The emergence of blockchain technology and cryptocurrencies has given rise to numerous centers of Web3 innovation. Clear guidelines on crypto taxation and regulations have empowered the most crypto-forward nations to foster vibrant Web3 companies, facilitating seamless integration with governmental bodies and financial institutions.
Furthermore, several countries are poised to introduce their own central bank digital currencies (CBDCs), signaling a transformative shift in the financial landscape. Not all nations embrace digital assets with equal enthusiasm. In fact, certain countries, and governments actively impede individuals from accessing cryptocurrencies, imposing considerable barriers to entry.
Determining the countries that are most crypto-friendly involves considering several key factors. These include the level of institutional acceptance, availability of exchanges and wallets, acceptance of decentralized finance (DeFi), government regulation, and transparency. Additionally, thriving financial sectors that offer a wide range of crypto services and products are essential in the most crypto-friendly countries.
In the following discussion, we will explore the top countries investing in Web3, key markets for Web3 gaming and crypto-friendly countries.
Top Countries investing in Web3
Web3 technologies, such as blockchain, decentralized finance (DeFi), and other distributed technologies, are garnering global attention as investors increasingly recognize their potential. While it is challenging to determine which country is investing the most in Web3 technologies, several countries are known for their strong support and investment in these transformative technologies. Here are some examples of countries actively investing in blockchain technology:
The Chinese government has made substantial investments in blockchain technology. In October 2019, President Xi Jinping called for increased investment and development in blockchain. China announced plans in 2020 to invest $1.4 billion in blockchain technology over the next five years. In terms of venture capital investment in blockchain, China accounted for approximately 22% globally in 2020. The government has initiated various blockchain projects and launched a national blockchain infrastructure project to standardize blockchain development. Additionally, China introduced the digital yuan, a digital currency based on blockchain technology.
The United States has also been actively investing in blockchain technology. The National Science Foundation (NSF) awarded over $100 million in research grants for blockchain-related projects. Several U.S. states, including Wyoming, have invested in blockchain technology by establishing regulatory frameworks for blockchain and cryptocurrency businesses.
In 2020, the U.S. accounted for around 27% of global venture capital investment in blockchain. The U.S. government has launched initiatives and projects exploring blockchain’s applications, such as supply chain management. The country is home to leading blockchain companies like Coinbase, ConsenSys, and Ripple.
Switzerland has a long-standing reputation for supporting innovation and emerging technologies, including blockchain. In 2019, the Swiss government launched a program with a $100 million allocation to support blockchain startups. Switzerland accounted for approximately 6% of global venture capital investment in blockchain in 2020.
The Swiss government has introduced blockchain strategies and initiatives to create regulatory frameworks and promote blockchain adoption in the economy. Funding for blockchain research and development has been provided through various programs.
Japan has shown interest in exploring the potential of blockchain technology and has made investments in blockchain-related research and development. In 2018, the Japanese government launched a program with $9.1 million in funding to support blockchain startups. In 2020, Japan accounted for approximately 6% of global venture capital investment in blockchain, amounting to around $770 million.
The government has initiated blockchain projects, such as a platform for sharing academic records and a platform for issuing digital certificates. Japanese blockchain companies, including bitFlyer, SBI Ripple Asia, and LayerX, have played significant roles in driving blockchain innovation.
South Korea has also been investing in blockchain technology. In 2019, the government announced a $9 million investment in blockchain-related projects over three years. In 2020, South Korea accounted for approximately 5% of global venture capital investment in blockchain, totaling around $650 million. South Korean investors have actively funded blockchain startups and projects.
United Arab Emirates (UAE)
The UAE has been making substantial investments in blockchain technology. The UAE’s blockchain market is projected to grow at a compound annual growth rate (CAGR) of 67.6% between 2020 and 2025, reaching a value of $8.6 billion by 2025, according to the Dubai Chamber of Commerce and Industry.
The Dubai government launched the Dubai Blockchain Strategy in 2016, aiming to transform Dubai into the world’s first blockchain-powered government. Various blockchain initiatives have been launched as part of this strategy, covering government services, trading and logistics, and real estate transactions. The UAE is home to notable blockchain companies like BitOasis and ArabianChain.
