As digital assets become increasingly popular and familiar to investors, governments around the world have had to respond. Some countries have been less than friendly when it comes to digital assets, particularly initially, but many have responded by embracing digital assets. They have built new regulatory frameworks to accommodate cryptocurrencies and other digital assets, welcoming businesses in the industry, and supported the growth of crypto and blockchain in various ways.
Governments that have recently made moves to embrace digital assets include those in El Salvador, the United Arab Emirates, Canada, Singapore, and Gibraltar. Here’s a closer look at how they are making an effort to be welcoming for cryptocurrencies, blockchain, and other digital assets and infrastructures.
1. El Salvador Accepts Bitcoin As Legal Tender
The Central American nation of El Salvador became the first country in the world to officially accept bitcoin as legal tender in 2021. The country, which adopted the US dollar as its national currency in 2001, made bitcoin an additional currency to run alongside the dollar. This move has provided both benefits and challenges, with president Nayib Bukele making big promises such as a mining plant powered by volcanic energy and a bitcoin city.
The Bitcoin Law allows prices to be expressed in bitcoin and says that businesses with the technical ability to do so must accept payments in the cryptocurrency. It also allowed all invoices issued in dollars before September 7, 2021, to be paid in bitcoin.
2. The UAE Makes Efforts to Be Crypto-Friendly
The United Arab Emirates, home to many a financial mogul and rich investor, is known for being particularly friendly toward cryptocurrencies and digital assets and infrastructure. The Dubai Financial Services Authority began 2021 by proposing a regulatory framework for crypto, followed by issuing several significant regulatory approvals. Existing regulations apply to the tokenization of securities through blockchain and distributed ledger technology. A special zone at the Dubai WTC is also being established to dedicate an area to companies dealing with digital assets.
Due to the crypto-friendly environment, the UAE is becoming an inviting option for businesses in the industry. Binance, the world’s largest digital assets exchange, appears to be considering setting up its headquarters in either Dubai or Abu Dhabi.
3. Canada Approves Bitcoin ETFs
Canada took a big step in 2021 by being the first country to approve a physically-settled bitcoin ETF. The first product of its kind was launched in February by Purpose Investments, with further funds following on its heels, including one created by Fidelity Canada, which was released towards the end of the year. Purpose Investments also launched further crypto funds on the Toronto Stock Exchange, which included the Purpose Bitcoin Yield ETF, Purpose Ether Yield ETF (investing in ethereum), and Purpose Bitcoin Opportunities ETF.
In addition, Canada has made steps to bring clarity to the country’s crypto regulations. This has included recognizing crypto firms as financial service businesses. Canada is also home to a large amount of bitcoin mining activity, being the fourth-largest country for mining power.
4. Singapore Regulators Support the Crypto Industry
As a country known for its successful economy and as a hub for banking and finance, it’s no surprise that Singapore has welcomed digital assets and infrastructure. The government has supported the growth of exchanges and blockchain businesses, being proactive concerning regulations and more. Regulators have allowed companies to provide digital token payment services and bitcoin funds have recently been released.
However, all is not rosy in the Singapore crypto world. The Monetary Authority of Singapore also ordered Binance Singapore to stop all crypto transfers, placing binance.com on an investor alert list. Singapore is not the only country to take stringent measures against Binance, and this can be viewed as evidence that regulators are ensuring customers are protected from financial risk.
5. Gibraltar Is a Strong Advocate for Crypto and Blockchain
The British Overseas Territory of Gibraltar is emerging as a welcoming location for those in the crypto industry. The cryptocurrency exchange Bullish has set up there, having obtained a distributed ledger technology license from the Gibraltar Financial Services Commission. Another local exchange, Zubr Exchange Limited, has also setup there. In December, Valereum Blockchain, itself based in Gibraltar, acquired the Gibraltar-based Juno Group in a step towards establishing a regulated link between fiat and crypto. Valereum has made its intentions clear to acquire the Gibraltar Stock Exchange, a proposal that was being examined at the end of 2021.
As digital assets become more popular, governments and regulators around the world are moving to embrace them. At the same time, many of them are being cautious in an attempt to ensure their citizens are protected.
