A quick look at some of the most ICO friendly nations in 2018

For many years cryptocurrencies, and Bitcoin in particular, were the choice of the unsavoury. The illicit preserve of those not wishing to be caught and, often, those participating in illegal activities.

With all the secrecy, governmental organisations around the world have struggled to keep tabs on who the users are, who is moving money and for what purpose. Without this knowledge it becomes impossible to know your customer (KYC) and to put in place anti-money laundering (AML) measures. They also miss out on tax money — but no one likes paying that anyway…

Fast forward to the present day and governments are in a bit of a sticky situation. Clearly, cryptocurrencies and blockchains are a hot topic — but how do they tackle the issue of regulation?

For coins already in circulation and in people’s private wallets this task is nigh on impossible, though not completely, and would take up a lot of resources and computing power to figure out who owns what and trace it back to them. This tact is a bit of a non-starter, so the Initial Coin Offerings (ICOs) are where new legislations are being focused. This is the method in which new coins, or cryptocurrencies, are generated and distributed to buyers.

I believe there should be regulation, it is important for governments to know who is transferring money and where it’s going. But also to protect buyers: it’s too easy for “projects” to scam people into buying their tokens, raising MILLIONS of dollars and then never delivering anything. Over $7bn has been raised in 2018 already. (Sidenote: this is why at Sweetbridge we are doing a long-running, low hype, crowdsale so we can show clear deliverables through the journey.)

With China and South Korea putting an outright ban on companies raising funds through ICOs, and America keeping it strictly to accredited investors, we are going to take a look at some of the crypto-friendly nations around the world.

Switzerland

The perennial leaders in finance and fintech innovation, in terms of regulation, are again front runners when it comes to crypto. In fact, Switzerland is home to the municipality of Zug which is known in the business as Crypto Valley.

From their website: “Thanks to its business-friendly regulatory framework, deep talent pool and sophisticated infrastructure, Crypto Valley is quickly becoming a global center where emerging cryptographic, blockchain and other distributed ledger technologies businesses can thrive”.

With its openness for digital currency innovation and slight libertarian streak, common across all of Switzerland’s highly devolved government structure, Zug alone is home to over 200 cryptocurrency startups and foundations. Switzerland was behind only the US in 2017 in terms of $ amount raised in ICOs.

As a point of note, it was announced yesterday via Cointelegraph that Hypothekarbank Lenzburg has become the first bank in Switzerland to offer accounts to cryptocurrency companies.

United Kingdom

One of the world’s fintech powerhouses, the UK has always strived to be a leader in innovation and adoption of new technologies and ways of financing. With its state-backed initiative, Open Banking, all financial institutions operating in the UK can only allow your financial data to be shared with trusted 3rd parties you approve. This has caused a huge outbreak in personal finance apps such as Cleo, Clearscore and Moneybox. It’s also a clear sign of intent that the UK government wants the people to be more in control of their finances, and after bailing out the Royal Bank of Scotland, following the 2008 collapse, why wouldn’t they?

With Brexit looming, and a genuine uncertainty around the London financial district — European banks have pulled out 17% of funds held in the UK — the government is backing innovation in a bid to remain prosperous and still be seen as a leader in the space.

Enter blockchain and cryptocurrency. The UK government and the Bank of England are actively researching the space and looking at ways of bringing in fair regulations that protect consumers, though it should be added that they are currently unregulated. Nicky Morgan, part of the Treasury Select Committee looking into cryptocurrencies, said “Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial.”

Gibraltar

While technically Gibraltar is an overseas territory of the United Kingdom they do have their own rules and regulations and are front runners in terms of bringing in ICO standards and regulations around them. Part of this initiative will see regulated ICO sponsors emerge, whose job it will be to ensure that financial regulations and anti-crime measures are adhered to.

It’s also home to the Gibraltar Blockchain Exchange project (subsidiary of the Gibraltar Stock Exchange and the only one of its kind). From their website: “we seek to create a new era of trust, openness and global acceptance for the crypto industry, one quality token listing at a time.” It is clear they are seeking to pave the way for bringing cryptocurrencies into the mainstream.

Denmark

Denmark wasn’t a country that, for me, instantly popped into my head when I thought of crypto and blockchain “hubs”. That was until I recently discovered there’s 0% tax on cryptocurrencies (they have no “issuer” so are not recognised as a currency). Denmark’s National Bank’s monetary review in 2014 stated, “Bitcoins and similar solutions with no central issuer are covered neither by European legislation nor by the Danish Payment Services Act.”

While there is no tax or regulation, and Denmark’s National Bank doesn’t believe Bitcoin or virtual currency to be a threat to their economy, the report did issue a warning to consumers that they are not protected by the state in any way. So in summary: do what you like but realise that if it goes wrong, you’re on your own!

Lithuania

This small Baltic nation ranked 5th in the whole of Europe in terms of funds raised via ICOs in 2017, punches well above its rank of 35th in terms of population.

With their government actively pushing for collaboration and working groups between traditional banks, ICOs and themselves, it’s clear they are looking to pave the way for these organisations to co-exist. It should be noted though that their central bank has actively tried to dissuade organisations from dealing with crypto-based organisations. But the government is on our side!

Vilnius, Lithuainia’s capital, also plays host to The Blockchain Centre: Europe’s only part of a global blockchain innovation hub.

Singapore

While the Monetary Authority of Singapore’s (MAS) standpoint on cryptocurrencies is not 100% clear, they are not taking a hard line on them and openly state they do not regulate them. They do, however, regulate the subsidiary parts of the industry such as exchanges and mandate KYC / AML through these.

Singapore has a desire to become a fintech hub globally, and the MAS recently launched a sandbox initiative in order to promote innovation within the sector to ensure that organisations can challenge the status quo while remaining on the right side of the law.

With a large of number ICOs raising $10m+ in 2017, Singapore is clearly a popular choice of location for organisations working with the crypto space.

There are many more countries actively encouraging cryptocurrency organisations to choose them as base, however these are just 5 that I have picked for the reason stated above.

Currently the total market cap for cryptocurrencies is just above $347bn, which is roughly 0.005% of world’s GDP and what many would call just a drop in the ocean. Despite this small figure it is the accessibility for everyone around the world to buy and own crypto, and become part of a new revolution that has made it headline news.

Blockchain and crypto are here to stay, and countries are starting to realise this.