For most of the past decade, the United States and China took turns laying claim to the title of cryptocurrency capital of the world. But then, regulators in the US began taking more aggressive steps to rein in cryptocurrencies, sending a chill through the market. And around the same time, China all but banned cryptocurrencies within its borders, suddenly outlawing some of the biggest crypto mining operations overnight.
As a result, cryptocurrency projects and their related businesses have begun to spread out across the globe, looking for a place they can call home. And despite its reputation as a regulation-heavy market, Europe is looking like an early contender. In 2021 alone, European nations accounted for 25% of all cryptocurrency activity — worth a total of €870 billion.
All of that action is fast making Europe the preferred destination for crypto projects. But the centers of all of the activity might not be where most people think.
Here's a look at the three hottest crypto markets in Europe right now.
Long known as a center of the global banking industry, Switzerland spent much of 2021 looking for ways to make itself even more inviting to the crypto industry. That comes as no surprise when you consider the fact that Ethereum was born there. Because of that, Switzerland has grown a reputation as a crypto hub for longer than almost anywhere else in Europe. Even its largest insurer, AXA, got in on the act and started accepting crypto for payments in 2021.
Moreso, the government is sending some strong signals that it intends to remain a crypto-friendly jurisdiction. In the past few years, it has passed and refined some of the most forward-thinking crypto regulations in the world. By doing so, it has eliminated the kind of uncertainty that has kept crypto projects hopping from one country to the next. Add a variety of Swiss financial firms making moves to adopt and accept cryptocurrencies to the mix— and you have the perfect recipe to become one of Europe's crypto capitals.
One of the big issues that cryptocurrency users face lies in figuring out their tax obligations as they transact in their favorite coins. In places like the US, figuring out one's taxes concerning crypto has been likened to a minefield — which doesn't sound too pleasant. And according to NA Kryptovaluta, Norwegians chronically underreport their crypto earnings, leading to its tax agency issuing repeated warnings of a crackdown to come.
But in Germany, the tax implications of crypto seem all but figured out. And that's because for most people — there aren't any. For Germans, cryptocurrencies held for over a year are tax-exempt, as are the proceeds of any sale that doesn't exceed €600. As a result, Germany's risen to a position of prominence in the European crypto scene. And on top of that, a recently-passed law is set to pump up to $415 billion in investments into German crypto projects in the years to come. That makes Germany one of the best places to own or develop crypto in the world, and it's primed to remain a rising crypto hub for the foreseeable future.
Even though Germany has some of the most inviting crypto tax policies in Europe, it can't hold a candle to Portugal. It's becoming a magnet for crypto investors from around the world, thanks in part to having one of the most laissez-faire approaches to cryptocurrencies you'll find anywhere. And according to regional crypto industry analyst Jean Galea, Portugal is the most crypto-friendly place on the continent — with a 0% tax rate on crypto for individuals.
But that's not all. Early in 2021, the Portuguese government began granting licenses for domestic crypto exchanges. That signaled its intention to make cryptocurrencies a permanent part of the economy there and to make it easier for citizens and visitors alike to transact in their favorite currencies. And the moves appear to be working. There's so much crypto talent pouring into Portugal that even American tech firms are setting up remote engineering teams there.
Judging by the inflows of crypto capital pouring into Europe, it seems obvious that we're seeing the beginnings of a mass relocation within the industry. And although the three nations mentioned here are getting plenty of attention right now, they're not the only places on the continent trying to attract a share of the industry and its business.
In fact, Eastern European nations like Croatia, Ukraine, and Serbia are all making a play for a share of the market. The trouble is, geopolitical instability in the region is making it hard for those nations to gain traction. And there's also the matter of illicit activity — which presently dominates transactions there.
But the takeaway here is that it's looking quite certain that Europe is accepting its role as the center of the crypto universe. And in doing so, it's helping the nascent industry continue to develop and grow. And that's good news for crypto users and investors within Europe's borders and beyond.