Bitcoin: which countries are the most "friendly"?

On the occasion of Surfin Bitcoin, the major French conference devoted to Bitcoin (in Biarritz), The Big Whale has compiled a list of the 10 most "bitcoin friendly" countries, i.e. those in which it is most favourably received.

We obviously didn't produce this list on a "wet flipper". With the help of experts, we have established five essential criteria on which each country is screened:

👉 Regulation

👉 Taxation

👉 Local talent

👉 Market maturity

👉 Energy costs

We also assigned a score (between 1 and 5 whales, bearing in mind that the more whales, the more positive) to each country based on these criteria.

ARGENTINA 🇦🇷

👉 Regulation: 🐳

👉 Taxation: 🐳🐳 🐳

👉 Local talent: 🐳🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳🐳 🐳🐳

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Despite its relatively unclear regulatory framework, Argentina is one of the spearheads of the Bitcoin ecosystem in the world. This is no coincidence: the country has suffered endemic inflation since the 1980s (215% a year on average!). Argentines are fleeing the peso and finding in bitcoin and other cryptocurrencies a way around the tightening of exchange controls that tend to restrict access to the US dollar (traditionally used to protect savings).

As The Big Whale found out on the ground in the spring, Argentines are also fond of bitcoin because it represents an alternative to the national banking system. Almost 50% of the population do not have access to a bank account. The high level of education among the population, particularly engineers, is also a factor in the consequent level of adoption of bitcoin and cryptocurrencies.

The government's strong intervention in the economy also makes it easier for cryptos to take hold. It is relatively cheap to mine bitcoin, an energy-intensive activity, because the cost of electricity is kept particularly low by the state. Canadian company Bitfarms has invested $250 million in 2021 to build one of the world's largest mining facilities in Cordoba.

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South Korea 🇰🇷

👉 Regulation: 🐳🐳 🐳🐳

👉 Taxation: 🐳🐳

👉 Local talent: 🐳🐳 🐳🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳

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When people talk about bitcoin, they rarely mention South Korea. And wrongly so! Because the country is surely one of those where the soil is most fertile for cryptos. In addition to the fact that several major groups such as Samsung are investing more and more in the sector, South Koreans are very keen on new technologies and the rate of adoption of cryptos among the adult population, while still modest (around 5%), is constantly rising.

The stability of South Korea's regulatory framework also obviously makes it a favourable country, even if the tax promises of the new president-elect are not certain to come true. During the spring campaign, Yoon Seok-Youl pledged to abolish the 20% tax on capital gains below €37,500, compared with €1,800 at present. This threshold may in the end be less advantageous than expected.

In addition to these two factors, South Korea has a wealth of talent, particularly in Tech, and well-trained employees.

UNITED ARAB EMIRATES 🇦🇪

👉 Regulation: 🐳🐳 🐳

👉 Taxation: 🐳🐳 🐳

👉 Local talent: 🐳

👉 Market maturity: 🐳

👉 Energy costs: 🐳🐳 🐳🐳

It's the "Place" that's on the rise: in just a few months, the United Arab Emirates (mainly Dubai) has established itself as one of the new bitcoin capitals. This change in status is due in particular to the recent adoption of a highly favourable regulatory framework for businesses. Several giants such as Binance, FTX and Crypto.com set up operations in the country in 2022.

In addition to the fact that crypto companies can now reach a very wealthy clientele, they also benefit from particularly "soft" taxation (less than 10% corporation tax). For individuals, it's even zero!

The Emirates are also blessed with no shortage of energy, making it a potentially very attractive player for bitcoin miners. US specialists such as Crusoe Energy (known for its expertise in recovering the flared gas that escapes from oil and gas facilities for mining purposes) signed a $350 million deal with Abu Dhabi's sovereign wealth fund in June.

USA 🇺🇸

👉 Regulation: 🐳🐳 🐳

👉 Taxation: 🐳🐳 🐳

👉 Local talent: 🐳🐳 🐳🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳🐳 🐳🐳

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Boosted by China's mining ban in 2021, the US has become the epicentre of the industry globally. According to Cambridge University, 38% of the computing power devoted to mining comes from the United States, and in particular from a few states such as Georgia, Texas and Kentucky where energy (oil, gas, wind, solar) is available at hyper-competitive prices.

