Best Countries to Start a Crypto Business

The cryptocurrency and blockchain industry has grown exponentially over the last decade, and is now soaring into mainstream popularity. Recent years have seen a rapid increase in the number of crypto businesses looking to innovate and profit in this exciting new space. 

Unfortunately, the open adoption of cryptocurrency by many governments around the world has lagged somewhat. Some governments remain firmly anti-crypto, while others simply haven’t adapted fast enough to know how to supervise and regulate this constantly evolving space. 

This means that it is important for those looking to start a cryptocurrency business to carefully consider where to base themselves. It is a decision that can have significant effects on taxation, freedom to operate and grow, customer base, scope of allowable operations, and many other areas. 

We have provided an overview of five of the best countries in the world to start a crypto business. There are certainly many other options to consider so this should in no way be considered an exhaustive list. 

Key Takeaways

• Switzerland, Singapore, and Malta offer favorable environments for crypto companies
• Regulatory clarity and tax benefits are crucial factors in jurisdiction selection
• Entrepreneurs should align their choice with their company's specific needs and goals

Understanding the Crypto Company Ecosystem

Crypto companies typically focus on facilitating transactions, storage, or trading of digital assets. Key components often include secure wallet systems, exchange platforms, and compliance frameworks. Many firms specialize in specific areas like cryptocurrency mining, blockchain development, or decentralized finance (DeFi) applications.

These businesses must navigate complex regulatory landscapes, which vary significantly between jurisdictions. Robust security measures are critical to protect digital assets and user data. Crypto firms also require skilled technical teams to develop and maintain their blockchain-based systems.

The Role of Blockchain Technology

Blockchain forms the foundation of most crypto companies. This distributed ledger technology enables secure, transparent, and immutable record-keeping of transactions. Crypto firms use blockchain to create trust in a decentralized environment, eliminating the need for intermediaries.

Blockchain allows for the creation and management of digital assets, including cryptocurrencies and tokens. It supports smart contracts, which automate and enforce agreement terms without third-party involvement. Many crypto companies leverage these features to build innovative financial products and services.

The technology's potential extends beyond finance, with applications in supply chain management, identity verification, and more. As blockchain evolves, crypto companies continue to explore new use cases and business models.

Best Countries to Start a Crypto Business

1. Malta

Malta consistently features on just about every list of crypto-friendly countries and best jurisdictions to start a crypto business. It is widely known as being a leader and pioneer in terms of its open, forward-thinking view towards the digital asset market and blockchain technology in general. 

Malta was the first nation to introduce a comprehensive regulatory framework for Cryptocurrencies which is governed by the Malta Financial Services Authority (MFSA).

These regulations help prevent money laundering and financial crime related to cryptocurrency, while being highly favourable and beneficial toward crypto businesses incorporated in Malta.

In 2018, Malta Lunched three “blockchain bills” to further help properly regulate and instil confidence in the growing Malta cryptocurrency markets. These were ‘The Malta Digital Innovation Authority Bill’, ‘The Technology Arrangements and Services Bill’, and ‘The Virtual Financial Assets Bill’. 

In addition to its particular attention and favouring of the crypto industry, Malta is also more generally an ideal jurisdiction to incorporate an offshore company. Overseas companies are not expected to pay income or capital gains tax in Malta, along with various other privileges. 

It is clear why some of the largest crypto exchanges in the world, such as Binance, along with many other successful cryptocurrency and blockchain businesses have decided to base themselves in Malta. 

2. Switzerland

Switzerland has taken a highly progressive and friendly stance toward the cryptocurrency industry. So much so that Zug, a town in Switzerland, has been widely dubbed “Crypto Valley”, with its top 50 cryptocurrency companies worth over $40 billion collectively. 

In 2021, Zug began allowing its residents to pay for taxes, municipal services, and everyday transactions with Bitcoin and Ethereum.

This means that these cryptocurrencies are viewed as legal tender and are therefore not liable for capital gains taxation. The extremely friendly and favourable environment for crypto businesses in Zug alone makes Switzerland one of the best countries in the world for cryptocurrency businesses and investors. 

In addition, the rest of Switzerland also offers an advantageous landscape for both individual crypto investors and companies alike.

These come in the form of low or zero taxation depending on the nature of the transactions (individual traders are not liable for capital gains tax at all on crypto transactions), as well as a thriving and rapidly expanding crypto currency market with well structured regulation and friendly incorporation laws. 

3. Singapore

The international financial hub of Singapore, with its already thriving offshore sector, booming economy, and reputation as a fintech hotspot, has become a natural choice of country in which to setup an offshore cryptocurrency company. 

Singapore has taken the attitude that the cryptocurrency and blockchain industry should be well regulated and supervised, without stifling innovation and growth. So far, their approach has been highly successful.

