The dominance of the cryptocurrency market is undeniable as it sits with a market cap of over $1 trillion. With Bitcoin worth over $600 billion, the underlying blockchain technology poses a threat to the traditional financial systems. The transparency, security, and decentralization offered by almost every cryptocurrency far outweighs heavily centralized traditional financial institutions on the scales.
Blockchain, the inclusivity it offers, and the ecosystem that is built on it is often met with a polarising views from the global financial community. Blockchain Technology aims to replace centralized institutions by making finance more inclusive.
The emergence of the crypto industry is undeniable. The emerging popularity of the cryptocurrency industry is evident by its staggering numbers as it offers over 11,000 unique assets, 385 exchanges, and daily trading volumes of over $67 billion.
Additionally the introduction of Decentralized Finance, which was made possible by cryptocurrencies, has allowed anyone with an internet connection to access an extensive list of diverse financial services without going through the discriminating process of traditional financial systems.
Blockchain, cryptocurrencies, decentralized finance, and cryptocurrency exchanges are some of the hottest trends on the internet today. Blockchain-based platforms are hypnotizing every financial media source there is and they do it with good reason.
As more businesses ease up to the idea of embracing cryptocurrencies, the world is going through a much needed financial transformation. According to a financial report, over 2 billion people globally are unbanked. That’s the total population of India and China combined. The existing traditional financial system is not inclusive. However, cryptocurrencies are changing that and we’ll finally be able to see financial inclusivity and financial freedom sooner than ever.
Despite the asset being notoriously volatile and nascent, we’re seeing more businesses and organizations embracing the asset. Paypal, Mastercard, Visa, Tesla, International Food brands, and International Hotels are adopting cryptocurrencies into their business model. Cryptocurrencies could soon replace banks with faster transactions, lower fees, smart contracts, digitization, and more.
Today anyone with an internet connection, a digital wallet, and a smartphone can take out loans, earn interest, raise capital for projects, and make instant payments from across the world with DeFi. A wider majority of the crypto community even believes that cryptocurrencies could soon replace banking and finance with a more efficient digital decentralized economy but will it really happen?
Banking and governments hold a lot of power in our lives and it may seem delusional to believe that cryptocurrencies and blockchains could entirely replace them. However, governments and economies throughout the globe are welcoming Bitcoin and other cryptocurrencies but regulation and taxation remain important factors. Taxes need to be paid and governments need to be run.
However, cryptocurrencies and blockchain technology have been performing exceptionally well and we could eventually see centralized institutions embrace blockchain solutions to avoid the possibility of going extinct. Interestingly, some governments and economies have gone the extra mile and welcome cryptocurrencies into their financial structure.
As the famous adage goes if you can’t beat ‘em join ‘em.
El Salvador made it to social media headlines after President Nayib Bukele crowned Bitcoin as its legal tender. With 62 votes out of 84 lawmakers, the Salvadoran President was successful in initiating Bitcoin as the country’s legal tender.
Although Bitcoins and cryptocurrencies expected the first-world countries to drive the mass adoption of cryptocurrencies, Central America has been moving quickly to accept cryptocurrencies into their economy.
El Salvador’s step towards financial inclusivity could soon be followed by other Latin American countries such as Paraguay, Panama, Brazil, and more. Currently, Paraguay is working on a proposal to introduce cryptocurrencies into the country’s economy.
Portugal’s tax authorities have accepted bitcoin investing as a legitimate investment. The Portuguese government is one of the most crypto-friendly governments in the world, according to the World Cryptographic Union. Individuals have a multitude of options available to them through the Portuguese government. People who benefit from the purchase and sale of cryptocurrencies are not subject to capital gains tax on their profits. Moreover, trading cryptocurrencies are also free of any taxation.
Portugal also has some of the most favorable laws when it comes to tax levied on payment received in cryptocurrencies. Simply put, individual cryptocurrency investors have a plate full of golden opportunities thanks to the Portuguese government and their favourable taxations. However, unfortunately, companies aren’t given the same opportunity which is why it’s more unlikely that we’re going to see crypto companies being established in the country any time soon.
Switzerland is lauded for many things. Its cost of living, it’s facilities, it’s inclusive finance, and more. Swiss banking standards have been known as the pinnacle of all banking standards. The Swiss banking standards have some of the highest levels of privacy and lowest levels of risk and it’s no surprise that the Swiss government has lenient regulation for cryptocurrencies. Cryptocurrencies already offer the best privacy option there is; however the regulations set for them may vary from place to place. Switzerland is composed of a unique system of regions and divisions called cantons. There’s a total of 26 cantons in the country, each responsible for setting their own legal definitions regarding cryptocurrencies.