These countries, among others, have demonstrated significant investments in blockchain technology, and their commitment is expected to continue as blockchain continues to gain traction as a transformative technology.
Key Markets for Web3 Gaming
Vietnam possesses a strong foundation for fostering a thriving gaming economy. With a staggering 68 million smartphone users, it has emerged as a pivotal market for the growth of mobile gaming. Additionally, Vietnam exhibits a positive sentiment towards cryptocurrency investment, with many individuals embracing it alongside other investment options.
Consequently, the country has secured its position as a global leader in crypto usage, boasting high purchasing power and widespread adoption on a per capita basis. Notably, Vietnam has been instrumental in nurturing numerous successful Web3 gaming projects, including Thetan Arena, Faraland, and Axie Infinity.
The Philippines harbors a dynamic gaming community that has significantly contributed to the expansion of Web3 games. The country’s robust GameFi community played a pivotal role in the success story of Axie Infinity, to the extent that the game’s founders credited Filipino gamers for their support.
GameFi models such as Play-To-Earn (P2E) have gained immense popularity among gamers in the Philippines, offering an alternative means of making a living, particularly during the peak of the Covid-19 pandemic. To encourage innovation and growth in the Web3 gaming sector, the Philippines has hosted various Web3-related events, including the recent Philippine Web3 Festival, which highlighted the market’s importance in the industry’s development.
India currently boasts a staggering half a billion gamers, a significant proportion of whom are paying customers. Recognizing this immense opportunity, many Indian entrepreneurs have ventured into the Web3 gaming space. In 2022, Web3 games in India managed to raise a total of $620.5 million across 32 deals, as reported by research firm Tracxn. Notable among these successes is Rario, an NFT gaming startup that secured $120 million in Series A funding.
India also serves as a hub for game development talent, with a substantial number of Indian developers involved in the creation of popular AAA games in the western market, making it an ideal location for launching a gaming company.
Brazil stands out as one of the most promising countries in Latin America for the development of crypto and NFT games. Brazilian users view cryptocurrency investments as a means to safeguard and grow their earnings, a sentiment shared by Thomaz Fortes, the crypto lead at Nubank. As a result, Brazil has emerged as the leading crypto market in the region and the seventh-largest globally.
Recent developments indicate Brazil’s commitment to crypto adoption, as the country’s president signed a bill to legalize and regulate the use of cryptocurrencies as a payment option. This progressive move is expected to drive even greater adoption of cryptocurrencies in Brazil and across Latin America.
Thailand’s well-defined regulations for cryptocurrencies have paved the way for GameFi development within the country. The Bank of Thailand’s report highlights a substantial 17-fold increase in the volume of domestic crypto trade, soaring from $143 million in 2018 to $2,589 million in 2020.
The government’s efforts in establishing regulatory clarity have positioned Thailand as one of the first countries globally to regulate digital asset offerings. Numerous Web3 game firms have flourished in Thailand, with GuildFi being a notable example. GuildFi, a Web3 platform facilitating game onboarding and player connections, secured $6 million in funding from Animoca Brands in 2021 through its partnership with global game creators.
When it comes to determining what makes a country crypto-friendly, factors such as digital asset laws and tax policies play a crucial role. Here are some of the most notable crypto-friendly countries and the reasons behind their appeal:
Portugal has become a dream destination for many crypto enthusiasts. As one of the world’s most developed nations, Portugal has shown a keen interest in embracing cutting-edge technologies, including cryptocurrencies. One of the significant advantages for investors in Portugal is that cryptocurrency gains are tax-free if the assets have been held for at least one year. The government has also introduced Technological Free Zones to encourage blockchain companies to conduct experiments and contribute to digital transformation.
Malta, despite being one of the smallest countries in the European Union, has positioned itself as a leader in digital currencies within Europe. The country has a progressive approach to digital assets and has enacted legislation to create a regulatory ecosystem for cryptocurrency operations. Malta’s legislative package includes categorizing cryptocurrencies into distinct classes, implementing regulations for offering digital financial assets, and establishing a Digital Innovation Authority. The country’s equitable tax system and favorable regulations have solidified its position as a crypto-friendly hub.