Their comprehensive rules and regulations make it easier for crypto companies to understand where they fit in the regulatory framework whilst providing consumer protection and confidence. At the same time, the regulations are generally friendly and beneficial to companies wanting to setup shop in Singapore. 

Crypto tax treatment in Singapore is generally favourable. Individuals and companies are not liable for capital gains tax; however, they may be subject to income tax if they are an active trading company or accept payments in crypto. 

4. Estonia

Estonia is one of the most well-regulated and, at the same time, friendliest nations in the world for cryptocurrency, digital asset, and blockchain companies.

In fact, Estonia is so eager to market itself as a cryptocurrency hotspot and embrace blockchain technology that they are even considering launching their own national digital currency. 

The technologically advanced nation of Estonia has taken a positive stance towards cryptocurrency early on. They took the approach of ensuring comprehensive and fair regulations to encourage its safe and sustainable adoption in Estonia. This includes anti-money-laundering and tax legislation. 

Cryptocurrency taxes are favourable for crypto companies in Estonia. Transactions with bitcoin and other cryptocurrencies are taxed identically to other types of corporate activity, and there is no corporate income tax on crypto if the profits are not distributed. 

5. Seychelles

Seychelles has become a highly attractive jurisdiction for cryptocurrency companies who are looking to incorporate offshore. Well recognised as a traditional tax haven and ideal location for offshore company incorporation in general, Seychelles was quick to embrace cryptocurrency and market itself as a hotspot for the industry. 

Seychelles already offers offshore companies favourable tax treatment, as well as good levels of privacy and asset protection.

It has extended these benefits to cryptocurrency companies, and has since attracted industry-leading exchanges such as Bitmex, KuCoin, and Huobi to register on their shores. Seychelles is poised to become the next major crypto hub. 

Regulatory Frameworks and Compliance

AML and KYC Protocols

Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols are fundamental components of crypto compliance. These measures help prevent financial crimes and ensure transparency in transactions.

Crypto companies must implement robust AML policies, including transaction monitoring and reporting suspicious activities. KYC procedures involve verifying customer identities and assessing their risk profiles.

Many jurisdictions require crypto firms to maintain detailed records of customer information and transactions. This data aids in detecting and preventing money laundering, terrorist financing, and other illicit activities.

Compliance with AML and KYC regulations often involves partnering with specialized service providers to streamline processes and stay up-to-date with evolving requirements.

VASP Regimes and Cryptocurrencies

Virtual Asset Service Provider (VASP) regimes have emerged as a key regulatory framework for crypto businesses. These regimes define the scope of regulated activities and set compliance standards for crypto companies.

VASPs typically include cryptocurrency exchanges, wallet providers, and other entities facilitating crypto transactions. Regulatory requirements for VASPs may vary by jurisdiction but often encompass:

• Registration or licensing
• Compliance with AML/KYC protocols
• Regular reporting to regulatory authorities
• Cybersecurity measures
• Customer protection policies

Some countries have adopted the Financial Action Task Force (FATF) recommendations for VASPs, creating a more standardized global approach to crypto regulation.

Crypto-Friendly Regulatory Protocols

Certain jurisdictions have implemented crypto-friendly regulatory protocols to attract blockchain businesses and foster innovation. These frameworks aim to strike a balance between consumer protection and industry growth.

Key features of crypto-friendly regulations may include:

• Clear legal definitions for cryptocurrencies and blockchain technologies
• Simplified licensing processes for crypto businesses
• Tax incentives for blockchain startups
• Sandbox programs for testing innovative products
• Supportive stance on initial coin offerings (ICOs) and security token offerings (STOs)

Countries like Singapore, Switzerland, and Malta have gained reputations as crypto-friendly jurisdictions due to their progressive regulatory approaches. These nations often provide clear guidelines for crypto businesses while maintaining robust compliance standards.

Business Considerations for Crypto Companies

Cost and Setup of Crypto Businesses

Incorporation fees for crypto companies vary widely across jurisdictions. Singapore offers competitive rates, with registration costs around $300-$500. Malta's fees are higher, typically ranging from $1,500-$2,500.

Initial capital requirements differ as well. The British Virgin Islands (BVI) has no minimum capital requirement, making it attractive for startups. Switzerland, however, mandates a minimum capital of 100,000 Swiss francs for public limited companies.

Ongoing compliance costs should be factored in. Annual audit fees in Singapore average $3,000-$5,000, while Malta's regulatory fees can reach €10,000 annually.

Legal Structures and Tax Benefits

Crypto-friendly jurisdictions offer various legal structures tailored to blockchain businesses. Singapore's Private Limited Company structure provides liability protection and tax benefits for crypto firms.

Switzerland's AG (Aktiengesellschaft) structure is popular among blockchain startups due to its flexibility and credibility. The country's crypto-friendly Canton of Zug offers corporate tax rates as low as 14.6%.

Malta's innovative DLT framework includes three types of licenses for crypto businesses, each with specific regulatory requirements and tax implications. The country's effective corporate tax rate can be as low as 5% with proper structuring.