This means that one canton may tax cryptocurrencies and the other may not. Let’s take Zurich as an example. In Zurich, movable privacy wealth isn’t a taxable asset, which basically means Bitcoin and other cryptocurrencies are tax exempt.
However, mining gains are taxed as regular income. Consequently, Bern has very strict regulations on mining and trading while Lucerne follows the same road as Zurich and treats capital gains on cryptocurrencies as non-taxable.
In addition to being one of the world’s most stable and developed economies, Singapore is also widely regarded as one of the finest places in the world to conduct business, according to Forbes. Singapore, today, is known as the hub of FinTech within Asia. Singapore’s central bank, The Monetary Authority of Singapore, believes that the cryptocurrency industry must be monitored to prevent cases of money laundering and other illegal activities; however the innovation and features that it provides shouldn’t be stifled.
The perspective of cryptocurrencies held by the Singapore’s government has prompted the cryptocurrency community to define the city-state as having a balanced regulatory and legal environment for cryptocurrencies. Furthermore, cryptocurrencies are a good fit for Singapore’s business-forward posture, which has earned the city-state the admiration of people all over the world.
This small mediterranean island nation has long been the safe haven for crypto investors, crypto companies, and anything related to crypto. Today, almost every leading cryptocurrency exchange is based in and operates from Malta because of its friendliness.
Malta welcomed Binance, the world’s largest cryptocurrency exchange, among other cryptocurrency exchanges following Hong Kong’s strict legislations. Malta makes a very resounding and supporting case for crypto-focused businesses.
Due to Malta’s membership in the European Union, crypto projects with operations located in Malta are permitted to operate freely throughout the whole European Union, which is a significant advantage. However, the country’s liberal attitude towards regulating cryptocurrencies doesn’t sit well with some governing bodies.
FATF, The Financial Action Task Force, is an intergovernmental policy making body that consists of 39 member states. The FATF has been concerned over Malta’s friendliness towards cryptocurrencies. Over $71 billion in cryptocurrencies passed through Malta’s borders and the lack of a regulatory body providing oversight continues to be the primary concern for the FATF.
However, regardless of the rising concern from intergovernmental policy making bodies, Malta continues to serve as the safe haven for crypto investors, companies, and enthusiasts. The small mediterranean island also offers instant citizenship for $1.8 million.
Similar to Malta, Cyprus is yet another mediterranean island nation known for its lax attitude towards cryptocurrencies including Bitcoin. Despite the fact that cryptocurrencies have not yet been formally controlled in Cyprus, the government seems to be moving in that direction.
The Central Bank of Cyprus has shared their concerns about the potential for losses and issued guidelines about the risks surrounding cryptocurrencies as early as 2014. Furthermore, the Cyprus Securities and Exchange Commission (SEC) has developed an innovation centre for businesses and individuals to share expertise in order to fulfil its objective of ensuring that investors are safeguarded while dealing with regulated entities.
Overall, Cyprus is considered to be one of the most welcoming cryptocurrency jurisdictions in the world. Although the Cyprus SEC has issued some legal jurisdictions involving ICOs; however, there seem to be no restrictions on mining, reporting requirements, or legal framework for the treatment of cryptocurrencies within the country.
In 2018 Bermuda announced in their Digital Asset Banking Act to set out its regime for regulating users and organizations who issue, sell, redeem, and trade cryptocurrencies and other digital assets. This includes operating as a crypto payment provider, a cryptocurrency exchange, or providing wallet services.
The regulations basically dictate what constitutes digital businesses within Bermuda, which is known to levy zero income and capital gain taxes. Bermuda has been attracting and welcoming individuals and businesses around the world for digital business. It is considered to be one of the most crypto-friendly countries in the world.
Case in point: Bermuda recently announced Bitcoin ETFs, also known as Exchange-traded funds. After years of failure, Bermuda launched a successful Bitcoin ETF in the U.S called the Hashdex Nasdaq crypto ETF, a one of a kind innovation that proved that Bermuda is forward thinking when it comes to cryptocurrencies.
The Cryptocurrency industry is growing at a phenomenal rate and we could soon see crypto banks taking over traditional banks. With business, economies, and people embracing cryptocurrencies we could see that reality sooner than ever. Cryptocurrencies are dominating the finance world and they do so with a reason.