While 2021 surely saw a few regulatory setbacks, some governments delivered masterclasses in forward-looking crypto regulation. Helen Partz collected some prominent cases on Cointelegraph.
As digital asset prices had been hitting new historical highs in 2021, many jurisdictions were increasingly adopting cryptocurrencies like Bitcoin (BTC) and other crypto-based instruments.
In addition to Bitcoin crossing $68,000 for the first time since inception, the year of 2021 will be remembered for Bitcoin’s historical adoption as legal tender in El Salvador. The world’s first-ever Bitcoin exchange-traded fund (ETF) was also inaugurated in 2021, alongside many other benign regulatory developments around the world.
As we glance back at notable global regulatory moments in 2021, Cointelegraph has picked some of the most memorable instances of friendly crypto regulation.
1. El Salvador: The first country in the world to adopt Bitcoin as legal tender
The Republic of El Salvador, the smallest nation in Central America, officially adopted Bitcoin as legal tender on Sept. 7, 2021, becoming the world’s first country to do so. Bitcoin was trading at around $47,000 on the day of Bitcoin’s official adoption in the country.
El Salvador’s bold Bitcoin move took several months to materialize as president Nayib Bukele had first introduced the “Bitcoin Law,” laying the groundwork for BTC’s usage as an official payment method alongside the United States dollar in June 2021. The Salvadoran Legislative Assembly subsequently passed the law, which amassed a supermajority of 62 out of 84 votes.
Known as the “Land of Volcanoes,” El Salvador also moved to deploy its volcanic activity to generate new Bitcoin. In September, president Bukele teased a Bitcoin mining plant powered by volcanic geothermal energy in El Salvador, marking a major case for cutting BTC’s carbon footprint. Soon after, Bukele upped the stakes even further when he announced plans to establish an entire Bitcoin city, funded by BTC bonds.
While the crypto community celebrated El Salvador’s BTC drive, global financial authorities like the International Monetary Fund have expressed skepticism about the government’s move into crypto.
Some people in El Salvador were also unhappy with the Bitcoin Law, with some protesting against Bitcoin adoption due to concerns over its unstable price. Some of the protests even resulted in destroyed Bitcoin ATMs.
2. The United Arab Emirates: CZ’s new home
The UAE emerged as one the most crypto-friendly countries in 2021 as authorities in its capital city of Dubai have been ramping up the efforts to enable the crypto industry’s development.
In January, the Dubai Financial Services Authority (DFSA) announced plans to establish a comprehensive crypto regulatory framework as part of its 2021 business plan. The DFSA subsequently issued several regulatory approvals, including one for a major Canadian investment product, The Bitcoin Fund, in October. DFSA has also been working on regulations for investment vehicles like security and derivative tokens.
UAE regulators also came up with multiple arrangements to officially allow and support crypto trading in several free economic zones in Dubai. The nation has also been making strides in nonfungible tokens (NFT) adoption as its postal operator issued NFTs in November to commemorate the federation’s 50th National Day.
In late 2021, the Dubai World Trade Centre Authority said it will become a comprehensive zone and regulator of cryptocurrencies, products, operators, and exchanges.
The UAE is becoming an attractive destination for some of the world’s largest cryptocurrency companies and industry figures. In October, Binance CEO Changpeng Zhao reportedly bought his first home in the “very pro-crypto” Dubai. The Chinese-Canadian business executive had previously claimed that he did not own any real estate as of April 2021.
3. Canada: Crushing the global Bitcoin ETF race
Canada has earned a place on the list of 2021’s most crypto-friendly countries the moment its main securities regulator cleared the takeoff of the world’s first physically-settled Bitcoin ETF at the beginning of the year.
Launched by Canadian investment firm Purpose Investments in mid-February, the Purpose Bitcoin ETF saw an explosive debut with $564 million in assets under management in just five days after starting trading.
Canada continued leading the global Bitcoin ETF race as Fidelity Canada launched its Fidelity Advantage Bitcoin ETF and the eponymous mutual Bitcoin ETF fund in December.
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.
On top of crypto ETF dominance, Canada has been working to introduce more clarity to its crypto regulations in recent years, officially recognizing crypto firms as money service businesses in 2020. In late 2021, Canada’s Financial Transactions and Reports Analysis Centre of Canada issued registration for Binance’s local subsidiary, Binance Canada Capital Market.
Canada is ranked the fourth largest country in terms of Bitcoin mining power, accounting for 9.6% of the total global hash rate, according to data from the Cambridge Bitcoin Electricity Consumption Index.
4. Singapore: Crypto is ‘investment in a prospective future,’ says regulator
Singapore continued to be one of the world’s biggest hubs for cryptocurrency exchanges and blockchain enterprises in 2021 as the country’s regulators have done a great deal to nurture the industry.
In November, Singapore welcomed two new institutional-grade Bitcoin funds launched by Fintonia Group, a company regulated by the Monetary Authority of Singapore (MAS). Previously, MAS officially allowed companies like the Australian crypto exchange Independent Reserve and DBS Bank’s brokerage arm, DBS Vickers, to provide digital payment token services in the country.
DBS Bank, Singapore’s largest retail and commercial bank, is one of the largest local companies to make a foray into the crypto industry in the past year. The firm posted tenfold crypto volume growth in Q1 2021 after launching its crypto trading platform, DBS Digital Exchange, in late 2020.
Some companies with close ties to the government of Singapore are reportedly big fans of cryptocurrencies like Bitcoin. Robert Gutmann, CEO of New York Digital Investment Group, claimed in March that Singaporean government-backed holding company Temasek is a major Bitcoin investor.
Singapore is also among the world’s top nations in terms of retail crypto adoption as 43% of Singaporeans own crypto, according to one survey.
Despite local authorities welcoming the crypto industry development, a large number of crypto businesses have apparently failed to receive licenses to operate in Singapore in 2021.
5. Gibraltar: New target for Huobi exchange after Chinese crackdown
Gibraltar, a British Overseas Territory and one of the smallest countries in the world, has been emerging as an attractive location for crypto in 2021.
In November, Gibraltar welcomed Bullish, a new cryptocurrency exchange launched by the EOS.IO protocol developer, Block.one. The company’s local branch previously obtained a distributed ledger technology license from the Gibraltar Financial Services Commission (GFSC).
In September, the GFSC also approved operations of Zubr Exchange Limited, a new local crypto exchange business launched by Sam Bankman-Fried’s crypto giant FTX.
The government of Gibraltar has been strengthening its ties with global blockchain and crypto industry players. In March, Gibraltar’s minister for digital and financial services, Albert Isola, became an ambassador for the Global Blockchain Business Council, a major industry association.
Some of the world’s biggest crypto exchanges entered Gibraltar in 2021 amid growing support from regulators.
Following approval from the GFSC, crypto exchange Huobi has reportedly been moving its spot trading operations to its Gibraltar-based affiliate following China’s cryptocurrency crackdown. According to the firm, Chinese operations made up at least 30% of its total trading volumes and revenues before the ban.
Crypto-friendly jurisdictions of 2021: Honorable mentions
El Salvador, the UAE, Canada, Singapore, and Gibraltar are, of course, not the only countries that served examples of benign crypto regulation in 2021.
Among other increasingly crypto-friendly jurisdictions is Australia, which has been actively moving to adopt new crypto regulations and became a major location for crypto-related ETF listings this year.
Liechtenstein, the world’s richest nation per capita, was the country with the most comprehensive cryptocurrency tax policy for the second year in a row in 2021, as per a PwC report. Australia and Malta ranked second, followed by Germany.