Last Updated on February 22, 2022 by Diana Kelley
If we look up in Google Trends, we will see the significant growth of interest in cryptocurrency and Bitcoin in the recent month. This is explainable — the total crypto market cap doubled in just two months to the whopping $1 trillion, lucky investors made terrific profits, and the general audience is extremely curious about the reasons for this blockchain-based success.
But behind and before this spark of interest, there have been months and years of steady crypto market development in a number of regions of the world. Among the others are the United States and Canada, Nigeria, Cyprus, Singapore, South Africa, the United Kingdom, and several European countries. South America’s Brazil, Bolivia, and Ecuador are also in the trend. Traditionally crypto-friendly Japan is a little off this list. Interestingly, the number of search queries about Bitcoin specifically sparked 2-3 times more than that to cryptocurrency in general.
Does crypto serve each of these countries in the same way? Bitcoin and many other coins have been designed as a blockchain-based alternative to the traditional banking system, and in developing countries with poor economies, they do serve this purpose. This is less relevant though for the countries with stable local currencies. In the developed states, Bitcoin is mostly a tool to make from trading and investment.
Now, let’s take a closer look at several countries with high interest in crypto right now. How is crypto regulated in developing and developed countries, and how widely it is adopted?
United States
In some way, the USA is the stronghold of cryptocurrency. Although its crypto regulation frameworks are still ambiguous and some of the higher-level authorities are skeptical about Bitcoin, cryptocurrency has always been legal in the USA. Silicon Valley and regions have become home to such outstanding cryptocurrency exchanges as Coinbase, Kraken, Gemini, and Poloniex. Cash App is also based in the USA.
Unlike some countries of the world, crypto in the USA is not legal tender. The SEC (Securities and Exchange Commission) sees cryptos as digital currency, the CFTC (Commodity Futures Trading Commission) classifies them as commodities, and the IRS (Internal Revenue Service – America’s tax authorities) defines Bitcoin as property. The latter is cool in terms of taxation — you have to pay tax if you invest and then sell Bitcoin or Ethereum for cash, but if you just earn it somehow or send without USD in between, regulators don’t view it as a tax event.
Nearly 25% of worldwide trading of Bitcoin is concentrated in the USA: Americans prefer speculating crypto instead of actually using it. You can pay with virtual currencies in Starbucks or buy/sell it in one of the 12,000 ATMs, but not too many people do this, preferring credit cards for these purposes. The reason is simple: Americans have a stable currency and a well-developed banking system. They have access to good financial services, their local currency is not as prone to inflation as those of Argentina or Venezuela.
Venezuela
Bitcoin or Litecoin volatility is quite high compared to the world’s most stable currencies. However, it’s not even close to Venezuelan Bolivar’s inflation rate, which was over 2,300% in 2020.
What happens if a currency plunges so fast? Let’s give it an example. Say, you have 1,000 of fiat currency today and can go buy some food and clothes. Maybe not tomorrow, but in a month or a year, you won’t even be able to buy a loaf of bread with the same sum.
In the cases when the economy is so weak, some local authorities start using different fiat currencies like the US Dollar instead of their own currency issuance. That’s what happened in Zimbabwe, but that’s not the case for Venezuela due to poor relations between the countries. As a result, President Maduro announced in September 2020 that the country is to start using cryptoassets to neutralize crippling U.S. economic sanctions and fight the deepening economic crisis.
However, the local population has started using Bitcoin transactions, crypto exchanges, and blockchain technology long before the country’s leader announced it. When the inflation rate goes up as high as 10,000,000% in 2019, you just have to find an alternative to the local central bank. For many Venezuelans, Bitcoin is that lifeline now.
Nigeria
Nigeria is not the only country in Africa where BTC is extremely popular. South Africa, Ghana, and Kenya are also very keen on crypto assets and blockchain. Senegalese-American singer and songwriter Akon has even started to erect his own Akon Crypto City in Senegal. However, the interest of Nigerians in the crypto ecosystem and alternative financial institutions beats all records.
