Which EU Country Is Best For Cryptocurrency?

The Most Favorable Jurisdictions for Crypto Projects in Europe
Currently there is no uniform regulation of cryptocurrencies and related services in the EU. Different regulations, policies and interpretations of cryptocurrencies apply in different countries. Thus, cryptocurrency service providers have to familiarize themselves with the laws of the Member States in order to choose the most appropriate legal framework for their projects. In this analysis, we present the countries with the most favorable regimes in terms of transparency of requirements and procedures, predictability and legal certainty for projects or in terms of tax relief and other benefits and privileges.


Switzerland is one of the most progressive nations when it comes to cryptocurrency. For example, the Swiss canton of Zug has started accepting tax payments in cryptocurrency – up to 100,000 SHF ($111,300) of the taxes in either Bitcoin or Ether. The country has crypto-friendly regulations and also offers better transparency in policies. In September 2020, Parliament adopted the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (DLT Act). The remaining provisions of the DLT bill are expected to enter into force on 1 August 2021.
The DLT Act provides several amendments in other laws due to the topics regulated in the DLT Act. The Banking Act is amended to expand the existing Fintech license and to implement the new bankruptcy provisions to DLT. The Financial Services Act (FinSA) is amended to include ledger-based securities in the definition of “securities.” The National Bank Act provides that the Swiss National Bank will supervise systemically important DLT trading systems. DLT trading systems are included in the definition of “financial intermediaries” and must therefore abide by the anti-money laundering rules. (Anti-Money Laundering Act is amended.)

There is no specific regulations in Switzerland that cover initial coin offerings (ICOs) explicitly.
ICOs are thus currently treated in accordance with the generic categorization of tokens into payment, utility and asset tokens. Asset tokens qualifying, as securities are subject to treatment under financial market regulations and are, in particular, subject to the prospectus requirement if they are economically equivalent to a share or bond. If payment tokens are issued through an ICO, which can be transferred on a blockchain, at the time of the ICO or at a later date, then the provisions of AMLA apply. This imposes certain requirements such as establishing the identity of the beneficial owner and affiliating to a self-regulatory organization or being subject to supervision by FINMA.
If the tokens issued through an ICO constitute securities, then securities regulation applies, however under the Stock Exchange Act (SESTA) uncertificated securities are unregulated thus authorization is not required. If the tokens issued through an ICO are derivatives in the form of securities, then regulations apply and authorization as a bank or securities firm is required. If the tokens issued through an ICO classify as equities or bonds, prospectus requirements may apply. The use of the token is the defining factor from a Swiss legal perspective.

The new FINMA Guidelines on the ICOs in Switzerland

Launching an Initial Coin Offering (ICO) in Switzerland


Estonia was among the first European countries to legalize crypto-related activities. Estonia’s LHV Bank was one of the earliest institutions to embrace blockchain. Cryptocurrencies in Estonia are not accepted as legal tender and considered as “value represented in digital form” and as digital assets for tax purposes, not taxable to VAT.
The country has created many acts and regulations that would allow for blockchain investment and exploration. It is worth mentioning that Estonia was one of the first countries in the world to implement e-Voting, e-Tax, e-Health and e-Residency in their public system and is already making use of blockchain in various sectors like security, the judicial and others in fully-functional mode since 2012. Overall, the country is open to blockchain technology and cryptocurrency, but has taken a stricter approach to regulate cryptocurrency service providers from the end of 2019.

On March 10, 2020 the changes to the Money Laundering and Terrorist Financing Prevention Act (MLTFPA) entered into force and cryptocurrency service providers are considered to be the subjects of certain obligations. The amendments created strong requirements for a registration of a cryptocurrency service provider.
The main requirements that a company has to meet in order to qualify for a cryptocurrency license are as follows:
minimum required charter capital — 12,000 euros;
Estonian personnel;
physical office and registered legal address in Estonia;
clean criminal records for company owners and managers;
their CVs;
an account with a bank or an electronic payment system located in EEA.

