While setting up a firm in the field of cryptocurrencies may have a bunch of benefits, there is a significant risk in doing such an activity. This is especially true if you are unfamiliar with the features of digital assets. Since specific legislation is still inconsistent in some regions, setting up your firm in a jurisdiction regarded as crypto-friendly can help you protect your funds. Let’s consider which jurisdictions are the best for dealing with virtual assets.
Best countries to start a crypto business
With many projects, such as Polkadot, Solana, and Dfinity, to mention a few, Switzerland is a well-known and respected country for blockchain-related firms. In 2018, Swiss banks were the first in the world to offer business accounts to crypto startups after realizing that using banking services would deter fraud and promote legitimate enterprises. Crypto coins are categorized as assets here, and Bitcoin is accepted as legal means of payment.
The government of Bulgaria, an EU member country, has shown a steadily growing supportive and open attitude toward bitcoin activities. Because of the recent amendments to the MAMLA, or Additional Provisions of the Measures Against Money Laundering Act, it is now permissible to operate cryptocurrency-related businesses in Bulgaria, such as wallet and exchange services. Obtaining this license is far simpler and easier than it is in the well-established nations of Estonia, Malta, and Cyprus. In about a month, you should have a workable solution. Bulgaria is amazing not only because of the streamlined procedure for getting a license for cryptocurrency activity, but also has a very good tax regime.
Malta has been a pioneer in the use of tokens. For instance, Binance moved back to Malta from Japan because they thought the country was better. These days, crypto coins are actively used in trade. The government passed a number of laws to make Malta a global leader in crypto-asset regulations.
Being one of the top FinTech centers in Europe, Lithuania is quickly emerging as the preferred destination for a broad range of digital services for businesses and significant organizations around the world. Since 2020, Lithuania has evolved into a crucial hub for a safe and straightforward license setup, following a 320% increase in the number of Fintech companies with 230 licensed firms since 2014. The sky is the limit for cryptocurrency exchange now that it is governed by the recently established Financial Crime Investigation Service (FCIS), which is part of the Ministry of the Interior of the Republic of Lithuania. This FinTech service, which is ranked fourth globally, supports businesses in fields like technology, law and finance digitally.
This country has a great ability to forge a magnificent niche for itself in the bitcoin industry. Here virtual assets are completely legal. Also, it is a hub for bitcoin startups in the EU, and Estonia's reputation fits with the appeal of crypto coins. Investors are keen to contribute investment in any blockchain-related solutions as this sector is experiencing rapid growth. There is no tax on corporate income if the profit is not distributed in Estonia, where payment operations involving bitcoin and other coins are taxed in the same way as any other company activity.
Portugal ranks at the top of the list of jurisdictions that are currently standing out in supporting the crypto field for the following reasons:
- To encourage digitization, Portugal created a "Digital Transitional Action Plan" in April 2020. According to the government, this plan would foster a climate that would promote company innovation and digital transformation.
- Moreover, "Technological Free Zones" are included in the action plan to facilitate blockchain and other field tests for businesses.
Singapore is a fintech hub in Southeast Asia that effects clear and crypto-friendly policies: while innovation is not hindered, the token ecosystem is strictly regulated with the aim to prevent the laundering of finances and other illegal activity.
Singapore does not tax capital gains. Investment held in cryptos by individuals and businesses is not taxed. Nonetheless, an organization that has its headquarters in Singapore and engages in trading or accepts crypto payments is liable for income tax.
The Bottom Line
Each jurisdiction has its peculiarities when starting a business dealing in cryptos. It is advised that you consider the source of your crypto capital and the movements of your cash, since these aspects might have a big impact on the tax advantages for your company.
When deciding on a jurisdiction to launch a cryptocurrency business, it is crucial that you find out what is the government’s approach is towards crypto including taxation and bank policies. The experts at Eternity Law International can assist you to explore these aspects concerning cryptocoins and licensing of cryptocurrency operations.