Five cases of governments adopting digital assets

As digital asset prices hit new all-time highs in 2021, many jurisdictions increasingly embraced cryptocurrencies like Bitcoin (BTC) and other crypto-based instruments.

In addition to the fact that Bitcoin crossed $ 68,000 for the first time since its inception, the year 2021 will be remembered for the historic adoption of Bitcoin as legal tender in El Salvador. The world’s very first Bitcoin exchange-traded fund (ETF) was also launched in 2021, alongside many other benign regulatory developments around the world.

As we take a look at notable global regulatory moments in 2021, Cointelegraph has picked out some of the most memorable examples of friendly crypto regulation.

1. El Salvador: The first country in the world to adopt Bitcoin as legal tender

The Republic of El Salvador, the smallest nation in Central America, officially adopted Bitcoin as legal tender on September 7, 2021, becoming the first country in the world to do so. Bitcoin was trade to around $ 47,000 on the day of Bitcoin’s official adoption in the country.

El Salvador’s bold Bitcoin move took several months to materialize when President Nayib Bukele first introduced the ‘Bitcoin Law’, laying the groundwork for using BTC as an official payment method alongside the US dollar in June 2021. The Salvadoran legislature then passed the law, which received a qualified majority of 62 out of 84 votes.

Known as the “Land of Volcanoes,” El Salvador has also decided to deploy its volcanic activity to generate new Bitcoins. In September, President Bukele teased a Bitcoin mining factory powered by volcanic geothermal energy in El Salvador, marking a major case to reduce BTC’s carbon footprint. Soon after, Bukele raised the stakes even higher when he announced his intention to create an entire city of Bitcoin, funded by BTC bonds.

As the crypto community celebrated El Salvador’s BTC campaign, global financial authorities like the International Monetary Fund have expressed skepticism about the government’s switch to crypto.

Related: El Salvador buys 21 Bitcoin to celebrate December 21, 2021

Some people in El Salvador were also unhappy with the Bitcoin law, with some protesting the adoption of Bitcoin due to concerns about its volatile price. Some of the protests have even resulted in the destruction of Bitcoin ATMs.

2. The United Arab Emirates: CZ’s New Home

The United Arab Emirates became one of the most crypto-friendly countries in 2021, as authorities in its capital, Dubai, stepped up efforts to enable the development of the crypto industry.

In January, the Dubai Financial Services Authority (DFSA) announced plans to establish a comprehensive crypto regulatory framework as part of its 2021 business plan. The DFSA subsequently issued several regulatory approvals, including one for one. major Canadian investment product, The Bitcoin Fund, in October. The DFSA has also worked on the regulation of investment vehicles such as security tokens and derivatives.

UAE regulators have also entered into several agreements to officially allow and support crypto trading in several free economic zones in Dubai. The nation has also made progress in adopting non-fungible tokens (NFTs) as its postal operator issued NFTs in November to commemorate the 50th National Federation Day.

At the end of 2021, the Dubai World Trade Center Authority said it would become a comprehensive zone and regulator of cryptocurrencies, commodities, operators and exchanges.

Related: Binance joins Dubai World Trade Center’s new crypto hub

The UAE is becoming an attractive destination for some of the world’s largest cryptocurrency companies and industry figures. In October, Binance CEO Changpeng Zhao reportedly bought his first home in “very pro-crypto” Dubai. The Chinese-Canadian business executive previously claimed he did not own any real estate as of April 2021.

3. Canada: Crushing the Global Bitcoin ETF Race

Canada earned a spot on the list of most crypto-friendly countries in 2021 when its main securities regulator cleared the world’s first physically-settled Bitcoin ETF at the start of the year.

Launched by Canadian investment firm Purpose Investments in mid-February, the Purpose Bitcoin ETF got off to an explosive start with $ 564 million in assets under management in just five days of starting trading.

Canada continued to lead the global Bitcoin ETF race as Fidelity Canada launched its Fidelity Advantage Bitcoin ETF and the eponymous Bitcoin ETF mutual fund in December.