According to a leading peer-to-peer bitcoin marketplace Paxful, Nigeria now has the world’s second-largest Bitcoin cryptocurrency trading volume. 60,215 Bitcoins have run through trading platforms in this country since 2016, even before the ICO boom of 2017 — and the trading volume still continues to grow by 20% each year. A significant number of people are involved in the distributed ledger industry.
Why are the crypto financial market and fintech so popular in Nigeria? There are several reasons for this:
- The local currency is inflationary. Nigerian Naira showed a 12.9% inflation rate. Such fast depreciation makes people use Bitcoin that grows each year.
- Many Nigerians live abroad and send money home, but it’s hard to make remittances to Nigeria. PayPal doesn’t work here, local banks restrict international transactions and charge high fees. Cryptocurrencies solve this problem.
- Nigerians are active not only in crypto remittances but in local peer-to-peer transactions as well. Here, the network effect takes place: over 11% of internet users in Nigeria aged from 16 to 64 own cryptocurrency, which means sometimes it’s easier to send crypto to people directly without withdrawing to cash.
- Nigeria has a status of a regional tech hub. Local circumstances allow creating crypto-related jobs, and many young and tech-savvy individuals inhabit the country. They tend to widely use crypto.
- When the protests flared up in October 2020, local authorities froze the activists’ bank accounts. The protesters have quickly moved on using Bitcoin.
What’s the regulatory framework for crypto in Nigeria? Just as in the USA, Nigeria’s tax authority is called SEC, Securities and Exchange Commission. In September 2020, they announced the new cryptocurrency regulation. Every digital asset in Nigeria will be now treated as securities and must be registered by any individual or corporation involved in a blockchain-related activity. Local authorities say these regulations will increase safety for crypto users in Nigeria. These measures are considered a good signal to investors who need clarity on the legal framework.
Australia
Crypto in Australia is also on the rise. According to a survey from late 2020, every fifth young adult in Australia owns the digital currency. Another study showed 13% of Australians own Bitcoin and 6% have Ethereum. The Reserve Bank is investigating the functionality of cryptocurrency, and the national Post service even started to sell Bitcoin at the Post offices! Over 3,500 locations are available countrywide. As Australians say, for many, buying Bitcoin for the first time this way feels safer than doing so online.
What’s the reason for such popularity of digital assets in Australia? Like in other developed countries, people invest in Bitcoin and enjoy its increasing value, trade on the coin’s price fluctuations, and hedge against inflation, although the latter is extremely low in the country. Many Australians stated they didn’t buy crypto in 2020 due to the economic uncertainty. However, in general, locals are optimistic about the future of crypto, as surveys show.
Japan
Japan has the longest history of crypto investment because it is one of the countries that has been investing in Cryptocurrency for a very long time. The quantity of crypto traders and users has grown large such that it has turn out to be the second-largest or third-largest economic system in the world of Bitcoins.
All these grew to be viable because the authorities of Japan showed exceptional acceptance by way oflegalizing Cryptocurrency and started regulating it very early. Japan Virtual and Crypto Assets Exchange Association has studied the range of transactions of its members and says that there is an upward style in Bitcoin trading. The seventy three million yen traded has grow to be 417 million yen in February 2021.
Vietnam
Vietnam seems like someone, who may not be interested in crypto, but it actually is a leading of the countries in the investments globally. A survey, which is conducted by the US financial consultancy Finder, claims that 20% of the residents have purchased Bitcoin in Vietnam. According to the Gross Domestic Product, Vietnam placed on the 53rd place in the list. Although, when it comes to Bitcoin gains, it takes 13th place.
The reason for that kind of growth in the country happened because people consider crypto assets as a significant investment to use cryptocurrencies for buying anything that is not considered legal.
