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Five Instances of Governments Embraces Digital Assets In 2021

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Five Instances of Governments Embraces Digital Assets In 2021 As Crypto Makes History.

While there were a few regulatory issues in 2021, some governments provided masterclasses in crypto regulation.

Many governments were rapidly accepting cryptocurrencies like Bitcoin (BTC) and other crypto-based assets as digital asset prices reached new historical highs in 2021.

The year 2021 will be recognized for BTC’s historic introduction as legal cash in El Salvador, in addition to it crossing $68,000 for the first time since its inception. In 2021, the world’s first BTC exchange-traded fund (ETF) was launched, along with a slew of other positive legislative developments around the world.

Some of the most memorable instances of friendly crypto legislation as we look back on significant worldwide regulatory developments in 2021.

1. El Salvador: The world’s first country to accept Bitcoin (BTC) as legal tender.

On September 7, 2021, the Republic of El Salvador, Central America’s smallest republic, became the world’s first country to embrace Bitcoin as legal cash. On the day of Bitcoin’s official introduction in the country, it was trading at roughly $47,000.

President Nayib Bukele had first introduced the “Bitcoin Law,” establishing the framework for BTC’s usage as an official payment mechanism alongside the US dollar in June 2021. The law was then passed by the Salvadoran Legislative Assembly, which received a supermajority of 62 out of 84 votes.

El Salvador, often known as the “Land of Volcanoes,” has decided to use its volcanic activity to generate fresh BTC.

President Bukele previewed a Bitcoin mining operation in El Salvador powered by volcanic geothermal energy in September, highlighting a big case for reducing Bitcoin’s carbon footprint. Soon after, Bukele raised the stakes even higher by announcing ambitions to build a Bitcoin city entirely funded by Bitcoin bonds.

While the crypto community applauded El Salvador’s Bitcoin initiative, international financial institutions such as the International Monetary Fund have expressed reservations about the government’s decision.

El Salvadoreans were likewise dissatisfied with the Bitcoin Law, with some protesting against its adoption due to concerns about its volatile pricing. Some protests even destroyed Bitcoin ATMs.

2. CZ’s new home in the United Arab Emirates.

In 2021, the UAE was named one of the most crypto-friendly nations, with officials in Dubai, the UAE’s capital, stepping up efforts to support the crypto industry’s growth.

As part of its 2021 business plan, the Dubai Financial Services Authority (DFSA) announced readiness to build a complete crypto regulatory framework in January. Following that, the DFSA gave additional regulatory permits, including one in October for The Bitcoin Fund, a prominent Canadian financial product. Regulations for investment vehicles such as security and derivative tokens are also being worked on by the DFSA.

Many agreements have also been made by UAE regulators to officially authorize and encourage crypto trading in several free economic zones in Dubai. The country has also made progress in the use of nonfungible tokens (NFTs), with its postal operator issuing NFTs in November to honor the federation’s 50th anniversary.

The Dubai World Trade Centre Authority said in late 2021 that it would become a comprehensive zone for cryptocurrencies, products, operators, and exchanges, as well as a regulator.

Some of the world’s leading cryptocurrency companies and industry figures are flocking to the United Arab Emirates. Binance CEO Changpeng Zhao is said to have purchased his first home in Dubai, which is “extremely pro-crypto.” As of April 2021, the Chinese-Canadian business executive claimed that he did not own any real estate.

3. Canada is a global leader in the Bitcoin ETF race.

When Canada’s primary securities regulator approved the launch of the world’s first physically-settled Bitcoin ETF at the start of the year, it earned a spot on the list of 2021’s most crypto-friendly countries.

Purpose Investments, a Canadian investment firm, launched the Purpose Bitcoin ETF in mid-February, and it enjoyed an explosive start, with $564 million in assets under management just five days after it began trading.

As Fidelity Investments continues to lead the worldwide Bitcoin ETF race, Canada has maintained its advantage. In December, the Fidelity Advantage Bitcoin ETF and the eponymous mutual Bitcoin ETF fund were launched in Canada.