Other American states such as Florida are pulling their weight, thanks in particular to the city of Miami, whose mayor Francis Suarez is an ardent supporter of bitcoin. To set an example, the mayor receives his salary in bitcoins (as does the new mayor of New York). Miami also hosted the largest bitcoin-related conference in April 2022 (Bitcoin Miami).

California is also a forward-thinking state where, alongside the tech popes, we find industry giants such as Coinbase and Square, as well as thousands of particularly well-trained engineers. Not to mention New York and the strike force of Wall Street, who are also very interested in bitcoin.

On the regulatory side, the US does not have the same standards as Europe, and, as Jeremy Allaire (Circle) recently pointed out in The Big Whale, the US regulatory framework is still very vague. The Biden administration is currently mulling over "ambitious" crypto regulations, which we'll be coming back to very soon.

FRANCE 🇫🇷

👉 Regulation: 🐳🐳 🐳🐳

👉 Taxation: 🐳

👉 Local talent: 🐳🐳 🐳🐳 🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳

"France in the top 10?!" We can already hear the comments from some (we won't give names) about Hexagone being ANYTHING but a bitcoin-friendly country. And yet! The world's sixth-largest economy can boast of offering rather favourable ground for it, at least on a few points.

First of all, there's the very stable regulatory and political framework. France was one of the first countries on the planet to adopt legislation in 2019 with the Pacte Act (creation of the PSAN status in particular), which even served as a model for the future European MiCA regulation.

The second point concerns the maturity of the market. The rate of adoption of cryptos and bitcoin is in a high range (between 7% and 10% of the population depending on the study) and France has many start-ups linked to bitcoin (StackinSat, Bitstack, Acinq...) and several leading players such as Ledger, which is none other than the world leader in crypto-asset custody.

The third and final point concerns precisely all the talent available in France in the sector. As Julien Bouteloup (StakeDAO, Curve, Stake Capital, etc.) recently explained to us in an interview (available here), France is perhaps the country with the best engineers and developers on the planet. Cock-a-doodle-doo?

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NIGERIA 🇳🇬

👉 Regulation: 🐳

👉 Taxation: 🐳🐳

👉 Local talent: 🐳

👉 Market maturity: 🐳🐳 🐳🐳

👉 Energy cost: 🐳🐳 🐳🐳 🐳

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Nigeria consistently ranks in the top 10 countries with the most cryptocurrency users. According to analytics firm Chainalysis, it's even ahead of the US (but behind Vietnam, India, Pakistan and Ukraine). Why such success?

Firstly, because Nigerians are using bitcoin (and cryptos) to bypass their very expensive and limited banking system when it comes to transferring money abroad, and vice versa; most Nigerian banks limit the amount of currency that can be taken out of the country to $500.

Bitcoin is also an increasingly popular instrument in Nigeria among companies that trade internationally. Chainalysis cites in particular the increase in trade with China, which is conducted via cryptos. Not to mention the fact that Nigeria is a major oil power, with low-cost (but high-carbon) energy and therefore an attractive place for miners.

Faced with a difficult economic environment, Nigerians have plenty of reasons to embrace virtual currencies. In August, inflation hit 20%, its highest level since 2005. As for the national currency, the naira, it continues to fall on the parallel market, where $1 now trades for 670 naira, while the central bank maintains an artificial exchange rate of $1 for 420 naira on the official market.

PORTUGAL 🇵🇹

👉 Regulation: 🐳🐳

👉 Taxation: 🐳🐳

👉 Local talent: 🐳🐳 🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳

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Portugal is currently one of the few countries in Europe where sales of cryptos are not taxable, as they are not considered currencies or financial assets. Individuals also do not have to pay VAT or capital gains tax when buying and selling assets (hello France 👋 ), and only professional activities paid for in crypto-assets are taxed.

Waiting for new tax rules (the government announced in May that it wanted to put an end to this privileged status... before postponing it until later), cryptocurrency investments are continuing to gain ground, particularly in the property sector, with the first sale of a flat paid for in bitcoin, without conversion into euros, completed at the beginning of May. Made possible by a new regulation approved by the Order of Notaries at the end of April, these property transactions could see a new demographic arrive. A number of European developers and project owners have already set up in the area.