Germany
Currently, 2.62% of Germany’s population presently uses Cryptocurrency. 2.62% constitutes 2.1 million residents of Germany. Like India, most of the investors of Cryptocurrency are youngsters of age 18-34 years.
The reason for this is that Germany has legalized Bitcoin. Moreover, with their 2019 strategy, Germany is maining to fully exploit blockchain technology as a driver of innovation. It is aiming to boost the use of the technology and has received praise from the country’s digital association.
Moreover, Germany is planning on allowing investments in crypto in the future, which will allow citizens to earn on their crypto.
France
In France, 3.3% residents of France use Cryptocurrency. The cryptocurrency is owned more by way of the rich people of France. The cognizance of the people about Cryptocurrency is very high in France; that is why it is one of the international locations that uses the highest quantity of Cryptocurrency. France also has some crypto change license which legalizes the cryptocurrency usage for the businesses.
One of the reasons of it is that France is planning on dipping their toes in the proverbial water, by way of testing the use of digital belongings and blockchain science in an respectable ability – especially in the shape of bond transactions. Some of the largest monetary players in France have been the usage of a new cryptocurrency together – one issued through the French Central Bank for the length of the 10-month experiment.
The legitimization of crypto in mainstream markets ought to have large affects on crypto and crypto gaming in the medium and lengthy term.Especially in a market like France, the place both esports and gaming development are strongly entrenched, a go toward blockchain and crypto acceptance will absolutely boon an enterprise extensiveduration of growth.
Philippines
The Philippines is one of the world’s quickest adopters of cryptocurrency.The authorities have allowed ten blockchain businesses to work underneath monetary zones. After Vietnam, the United States grew to be the 3rd most crypto user country. According to data, the pandemic has fuelled the trend, with Filipinos releasing the fee of crypto as an investment and income producing currency.
The Philippines, although later than a great deal of East Asia in selecting cryptocurrency, would subsequently stand out if regulators includeinstead than preclude it. China and South Korea have positioned curbs on certain kinds of crypto trade. Both banned initial coin choices in 2017, and China ordered the closure of cryptocurrency exchanges as part of that move. South Korea has at least 21 exchanges. The central financial institution governor can also see the cryptocurrency trade as phase of his largerdesign to strengthen the country’s electronic payment systems.
Ukraine
Ukraine is making the monetary recreation large by using using cryptocurrencies. The United States additionally has favorable conditions for bitcoin mining and incomes more. The government additionally goals to convert the USA. into a Hot cryptocurrency destination. Hence the number of cryptocurrency customers in the us of a is also increasing. Ukraine’s economy is particularly based on the export of metals and agricultural products. So Cryptocurrency has grow to be the satisfactory way to uplift the financial system as well.
Embracing Bitcoin ought to be Ukraine’s biggest geopolitical go to usher in a prosperous future. The Ukrainian government, or extra so the Ukrainian public, is aware the chance of a prolific economic instrument that has galvanized the public and grown to play a largerfunction in and reshape our internationaleconomy and is riding societal growthtoward taking the indispensable steps to partake in this economicincrease with recent legislation.
Bitcoin in the world — a store of value and the local currency substitute
As we can see, the main use cases of cryptocurrency depend on the country and break down into two main categories. For developed countries with stable economies, Bitcoin is mostly a trading and investment tool that helps people gain profits. For developing countries with poor economies, Bitcoin serves as a substitute to the local currency that depreciates fast and thus doesn’t serve as a normal means of value exchange. Also, here, Bitcoin serves as a tool for remittances as traditional financial infrastructure doesn’t allow doing so.
As you may have noticed, countries use different approaches to crypto in terms of taxation. This January, we issued a special guide to help you navigate in the world of crypto taxes. There, we took a close look at how crypto is treated in different countries and what this means to you.
The good thing that for borrowing crypto, there are no clear legal frameworks yet. Thus, you can take a loan in crypto right now without having to pay any tax. Look up CoinRabbit and see the offers!