Fundraising and Token Issuance

Token issuance regulations vary significantly across jurisdictions. Switzerland's FINMA provides clear guidelines for classifying tokens, facilitating compliant ICOs.

Singapore's regulatory sandbox allows crypto startups to test innovative products with relaxed regulations. The Monetary Authority of Singapore (MAS) has issued detailed guidelines on token offerings.

Malta's Virtual Financial Assets Act provides a comprehensive framework for ICOs and token sales. The country's blockchain-friendly stance has attracted numerous crypto projects seeking to raise funds.

BVI offers flexibility for token issuance, with no specific regulations on ICOs. However, companies must still comply with general securities laws and anti-money laundering requirements.

Services and Infrastructure for Crypto Firms

Custodial and Non-Custodial Wallets

Leading crypto-friendly jurisdictions provide a range of wallet options for businesses. Custodial wallets, managed by third-party providers, offer enhanced security and compliance features. These services often include multi-signature authentication and cold storage solutions.

Non-custodial wallets give firms full control over their private keys. Many jurisdictions host wallet developers creating user-friendly interfaces with advanced security measures.

Some regions have implemented regulatory frameworks specifically for wallet providers. This ensures businesses can choose from compliant, reliable options that meet industry standards.

Blockchain and Crypto Exchanges

Crypto-friendly jurisdictions typically host multiple cryptocurrency exchanges. These platforms facilitate the trading of various digital assets, offering liquidity and market access to businesses.

Many exchanges provide advanced trading features such as:

• Spot and futures markets
• Margin trading
• OTC desks for large transactions
• API access for automated trading

Regulatory clarity in these jurisdictions often allows exchanges to operate with greater certainty. This can lead to more innovative services and better support for institutional clients.

NFTs and Smart Contract Platforms

Jurisdictions supporting crypto firms often foster thriving ecosystems for NFTs and smart contracts. These regions typically host multiple NFT marketplaces, catering to various digital collectibles and tokenized assets.

Smart contract platforms find supportive environments in these jurisdictions. This includes:

• Development tools and resources
• Legal frameworks recognizing smart contract validity
• Blockchain-specific incubators and accelerators

Many regions actively encourage innovation in this space, offering grants or tax incentives for blockchain projects. This creates a fertile ground for businesses exploring NFTs and smart contract applications.

Conclusion

If you intend to enter the cryptocurrency industry and start a crypto or blockchain based business, it is important to understand the implications that the jurisdiction in which you are based can have on the success or failure of your business, as well as the scope of your permitted business activities.

The aforementioned countries are ideal locations to explore for your crypto business. However, what works for one business might not suit another, so it is always essential to do your own careful due diligence and find the location that best suits your needs.

In addition, cryptocurrency regulations are constantly changing, which means you always need to find out what the current rules are, and be aware that they may change again in the future. 

It is highly recommended to enlist the services of an expert in offshore and cryptocurrency industries to help you determine the best route to take and practically assist you with the incorporation process. 

For more: Best Tax Free Countries For Crypto 

Frequently Asked Questions

Which countries are considered the most accommodating for cryptocurrency businesses?

Switzerland, Singapore, and Malta are often cited as crypto-friendly jurisdictions. These countries have clear regulations and supportive ecosystems for blockchain companies. Estonia and Luxembourg also offer favorable conditions for crypto startups.

What factors should be considered when choosing a jurisdiction for a blockchain development company?

Regulatory clarity is crucial when selecting a jurisdiction. Tax policies, access to skilled developers, and proximity to potential clients or partners are important considerations. The availability of funding and the overall startup ecosystem also play significant roles.

In which jurisdictions are decentralized autonomous organizations (DAOs) most favorably treated?

Wyoming in the United States has pioneered DAO-friendly legislation. Switzerland and Malta have also shown openness to DAOs. These jurisdictions provide legal frameworks that recognize the unique nature of decentralized organizations.

How do specific regulations in the US impact the choice of state for a cryptocurrency LLC?

States like Wyoming, Delaware, and New Hampshire have crypto-friendly regulations. Wyoming offers specific blockchain and cryptocurrency legislation. Delaware's corporate laws are well-established and flexible. New Hampshire has minimal regulations and low taxes.

What are the advantages of setting up a cryptocurrency trading company in a particular country?

Low tax rates and regulatory clarity are primary advantages. Countries like Singapore offer favorable tax treatment for crypto trading. Some jurisdictions provide licensing frameworks specifically for cryptocurrency exchanges, enhancing legitimacy and consumer trust.

Which countries offer the most beneficial environment for a crypto holding company?

The Cayman Islands and British Virgin Islands are popular for crypto holding companies due to their tax-neutral status. Switzerland's "Crypto Valley" provides a supportive ecosystem. Singapore's stable financial environment and clear regulations make it attractive for holding companies.