Countries are encouraging the use of blockchain technology for a variety of reasons, such as recognizing its potential to revolutionize multiple industries, spurring innovation, and economic expansion, and establishing a regulatory setting that is suitable for blockchain businesses.
Countries leading blockchain adoption
Blockchain technology has the potential to significantly increase the productivity, safety, and openness of many different industries, leading to lower costs and better customer experiences. Therefore, governments are investing in the development and utilization of this technology in order to tackle a variety of economic and social problems.
In June 2021, El Salvador made history by becoming the first country to officially recognize Bitcoin as a legal tender. This groundbreaking move was carried out in order to promote financial inclusion and empower citizens who, with up to 70% of adults not having a bank account, may have been excluded from traditional banking systems. As such, El Salvador has become a global pioneer in adopting blockchain technology.
El Salvador’s President Nayib Bukele has noted the potential for his country to become a desirable destination for international investors if Bitcoin is accepted. To bolster the acceptance of the cryptocurrency, the government has taken action and the legislature’s finance commission approved a $150 million trust fund in the state development bank -Banco de Desarrollo de El Salvador- in August 2021. The fund is designed to make it easier for Salvadorans to exchange Bitcoin for U.S. dollars.
Portugal has taken a proactive approach to establish a favorable environment for blockchain and cryptocurrency startups. The government has been utilizing blockchain technology in various public services, healthcare, and supply chain management. In 2019, the Portuguese government launched the Blockchain Panorama platform, which aims to foster information sharing and collaboration among blockchain entrepreneurs.
Crypto enthusiasts and Bitcoiners have been drawn to the area, given its friendly stance towards cryptocurrency, allowing them to make use of BTC in their everyday lives, from paying bills and taxes to shopping. In addition, Spanish startup BitBase is striving to bring more Bitcoin ATMs and stores to larger cities, increasing merchant adoption.
Singapore stands out as a top nation in terms of embracing blockchain technology, with the country making sizable investments in blockchain research and development. Owing to its positive regulatory environment, Singapore has become a hotbed for Initial Coin Offerings (ICOs), luring in a lot of blockchain-related businesses to incorporate there.
The Monetary Authority of Singapore (MAS) is assuming a primary role in overseeing the progress of Singapore’s blockchain and cryptocurrency framework. It is working towards constructing governance systems, technical standards, and infrastructure to increase the adoption of these technologies. The agency’s goal is to supervise the cryptocurrency sector and reduce risks, while still encouraging innovation.
In 2021, Independent Reserve carried out a survey in Singapore which revealed that 43% of Singaporeans owned crypto. The following year, the same company conducted a new survey which indicated that the public’s trust and confidence in cryptocurrency and blockchain was high, with 58% of those surveyed viewing Bitcoin as a valuable asset and form of investment.
In 2017, Malta began to follow in the footsteps of Singapore by encouraging the use of blockchain technology and quickly earned the title of the “blockchain island” due to the introduction of certain regulations designed to promote its development. The following year, the Maltese Parliament approved three laws that provided a legal framework for the regulation of ICOs, cryptocurrencies, digital assets, and related services.
Malta has declared that electronic money and utility tokens are not considered capital assets under the Income Tax Act, and thus will not be subject to capital gains tax. However, securities and virtual finance assets are considered capital assets and will be taxed accordingly.
By the end of 2021, the Maltese government had added blockchain and artificial intelligence (AI) to its business guide and framework to advance the use of these technologies. The goal was to encourage international companies to set up in Malta to experiment with and apply blockchain technology.
United Arab Emirates (UAE)
In April 2018, the United Arab Emirates (UAE) government initiated its Emirates Blockchain Strategy 2021 in a bid to become a ‘smart’ region, where both public services and private businesses will be powered by blockchain technology to improve efficiency.
The UAE is renowned for its pioneering approach to digital advancement, and blockchain has facilitated government bodies and companies to save time, money, and resources, while at the same time providing individuals with a clear and distributed system. To further embrace progress in the metaverse and NFT sector, the UAE government is implementing measures to encourage innovation.
The other emirates within the United Arab Emirates (UAE) are in sync with Dubai and Abu Dhabi in putting in place initiatives and policies to foster blockchain and crypto businesses in the area. In February 2023, the Ras Al Khaimah (RAK) emirate declared the formation of the first free economic zone devoted exclusively to virtual assets and digital organizations, referred to as the RAK Digital Assets Oasis or RAK DAO.
The global digital asset market, which is mainly composed of blockchain technology and cryptocurrencies, has been expanding across the world. Certain countries such as USA, Switzerland, South Korea, Japan, and Nigeria have seen significant growth over the past couple of years, largely due to their welcoming attitude towards crypto assets.