Why Germany and the US are the most crypto-friendly countries

The world’s most crypto-friendly countries have been revealed, according to research from Coincub — with Germany and the United States tied for first place, but for very different reasons.

Germany: First in Progressive Crypto Legislation

The study argues that Germany has “progressive” crypto legislation, as well as a large number of investors and Bitcoin nodes. The study also praises the European country’s “favorable” tax system, which means that as long as Bitcoin and Ethereum are held for more than a year, no capital gains will be incurred. The report explains why this is such an important policy, adding: “As we have seen, a year is a long time in crypto affairs — but compared to the rules that apply to other assets in Germany, it represents a huge incentive, such as buying rental property, which must be kept for 10 years to avoid tax.”

Many countries have struggled to get to grips with crypto regulation, and the industry’s fast-moving nature means central banks and governments often struggle to keep up. But Germany has tackled this challenge head-on with complex rules that also take block rewards and airdrops into account.

Germany also emerged as the most crypto-friendly country in Q1 2022. Germany rose from 4th place in Q4 2021 to 1st place in Q1 2022, beating out former number one Singapore. The growing adoption of cryptocurrencies by institutions, as well as the country’s progressive taxation of developing markets, are cited as reasons for its rise in the rankings. German institutions have accepted cryptocurrencies as viable long-term investments for savers. This stance is reflected in the fact that a chain of traditional savings banks known as Sparkasse are now working to offer crypto trading and custody services to users. The move means that its 50 million customers will be able to trade and hold Bitcoin at the institution.

It is worth mentioning that as early as 2019, the German federal government reviewed, approved and issued the "German National Blockchain Strategy", which aims to take advantage of the opportunities brought by blockchain technology and tap its potential to promote the digital transformation of the economy and society. In recent years, Germany has actively embraced blockchain technology, accelerated its layout in the blockchain field, attracted global talents and funds, promoted the development of related technologies and products and industries, and further enhanced its international influence.

The Strategy defines 44 action measures in five major areas. It proposes to carry out blockchain financial innovation under the premise of ensuring financial stability. For example, opening up relevant German laws to pave the way for "securities on the chain"; drafting new bills to ensure that ICO activities are carried out under a regulatory environment; and allowing exchanges to carry out legal currency and encrypted digital currency exchange business under the premise of obtaining a license.

United States: Tied for first place for major developments

Fidelity has begun giving Americans the option to add Bitcoin to their retirement funds. Workers can allocate up to 20% of their 401(k)s to BTC as long as their employer agrees, which is seen as a major milestone, but some politicians have raised concerns about whether the volatile asset is a good match for pension funds.

In addition, other factors that helped the United States jump up the rankings include private demand for Bitcoin trading and mining, as well as a large number of BTC nodes and ATMs across the country. When China began to crack down on mining operations, the United States was widely considered to be one of the main beneficiaries. Data shows that between July 1 and July 10, the United States installed a total of 633 crypto ATMs, making it the country with the most crypto ATMs installed, accounting for nearly 88% of the total global crypto ATM installations.

Many politicians, including Cynthia Lummis and Kirsten Gillibrand, are trying to pass legislation that will help the digital asset industry thrive. President Joe Biden also signed an executive order to establish the first-ever comprehensive federal digital asset strategy for the United States.

In terms of crypto acceptance, the United States also shows positive data. Deloitte recently conducted a survey on digital assets among 2,000 senior executives of retail institutions in various industries across the United States. The survey results show that more than 85% of the executives surveyed attach great importance to "accepting cryptocurrency payments." Nearly 75% of the respondents said they plan to accept cryptocurrency or stablecoin payments in the next two years. More than 50% of the large retailers surveyed (with revenue of US$500 million or more) have invested more than US$1 million in "accepting digital asset payments" services. Among retailers that have already accepted digital asset payments, 93% said they have witnessed positive feedback from this move.

Other factors of change in other countries: legislation, taxation and regulation

The analysis noted that Singapore dropped one spot to third place, with regulators recently ordering the closure of all Bitcoin ATMs. Australia and Switzerland remained in fourth and fifth place. France, the Netherlands, Portugal, Canada and Hong Kong made up the rest of the top 10.

Notably, there was very disappointing news for the United Kingdom, which is sitting at number 12. The United Kingdom recently unveiled plans to become a global hub for crypto assets that would recognize stablecoins as a legal method of payment, but those ambitions were overshadowed by the recent political drama that led to the resignation of Prime Minister Boris Johnson.

In addition, among the countries that have fallen sharply in the rankings, Pakistan, South Korea, Belgium, Brazil and China have all fallen sharply. In addition, factors considered in this research analysis include government encryption policies, current legislation, taxation, the number of blockchain startups and the development of central bank digital currencies.