects. Stephen Meyer has seen both the advantages and disadvantages of launching a blockchain project in the small European nation: “Switzerland has a very clear regulatory situation based on the Swiss financial authority FINMA’s ICO Guidance of February 2018. Also, one of the major benefits is the possibility of receiving an individual pre-ruling by FINMA. Every crypto team can describe its project, send it to FINMA and will usually receive within 4–8 weeks a clear statement whether regulatory provisions are applicable.
Instead of creating new blockchain-related legislation, Switzerland applies the existing regulatory framework, but with a flexible and principle-based approach.
It seems like Switzerland has a very tech-friendly approach in regulating the fintech companies, ICOs, and cryptocurrencies. The parliament is well aware of the phenomenon and urges the government not to miss the opportunity to be amongst the first countries to attract blockchain-related actors. The political stability of Switzerland makes it an ideal place to develop business in general.
With a look at what Switzerland is doing, and then seeing how other nations are trying to replicate and advance it, there is this feeling of competition. While both Malta and Switzerland are striving to make the most open and inviting environment for blockchain projects, there are other nations that realize the potential of the technology, but have strict laws governing finance and money, as well as securities.

4. BELARUS IS A SPECIAL ECONOMIC ZONE\

Belarus is an Eastern European nation of nearly 10 million people. The country’s economy is mostly manufacturing-based and uses Byelorussian rubles (BYR) as currency. The government has recently embraced cryptocurrency as part of its program to develop the IT sector and attract foreign businesses, investment and talent.

The Digital Economy Development Ordinance, signed by President Lukashenko in December 2017, lays out the country’s plans in detail. Note that these new rules governing crypto — perhaps the most progressive in the world — apply only to individuals or companies which are registered residents of the Hi-Tech Park.

This is a special economic zone located in the capital city of Minsk. While Western media is discernibly negative in its coverage of Belarus, perhaps due to the country’s close association with Russia, Belarus presents an interesting opportunity for the right type of Bitcoin business.

REGULATION OF TAXES IN BELARUS

Belarusian Taxes on Bitcoin Under the Ordinance, Belarus has waived all taxes on cryptocurrency transactions and income for five years (so until January of 2023). In other words, no taxation of mining, trading, or other business activities involving crypto. Bitcoin gifts and inheritances are also exempt from tax. Tax-free status applies also to business conducted with foreign countries.

The Ministry of Finance in Minsk has created new accounting rules which specifically address cryptocurrency. This brings some much-needed clarity to tax reporting. Government Stance on Bitcoin Businesses — The President of Belarus has put his name to a decree which fully legalizes blockchain technology within the country.

LEGALIZATION OF ICO AND MINING

All crypto-related business activities, including ICOs, exchanges, mining, smart contracts, etc. are now considered legal in the country. Note that cryptocurrency is not regarded as legal tender in Belarus, meaning there is no compulsion for any person or business to accept it in lieu of Byelorussian rubles. Foreign companies may take advantage of Belarus’s favorable policies by registering a company there, according to an article from January 2018).

Foreign IT specialists may stay in Belarus without a Visa for 180 days. Belarus’s Banking Sector views Bitcoin Given the legislation passed at the highest levels, banks in the country have no real choice but to fall in line. In July of 2017, the National Bank of the Republic of Belarus gave local banks the green light to use blockchain systems for “transmitting bank guarantees.” This appears to refer to a permission that blockchain to record credit agreements between banks and the state. The central bank has also revealed plans to apply blockchain technology in the management of Belarusian currency and stock exchanges.

CONCLUSION

In conclusion, there will be different bumps along the way of adopting and growing blockchain technology because as governments need to deal with the reality of decentralization and empowering population, but they should always concentrate on the big picture.

For now, many countries are working on the legalization of cryptocurrency and blockchain technologies. Technologies are more stable and systematic. It is just matter of a time when will be legalized and received official status.

Summarizing main changes brought by cryptocurrency and blockchain we can highlight positive changes in financial industry, IT (security) industry, and government tax sector.

In the next publication, we will be focused on the Asian market, and south east-far east countries regulation and policy. Also, we will reply to a question why Volt Technologies choose Singapore? Strong and weak points of Singapore, government newest regulations, taxes and transparency for doing business. Stay tune …