Slovenia, located in Central Europe, has shown a significant interest in cryptocurrency and has openly encouraged its use. The country’s taxation system is favorable for crypto investors, as capital gains tax is not charged on earnings from crypto trading and market fluctuations. Slovenia does not recognize cryptocurrencies as financial instruments, making it an attractive destination for those seeking tax advantages. The country’s accommodating legislation and crypto-friendly banks further contribute to its appeal.
The Netherlands, one of the world’s wealthiest countries, has embraced cryptocurrencies and considers them part of its future economy. The Dutch government has demonstrated trust in cryptocurrency and has not imposed strict regulations on crypto transactions. The country has a standardized crypto market, and people can transact in cryptocurrencies without fear of legal repercussions. The progressive approach of the Financial Action Task Force and the government’s support make the Netherlands a leading crypto-friendly country.
As one of the fastest-growing economies globally, Canada was the first country in the Americas to establish a legal framework for cryptocurrency regulation. The country’s regulatory framework ensures that entities and individuals dealing in cryptocurrencies are monitored to prevent illicit activities. Canada has no laws prohibiting cryptocurrency dealings and has an unbiased and immigrant-friendly tax system. It is an excellent destination for trading cryptocurrencies and offers favorable conditions for cryptocurrency mining.
Germany, known for its economic prowess, has embraced cryptocurrencies while maintaining a unique approach to taxation. Capital gains tax is not applicable if Bitcoin or other cryptocurrencies are held for more than a year. Additionally, if the profit from crypto trading or exchanging for fiat currency is less than €600, no taxes are levied. Germany aims to foster a sustainable digital economy in the long run and provides a favorable environment for crypto enthusiasts.
Luxembourg offers a favorable regulatory environment for cryptocurrency businesses. While the country does not have specific regulations for Bitcoin, it imposes the same rules on crypto exchanges as other financial institutions. There are no restrictions on investing and trading in cryptocurrencies, and the government aims to normalize their use. With their progressive approach and acceptance of Bitcoin payments, Luxembourg has become a leading crypto-friendly country.
Estonia ranks among the top crypto-friendly countries in Europe. The country has accepted cryptocurrencies as legal tender and has positioned itself as a hub for crypto firms. Estonia’s taxation system for crypto trading, mining, and investing is straightforward, with no hidden taxes. Financial institutions such as LHV Bank have embraced blockchain technology, providing further support for crypto-related activities.
Singapore stands out as a leading crypto-friendly country in Asia. The Monetary Authority of Singapore has implemented progressive plans and safety measures to prevent illegal activities while fostering the growth of the crypto industry. Capital gains tax is absent on cryptocurrency trading, making Singapore an attractive choice for crypto investors. Although organizations engaged in crypto trading and payments may be subject to capital gains tax, Singapore’s overall crypto-friendly environment remains intact.
Switzerland has gained recognition as a global leader in the crypto world. The country considers cryptocurrencies as legitimate digital assets and has even classified Bitcoin as legal tender in some regions. Individual traders who hold and invest in crypto using personal bank accounts are not subject to tax. Switzerland’s Crypto Valley in Zug has become a hub for fintech startups and blockchain innovation, with no capital gains tax on cryptocurrencies. Switzerland’s forward-thinking approach and acceptance of Bitcoin payments have attracted numerous crypto investors.
These crypto-friendly countries offer unique advantages for investors, including favorable tax policies, progressive regulations, and government support. As the crypto industry continues to evolve, these countries remain at the forefront, providing an ideal environment for individuals and businesses to explore and flourish in the world of cryptocurrencies.
The top countries for launching Web3 companies offer a favorable environment for innovation and growth in the blockchain and cryptocurrency industries. These countries have demonstrated their commitment to fostering a crypto-friendly ecosystem through progressive regulations, tax incentives, and government support. Investors and entrepreneurs seeking to establish Web3 companies can benefit from the conducive business environments, robust infrastructure, and access to a skilled workforce in these countries.