Blockchain technology has the potential to increase the productivity, security and transparency of many industries, thereby reducing costs and improving the customer experience. Therefore, countries are investing in developing and using blockchain technology to address different social and economic problems.
Launching Cointelegraph, written Monday (13/3/2023), El Salvador emerged as a global pioneer in adopting blockchain technology after becoming the first country to recognize Bitcoin as legal tender.
To encourage widespread adoption of Bitcoin, governments are implementing several measures. Including a 150 million trust fund application at state development bank Banco de Desarrollo de El Salvador was approved by the legislative finance commission in August 2021. It was created to allow automatic conversion of Bitcoins to US dollars, facilitating easy exchange between the two currencies for Salvador.
The country debuted the Chivo wallet, the local term for cool in September 2021. Each wallet contains USD 30 in BTC. The government has built a network of crypto automated teller machines (ATMs) in El Salvador and 50 other US cities, making sending money to their families easier.
In 2022, the crypto market crash severely affected the price of Bitcoin, raising concerns for the Central American country that has invested so heavily in cryptocurrencies.
But the President of El Salvador, Nayib Bukele showed no concern and, instead, promised to purchase an average of one BTC per day at a dollar fee to confirm ongoing and full support for the digital asset.
In January 2023, El Salvador enacted the Digital Asset Issuance Act, setting parameters for “Volcano Bonds”—bonds backed by Bitcoin.
Portugal has proactively created a favorable environment for blockchain and cryptocurrency startups. The country has been actively using blockchain technology in public services, healthcare and supply chain management.
The Blockchain Panorama platform which aims to encourage information exchange and cooperation among participants in the blockchain business, was introduced by the Portuguese government in 2019.
Since then, Bitcoin and crypto enthusiasts have flocked to the region, attracted by the pro-crypto environment that offers the opportunity to use BTC in real life. Including paying bills and taxes with cryptocurrency. Merchant adoption is also increasing, with Spanish startup BitBase looking to bring more Bitcoin ATMs and shops to major cities.
In 2021, the Portuguese government approved a decree setting out the basic conditions for the creation of a technology-free zone (ZLT) to promote technology-based innovation. This includes assisting the application of blockchain technology through experimentation and testing.
Since then, Portugal started adopting stricter regulations on crypto taxes to follow the laws of other European countries. In 2022, the government announced a reversal of the old tax law that excluded crypto profits based on the assumption that they were not legal tender.
Singapore is a leading country in blockchain adoption, with the government investing heavily in blockchain research and development. Due to its favorable regulatory climate, Singapore has become a hotspot for initial coin offerings (ICOs), with many blockchain businesses choosing to join there.
The country’s financial regulatory body, the Monetary Authority of Singapore (MAS), is leading the development of the country’s governance structures, technical standards and infrastructure to drive blockchain and cryptocurrency adoption. Its main role is to monitor and mitigate the risks of the crypto industry without hindering technological innovation.
In 2021, crypto exchange Independent Reserve conducted a survey across all demographics of Singaporeans, revealing that 43 percent owned crypto assets. In 2022, a new survey by the same company highlighted that the population’s interest, trust and confidence in the future of cryptocurrencies and blockchain is very high. 58 percent of the population interviewed consider Bitcoin to be an investment asset and store of value.
Along with Singapore, Malta started promoting blockchain adoption in early 2017, when it earned a reputation as a “blockchain island” after drafting several industry regulations to accelerate the growth of blockchain technology.
In 2018, the Maltese parliament passed three laws that provide a regulatory framework for blockchain and digital currencies to regulate ICOs, digital assets, digital currencies, and related services.
Regarding the taxation of crypto assets, Malta stipulates that electronic money and utility tokens are not registered as capital assets in the Income Tax Act, excluding capital gains tax. In contrast, securities and virtual financial assets are considered capital assets and are taxable.
In late 2021, the Maltese government includes blockchain and artificial intelligence (AI) in their prospects and commercial guidance framework to commit to promoting these technologies. The goal is to incentivize international companies to set up in Malta to test and operate blockchain technology.
Malta has yet to achieve “blockchain island” status. Consistent and increasing international scrutiny of the island’s domestic political and economic events led its leaders to pursue more conservative policies towards the industry than previously promoted.
However, many businesses focused on blockchain and crypto are thriving. For example, companies using blockchain in the supply chain of products, such as wine and olive oil, are a stark reality on the island.
United Arab Emirates (UAE)
In April 2018, the UAE government launched the Emirates Blockchain Strategy 2021 to become a smart region, with government and private business services powered by blockchain for greater efficiency.
The region has always had a reputation as a hotspot for digital innovation, and blockchain is enabling governments and businesses to save time, money, and effort while enabling people to use transparent, decentralized systems. The UAE government is pushing policies that welcome innovation in the metaverse and non-fungible token (NFT) markets.
The remaining emirates that make up the UAE are working closely with Dubai and Abu Dhabi in implementing initiatives and regulations to promote blockchain and crypto businesses in the region.
In February 2023, the emirate of Ras Al Khaimah (RAK) announced the creation of its first free economic zone entirely dedicated to virtual assets and digital companies, dubbed RAK Digital Assets Oasis or RAK DAO.