Dateline: Colombo, Sri Lanka
Sri Lanka has become an increasingly popular tourist destination in recent years; it seems any bikini-clad Instagram influencer worth their salt has posted snaps here. As a result of so many “pioneer” nomads coming here, I figure this place will be the next Iceland (read: overrun with newbie tourists) within a few years.
But while I’m spending a day here in Sri Lanka en route to Dubai, I’ve been thinking about another kind of up-and-coming place: specifically, crypto-friendly countries.
In the last year, I’ve helped dozens of cryptocurrency investors and business owners legally reduce taxes, reduce regulatory burden, and build personal freedom. However, the historical issue with internationalization for these people has been access to good banks and services that understand and respect cryptos.
Many banks outright refuse to deal with the proceeds of cryptos entirely. An increasing number of credit cards ban the purchase of Bitcoin from exchanges. And some countries, like Hong Kong, are generally unfriendly to all things crypto.
The good news is that, while there are still a lot of fast-moving targets, things are improving. A growing handful of banks and fintech companies are declaring themselves open to crypto, or even crypto-only.
The “bad news” is that many investors come to me thinking they need this bank account or that corporation, and in reality, they don’t even need some of the things they spend so much time scouring the internet for.
What Makes a Crypto-Friendly Country?
In some cases, a country, bank, or other institution that is merely tolerant of crypto can be good enough. Think, for example, of a bank that serves as a waypoint between an exchange and a real estate investment; you don’t necessarily need a long-term relationship.
However, today’s tolerant parties may be tomorrow’s “we changed our mind” nightmares if new regulations or policies are enacted.
The most crypto-friendly countries are, naturally, those who have gone out of their way to attract Bitcoin and altcoins to their shores. As we say here at Nomad Capitalist, “go where you’re treated best”. The easiest way to find out who will treat you best is to see who is literally begging for your business.
I did not consider countries whose citizens own lots of Bitcoins, altcoins, or any other coin; the government and institutions need to be pro-crypto.
With that in mind, I’ve created a list of the best crypto-friendly countries in the world, taking in mind banking, trading, taxes, the blockchain, and actual startup businesses. As in any other area, no one country will cater to every crypto investor or entrepreneur, and it is often sensible to include a mix of crypto-friendly solutions from different countries in your personal plan.
My List of Pro-Crypto Countries
This list may change over time, and we’ll do our best to update it as circumstances change. The best approach for any crypto investor to take is to have several redundancies in place as well as back-up plans in order to be protected no matter what happens.
Call it “Blockchain Island”. So says the Parliament of Malta, which has long been working to cement the European island nation’s standing as pro-Bitcoin, and which passed three bills establishing a framework for blockchain technology in July 2018. My legal contacts in Malta have been telling me this has been a top priority of the Maltese government for some time, and now they’ve delivered. The prime minister even called crypto “the inevitable future of money”. Try getting any other government official to say that.
The benefit of Malta doing this is that it will open up its 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 tiny principality of Liechtenstein is not just one of only two double landlocked countries in the world; it’s also becoming one of most Bitcoin-friendly countries in the world. The country’s outsize banking system, which has become off-limits to US citizens and all but the ultra-rich as of late, has started to open up to crypto. Bankers at shops like Bank Frick are not only dealing in cryptos for their clients, but are even advising on ICOs. The microstate has become so coin-friendly that Forbes says “Blockchain is booming in Liechtenstein”.
Liechtenstein’s Crown Prince is courting the crypto community, claiming to be investing himself and reminding that while Liechtenstein is in the heart of Europe, it’s not in the European Union. For many crypto startups, the alpine forests of this tiny country are perfect for the same reason the place has more corporations than people: low taxes and friendly regulation. Yanislav Malahov’s smart contract startup Aeternity is based here, saying that while there are no financial incentives per se, the government is extremely open to altcoins and blockchain. It’s even possible to open a bank account without opening a bank account.
Bermuda has long been a leader in the insurance industry, but now wants to join the crypto revolution. The New York Times recently recognized Bermuda as an emerging destination courting crypto businesses and investors. The premier of Bermuda, E. David Burt, told the Times that with just 65,000 people and 20 square miles, “we want to position Bermuda as the incubator for this industry.”
In August 2018, Bermuda passed legislation allowing a separate class of banking license favoring fintech, fearful that the small number of banks operating on the island were not encouraging crypto investment in the country. Bermuda has also passed a law allow for fast approval of ICOs. These efforts have not gone unnoticed; Binance is investing millions to set up compliance operations on the island; altcoin iCash has also set up shop in Bermuda, rightfully claiming that the government’s small size should make it nimble and responsive.
Switzerland is home to hundreds of blockchain startups, most headquartered in the low-tax canton of Zug which has become dubbed “Crypto Valley”. It’s also attempting to become a “crypto nation” according to Switzerland’s economics minister. While Switzerland has lost its luster as the world’s go-to economic haven, it may be able to redeem itself with crypto.
For one thing, 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, correctly predicting the country and the canton would adopt pro-crypto regulations at a time when many other parts of the world were iffy. 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.
I’ve said repeatedly that every crypto investor needs a second citizenship to protect their freedom and protect against fast-changing regulations and tax policies. For many cryptocurrency investors I work with, the best way to obtain a quick second passport is through investment. The challenge with that approach is converting crypto into the dollars or euros needed to buy a passport in, say, Malta.
Vanuatu realized that and was the first citizenship by investment country to offer payment in Bitcoin. That said, the country’s passport offering isn’t exactly my favorite. While it offers a faster path and easier due diligence than its Caribbean counterparts, it offers only an “honorary citizenship”, and prices are confusing. I’ve had my concerns about the passport for a while, and though it may be a workable option in some cases, being able to pay in Bitcoin alone is not enough for me.
Antigua and Barbuda
Last month, Antigua joined Vanuatu in offering its upstart citizenship in exchange for Bitcoin. The reason is simple: a more crowded field of “passport for sale” offers and tighter restrictions of the flow of US dollars to flyspeck islands means countries like Antigua need to diversify. Perhaps Antigua is accepting Bitcoin as payment more out of an inherent need than a newfound love for cryptos, but we’ll take it nevertheless.
Like Vanuatu, Antigua offers an economic citizenship that scores lower on my list. The two-island nation reduced the price of its passport to $125,000 during the Caribbean citizenship price wars, but requires you to live in the country for a whopping five days before being naturalized. While the process still only takes a few months, it can be inconvenient, especially for crypto investors with non-western passports who may need a visa just to fly through an airport to get there. On top of that, the citizenship isn’t finalized for several years. So basically, the most crypto-friendly citizenship countries offer the least attractive passports. I talk about why this shouldn’t matter in this video:
Long-time readers of this site know that I’m a big fan of Georgia’s government. While Georgian banks aren’t much in favor of cryptocurrencies, the government of Georgia was one of the earliest adopters of blockchain technology. Eastern Georgia has always been one of the wealthiest parts of the country, thanks in part to vineyards making wine in ancient Georgian tradition. Today, the same valleys are home to crypto mining operations.
Electricity is rather subsidized in Georgia, making it easy to mine. The government is slowly opening up to the idea of cryptocurrencies, with one political party allowing its flock to use their computers to mine Bitcoin as a donation. Unlike Liechtenstein or Switzerland, Georgia is dirt cheap to live in, offers an interesting way of life, and offers the possibility of citizenship for entrepreneurs without waiting dozens of years as with the other countries on this list.