Canada’s Bitcoin ETFs are not only available to retail investors, but also offer significant benefits to those who open government-registered investment accounts, such as tax-free savings accounts.

Related: Crypto Doesn’t Pose a Big Risk to the Economy So Far, Bank of Canada Official Says

In addition to the dominance of crypto ETFs, Canada has made efforts to clarify its crypto regulations in recent years, officially recognizing crypto firms as money services firms in 2020. At the end of 2021, the Financial Transactions and Reports Analysis Center of Canada registered the registration of Binance’s local affiliate, Binance Canada Capital Market.

Canada is ranked fourth among the countries in terms of Bitcoin mining power, accounting for 9.6% of the total global hash rate, according to to Cambridge Bitcoin Electricity Consumption Index data.

4. Singapore: crypto is “an investment in the prospective future”, according to the regulator

Singapore continued to be one of the world’s largest hubs for cryptocurrency exchanges and blockchain businesses in 2021, as the country’s regulators have done a lot to nurture the industry.

In November, Singapore hosted two new institutional-grade Bitcoin funds launched by Fintonia Group, a company regulated by the Monetary Authority of Singapore (MAS). Previously, the MAS officially licensed companies like the Australian Independent Reserve Exchange and DBS Bank’s brokerage arm, DBS Vickers, to provide digital payment token services in the country.

DBS Bank, Singapore’s largest retail and commercial bank, is one of the largest local companies to have made a foray into the crypto industry in the past year. The company saw tenfold growth in its encryption volume in the first quarter of 2021 after launching its crypto trading platform, DBS Digital Exchange, in late 2020.

Related: Singapore to Position itself as a Global Crypto Center, Regulator Says

Some companies with close ties to the Singapore government are said to be big fans of cryptocurrencies like Bitcoin. Robert Gutmann, CEO of New York Digital Investment Group, claimed in March that Singaporean government-backed holding company Temasek is a major investor in Bitcoin.

Singapore is also among the best countries in the world in terms of retail crypto adoption, as 43% of Singaporeans own crypto, according to a survey.

Although local authorities welcome the development of the crypto industry, a large number of crypto companies have apparently not been licensed to operate in Singapore in 2021.

5. Gibraltar: new target for the Huobi exchange after the Chinese crackdown

Gibraltar, a British overseas territory and one of the smallest countries in the world, became an attractive place for crypto in 2021.

In November, Gibraltar hosted Bullish, a new cryptocurrency exchange launched by the developer of the EOS.IO protocol, The local branch of the company previously obtained a Distributed Ledger Technology license from the Gibraltar Financial Services Commission (GFSC).

In September, the GFSC also approved operations of Zubr Exchange Limited, a new local crypto exchange company launched by Sam Bankman-Fried’s crypto giant FTX.

The government of Gibraltar has strengthened its ties with global blockchain and crypto players. In March, Gibraltar’s Minister for Digital and Financial Services, Albert Isola, became an ambassador for the Global Blockchain Business Council, a major industry association.

Related: Gibraltar government plans to bridge public-private sector divide with blockchain

Some of the world’s largest crypto exchanges entered Gibraltar in 2021 thanks to growing support from regulators.

Following the approval of the GFSC, the Huobi crypto exchange reportedly moved its spot trading operations to its Gibraltar-based subsidiary following the cryptocurrency crackdown in China. According to the company, Chinese operations accounted for at least 30% of its total transaction volumes and revenue before the ban.

Crypto-friendly jurisdictions of 2021: honorable mentions

El Salvador, the United Arab Emirates, Canada, Singapore and Gibraltar are of course not the only countries that have served as examples of benign crypto regulation in 2021.

Other increasingly crypto-friendly jurisdictions are Australia, which has been actively engaged in adopting new crypto regulations and this year has emerged as a major venue for crypto-related ETF listings. .

Liechtenstein, the richest nation in the world per capita, has been the country with the most comprehensive cryptocurrency tax policy for the second year in a row in 2021, according to a PwC report. Australia and Malta are second, followed by Germany.

Sylvia B. Polson