Many jurisdictions began to adopt cryptocurrencies such as Bitcoin (BTC), and other crypto-based instruments, after digital asset prices hit new highs in 2021.
The year 2021 will be remembered not only for Bitcoin’s historic adoption in El Salvador as legal tender, but also for its $68,000 first-ever Bitcoin cross. In 2021, the first ever Bitcoin exchange-traded funds (ETFs) were also launched. There have been many other positive regulatory developments all around the globe.
Cointelegraph selected some of the most notable instances of friendly cryptocurrency regulation as we look back on important global regulatory moments in 2021.
1. El Salvador: First country to accept Bitcoin as legal currency
The Republic of El Salvador (the smallest country in Central America) officially adopted Bitcoin as legal currency on September 7, 2021. It was the first country to do this, and it is still the smallest. Bitcoin traded at $47,000 the day after its official adoption.
El Salvador’s bold Bitcoin move took many months to realize. President Nayib Bukele had introduced the “Bitcoin Law” in June 2021, laying the foundation for BTC’s official use as a payment method. The law was passed by the Salvadoran Legislative Assembly, with a supermajority vote of 62 of 84.
El Salvador, also known as the “Land of Volcanoes”, has taken steps to harness its volcanic activity in order to create new Bitcoin. President Bukele announced in September that a Bitcoin mining facility would be built using volcanic geothermal energy from El Salvador. This was a significant step towards reducing the carbon footprint of Bitcoin. Bukele soon followed up with plans to create a whole Bitcoin city funded by BTC bonds.
Although the crypto community celebrated El Salvador’s BTC drive with joy, international financial institutions like the International Monetary Fund expressed doubts about the government’s move to crypto.
Related: El Salvador buys 21 Bitcoin to celebrate Dec. 21, 2021
El Salvador also had a problem with the Bitcoin Law. Some protestors were against Bitcoin adoption because of its volatile price. Some protests led to the destruction of Bitcoin ATMs.
2. CZ is the new home of the United Arab Emirates
As authorities in Dubai, the UAE have intensified efforts to facilitate the development of the crypto industry, the UAE has emerged as the most crypto-friendly country in 2021.
The Dubai Financial Services Authority (DFSA), announced in January that it would establish a comprehensive cryptocurrency regulatory framework as part its 2021 business plan. The DFSA issued several regulatory approvals in October, including one for The Bitcoin Fund, a Canadian investment product. The DFSA is also working on regulations regarding investment vehicles such as security tokens and derivative tokens.
Multiple arrangements were also made by UAE regulators to allow and support cryptocurrency trading in several Dubai economic zones. NFT adoption has been a priority for the nation. In November, its postal operator issued NFTs to celebrate the 50th National Day.
The Dubai World Trade Centre Authority announced that it will be a regulator and comprehensive zone for cryptocurrencies, products and operators in the second half of 2021.
Related: Binance joins a new crypto hub created by Dubai World Trade Centre
Some of the most prominent industry figures and largest cryptocurrency companies worldwide are making Dubai their preferred destination. Changpeng Zhao, Binance CEO, reportedly purchased his first residence in Dubai in October. The Chinese-Canadian business executive claimed that he didn’t own any real property as of April 2021.
CZ Binance (@cz_binance), December 21, 2021
3. Canada: Canada is crushing the global Bitcoin ETF race
Canada was able to earn a spot on the list of crypto-friendly countries in 2021 when its main securities regulator approved the launch of the first globally-settled Bitcoin ETF at year’s beginning.
The Purpose Bitcoin ETF was launched by Purpose Investments, a Canadian investment firm. It saw an immediate success with $564 million in assets managed in five days.
Canada continued to lead the global Bitcoin ETF race when Fidelity Canada launched the Fidelity Advantage Bitcoin ETF in December and the eponymous mutual Bitcoin ETF funds.
Canada’s Bitcoin ETFs aren’t just available for retail investors but also provide significant benefits for those who open government-registered investment accounts, such as the Tax-Free Savings Accounts.
Related: Official at Bank of Canada says that Crypto does not pose a major risk to the economy.
Canada has worked to improve its crypto regulations over the years. In 2020, it officially recognized crypto firms as money service companies. Canada’s Financial Transactions and Reports Analysis Centre of Canada granted registration to Binance Canada Capital Market, Binance’s local subsidiary. This was in late 2021.
According to the data from the Cambridge Bitcoin Electricity Consumption Index, Canada ranks fourth in terms of Bitcoin mining power. It accounts for 9.6% of global hash rates.
4. Singapore: Crypto is considered ‘investment into a potential future’ according to regulator
In 2021, Singapore remained one of the most important hubs in the world for cryptocurrency exchanges and enterprises. This is due to the hard work of Singapore’s regulators.
Fintonia Group, a company regulated under the Monetary Authority of Singapore, launched two new institution-grade Bitcoin funds in Singapore in November. Previously, MAS had granted permission to companies such as the Australian crypto exchange Independent Reserve or DBS Bank’s brokerage arm DBS Vickers to offer digital payment token services within the country.
DBS Bank, Singapore’s largest commercial and retail bank, has been one of the most prominent local companies to venture into the cryptocurrency industry over the past year. After launching DBS Digital Exchange in late 2020, the firm saw a tenfold increase in crypto volume in Q1 2021.
Related: Singapore is positioning itself as a global cryptocurrency center, according to regulator
According to some reports, there are many companies that have close ties with the Singapore government who are big supporters of cryptocurrency like Bitcoin. Robert Gutmann, CEO, New York Digital Investment Group, stated in March that Temasek, a Singaporean government-backed holding company, is a major Bitcoin investor.
According to one survey, Singapore ranks among the top countries in terms of crypto adoption at retail. 43% of Singaporeans have crypto.
Despite the positive reception from local authorities for the development of the crypto industry, many crypto businesses failed to obtain licenses to operate within Singapore in 2021.
5. Gibraltar: New target for Huobi exchange after Chinese crackdown
Gibraltar is a British Overseas Territory, and has been recognized as a desirable location for crypto.
Bullish, a cryptocurrency exchange created by Block.one and EOS.IO protocol developers, was launched in Gibraltar in November. The Gibraltar Financial Services Commission granted the distributed ledger technology license to the local branch of the company.
The GFSC approved Zubr Exchange Limited’s operations in September. This new local cryptocurrency exchange was launched by Sam Bankman Fried’s crypto giant FTX.
The government of Gibraltar is strengthening its relationships with the global blockchain and crypto industry players. Albert Isola, Gibraltar’s minister of digital and financial services was appointed ambassador to the Global Blockchain Business Council (a leading industry association).
Related: Gibraltar’s government wants to bridge the gap between private and public sectors using blockchain
Despite growing regulatory support, some of the largest crypto exchanges in the world entered Gibraltar 2021.
After receiving approval from the GFSC crypto exchange Huobi reportedly moved its spot trading operations to its Gibraltar affiliate in response to China’s cryptocurrency crackdown. According to the firm Chinese operations accounted for at least 30% of the total trading volume and revenue before the ban.
Honourable mentions: 2021 Crypto-friendly Countries
El Salvador, Canada, Singapore, Gibraltar, and the UAE are not the only countries to have provided examples of benign crypto regulation in 2021.
Australia is one of the crypto-friendly countries. It has been active in adopting new crypto regulations, and it became a key location for ETF listing.
According to a PwC report, Liechtenstein was the richest country in the world per capita and the country with the most extensive cryptocurrency tax policy in 2021. Germany was second, followed closely by Australia and Malta.