SUISSE 🇨🇭

👉 Regulation: 🐳🐳

👉 Taxation: 🐳🐳

👉 Local talent: 🐳🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy costs: 🐳

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On the other side of the Alps, Switzerland is probably one of the most advanced European countries. It has a simple regulatory framework and a very dynamic ecosystem. In the canton of Zug (20 minutes by train from Zurich), the "Crypto Valley" attracts many entrepreneurs who appreciate its pro-business environment. Hundreds of crypto start-ups (also a lot of mailboxes) have set up in Zug in recent years; Neuchâtel, Lausanne, Geneva and Lugano also offer attractive regulatory ground.

On the banking front, more than half of Swiss institutions believe that cryptocurrencies will become a mainstream investment category within 10 years, on a par with stocks and bonds, according to a barometer by the firm EY published earlier this year. Crypto start-up Seba, meanwhile, has had a banking licence since 2019, a first in the world.

Switzerland's tax regime for cryptocurrencies is very advantageous compared with its European neighbours. Indeed, capital gains from the sale of cryptocurrencies are not taxable for individuals. For professionals, the tax rates applied to these gains are significantly lower than in other countries. And in Zug, you can pay your taxes in... bitcoins.

"Switzerland has decided not to pass any new laws to regulate bitcoin, all that is being asked of the players is that they respect the current framework," says Alexis Roussel, co-founder of the Bity exchange platform. "Switzerland is a population that is generally educated about money and distrustful of anything centralised, so I think there are cultural explanations for Bitcoin's local success," he stresses.

SALVADOR 🇸🇻

👉 Regulation: 🐳🐳

👉 Taxation: 🐳🐳 🐳🐳 🐳

👉 Local talent: 🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy costs: 🐳🐳 🐳🐳

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How can we not mention El Salvador? Just a year ago, this small Central American country made headlines by becoming the first state to make bitcoin its legal tender. Since then, while there hasn't been a big crypto night (far from it), the government has nonetheless pushed through a series of measures that have made El Salvador (population 6.5 million) one of the most 'welcoming' countries.

El Salvador's first asset is its 'stable' tax system, or more precisely, its almost non-existent tax system. In El Salvador, but it's not the only country, crypto capital gains are exempt from income tax. The aim of this measure is quite simple: to attract start-ups and crypto investors, and in turn to develop the local economy. Coincidence or not, tourism in El Salvador has risen sharply in recent months, returning to pre-Covid levels, according to the World Tourism Organisation.

To take things a step further, the country's president, Nayib Bukele, is also working on the creation of a Salvadoran "Bitcoin City", totally dedicated to bitcoin, where there would be no taxes: no income tax, no property tax, no capital tax... This city project located in the east of the country, which remember is one of the most violent in the world, would be powered by the Conchagua volcano, which could provide abundant energy.

This is precisely El Salvador's second advantage: the price of its energy. While no official figures are available, El Salvador can draw on around thirty volcanoes - twenty or so are thought to be active according to the government. According to figures put forward by the government, the price of a kilowatt-hour could fall below $0.05, compared with $0.2 in France.

SINGAPORE 🇸🇬

👉 Regulation: 🐳🐳 🐳🐳

👉 Taxation: 🐳🐳

👉 Local talent: 🐳🐳

👉 Market maturity: 🐳🐳 🐳

👉 Energy cost: 🐳

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As a leading financial centre in Southeast Asia, Singapore has long built a reputation as a hub for the crypto industry, thanks in particular to its favourable regulatory framework. The city-state is home to the headquarters of some of the sector's major companies (Crypto.com mainly) and also a plethora of investment funds.

Singapore has recently been in the news (not all good) because several players linked to the recent crypto crash, Terra Luna and Three Arrows Capital, were based there. In response, and to protect its reputation, the country's central bank has promised to be "brutal and particularly tough" with players who do not offer sufficient guarantees. Industry giants such as exchange platforms Binance and Bybit have recently chosen to bypass this jurisdiction to avoid the potential wrath of the authorities.

Despite this forthcoming tougher stance, the country remains a prime location with a highly skilled workforce. The country's largest bank, DBS, has launched an exchange platform. When it comes to mining, Singapore is not a recommended destination. Electricity is expensive, while the hot, humid environment adds to costs.

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