Bitcoin ETFs in Canada are not only available to ordinary investors, but they also offer considerable benefits to those who open government-registered investment accounts such as Tax-Free Savings Accounts.

Aside from dominating the crypto ETF market, Canada has been attempting to clarify its crypto legislation in recent years, to officially recognize crypto enterprises as money service organizations in 2020. Binance’s local affiliate, Binance Canada Capital Market, received registration with Canada’s Financial Transactions and Reports Analysis Centre in late 2021.

According to data from the Cambridge Bitcoin Electricity Consumption Index, Canada is the fourth largest country in terms of Bitcoin mining power, accounting for 9.6% of the total global hash rate.

4. Singapore: Cryptocurrency is an ‘investment in the future,’ according to the regulator.

In 2021, Singapore remained one of the world’s most important hubs for cryptocurrency exchanges and blockchain businesses, thanks to the country’s policymakers’ efforts to promote the industry.

Fintonia Group, a company registered by the Monetary Authority of Singapore, established two new institutional-grade Bitcoin funds in Singapore in November (MAS). Previously, MAS had authorized businesses such as Independent Reserve, an Australian crypto exchange, and DBS Vickers, a brokerage subsidiary of DBS Bank, to offer digital payment token services in the country.

DBS Bank, Singapore’s largest retail and commercial bank, is one of the most prominent local corporations to enter the cryptocurrency market in the last year. After establishing its crypto trading platform, DBS Digital Exchange, in late 2020, the company saw a tenfold increase in crypto volume in Q1 2021.

Some companies with close ties to Singapore’s government are said to be big supporters of cryptocurrencies like Bitcoin. In March, New York Digital Investment Group CEO Robert Gutmann said that Temasek, a Singaporean government-backed holding firm, is a major Bitcoin investor.

According to one report, Singapore is also one of the top countries in the world for retail crypto adoption, with 43 percent of Singaporeans owning cryptocurrency.

Despite local authorities’ enthusiasm for the crypto industry’s growth, a huge number of crypto companies appear to have been denied licenses to operate in Singapore in 2021.

5. After the Chinese crackdown, Gibraltar has become a new target for Huobi.

Gibraltar, a British Overseas Territory and one of the world’s smallest countries has emerged as a promising crypto site in 2021.

Bullish, a new cryptocurrency exchange founded by Block.one, the developer of the EOS.IO system, was welcomed to Gibraltar in November. The Gibraltar Financial Services Commission has already granted the company’s local branch a distributed ledger technology license (GFSC).

The GFSC also licensed Zubr Exchange Limited, a new local crypto exchange business created by Sam Bankman-crypto Fried’s powerhouse FTX, to operate in September.

Gibraltar’s government has been bolstering its relationships with global blockchain and cryptocurrency players. Albert Isola, Gibraltar’s minister for digital and financial services, joined the Global Blockchain Business Council, a prominent industry organization, as an ambassador in March.

In 2021, some of the world’s largest cryptocurrency exchanges will open in Gibraltar, thanks to increased regulatory support.

Following the GFSC’s clearance, cryptocurrency exchange Huobi is said to be relocating its spot trading operations to its Gibraltar-based affiliate in the aftermath of China’s cryptocurrency crackdown. Before the embargo, Chinese operations accounted for at least 30% of the company’s total trading volumes and revenues, according to the company.

Honorable mentions for crypto-friendly jurisdictions in 2021

Of course, El Salvador, the United Arab Emirates, Canada, Singapore, and Gibraltar were not the only countries that provided examples of favorable crypto policy in 2021.

Australia, which has been aggressively moving to embrace new crypto legislation and became a significant location for crypto-related ETF listings this year, is one of the other growing crypto-friendly states.

According to a PwC analysis, Liechtenstein, the world’s richest nation per capita, had the most comprehensive cryptocurrency tax policy for the second year in a row in 2021. Germany came in second, followed by Australia and Malta.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.