The cost of the cryptocurrency license in Estonia is 3,300 euros. As the country is an EU member, the company registered there can do crypto business in any European country without having to apply for new licenses.
Since the changes to the MLTFPA Estonia has withdrawn more than 1,000 licenses from cryptocurrency companies in 2020 due to the burden of monitoring compliance. The mass license revocation by the Financial Intelligence Unit still leaves around 400 virtual currency service providers licensed in Estonia.
The mass license revocation in 2020 might have seemed like a change in position of the Estonian government but that is not the case. The cryptocurrency market is still very new and unregulated, even in Estonia, which provoked a huge influx of new registrations in 2017-2019. The revocations are due to the developing legislation and are a natural process of any newly formed market that is yet to be regulated. In that sense, it seems unlikely that the country will implement very strict regulations on cryptocurrencies. After all, the country is a leader in digital innovations and is largely regarded as “the most advanced digital society in the world”.


The Portuguese government is studying blockchain technology with the idea of creating favorable conditions for the development of the sector. There are no specific laws or regulations applicable to cryptocurrencies in Portugal, including in relation to their issuance and transfer. Hence, cryptocurrencies are not prohibited and investors are allowed to purchase, hold and sell them.

In September of 2020, the The Central Bank of Portugal announced it would regulate digital assets. The regulation focused mainly on AML/CFT issues or entities that carry out any of the following activities with virtual assets: (a) Exchange services between virtual assets and fiat currencies or between one or more virtual assets; (b) Virtual asset transfer services; (c) Safeguarding or safekeeping services and administration of virtual assets or instruments that allow to control, hold, store or transfer these assets, including private cryptographic keys.
The Central Bank of Portugal has already issued first two operating licenses to Criptojola and Mind The Coin as “virtual asset providers”, or VASPs.
In terms of taxation, Portugal is one of the most crypto-friendly tax countries in the world – in 2016 was declared that buying or selling cryptocurrencies would not be subject to capital gain taxes or value-added tax (VAT). The sale of cryptocurrencies is not taxable in Portugal unless due to its frequency it constitutes a professional or entrepreneurial activity, which would make it taxable
The Portugal non-habitual resident (NHR) tax aims to attract investors and professionals of high cultural and economic worth, in order to increase the country’s international competitiveness. In order to qualify for the NHR regime, applicants must fulfill the following requirements:
(i) Have the right to reside in Portugal either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa program; (ii) not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal (iii) have a place of abode in Portugal on the 31st of December of that year. This home must be available in a way that may lead to the supposition of an intention to keep and occupy it as a habitual home.


Due to its favorable and detailed legislation, Malta is one of the first countries to introduce an organized framework for cryptocurrency used to help combat money laundering and financial crime through its MFSA (Malta Financial Services Authority).

On November 1, 2018 Malta launched 3 blockchain bills: the Malta Digital Innovation Authority Bill (MDIA) , The Innovative Technology Arrangements and Services Bill (ITAS) and the Virtual Financial Assets Bill (VFA).
According to MDIA Bill, the work of MDIA is to certify the developed DLT platform software and would help the government to determine the eligibility of crypto businesses. The certification would provide a certainty to the users of the DLT platforms based in Malta in the areas of technical, legal and token-economics (tokenomics).
The ITAS Bill contains provisions on ways to certify and audit architectures and software that has been utilized in the design and delivery of DLT, token exchanges, smart contracts, as wells as the decentralized autonomous entities.
The VFAA Bill aims to create a framework in which the regulatory bodies can work either directly or indirectly with various financial assets that include the ICOs, custodian wallet providers, token exchanges, brokerages, nominee service providers, portfolio managers and different investment advisers. The VFAA Bill provides further guidelines and requirements for an STO (Security Token Offering and the ICO (Initial Token Offering). The VFAA Bill required businesses to be licensed by the MFSA if they launch initial coin offerings, trade digital assets, or provide electronic wallets and brokerage activities. The act also requires that the token issuer appoint a VFA agent who then goes through approvals by the MFSA and acts as a competent authority for monitoring and reporting on any token offerings.

Notwithstanding the clear and comprehensive legal framework for cryptocurrencies, the requirements for licensing have been labeled as “too demanding and expensive“ and that is the why the majority of companies have not filed. An additional reason for the low interest is the slow processing speed of applications by the MFSA.


Gibraltar is a global leader in cryptocurrency regulation: cryptocurrency exchanges are legal and operate within a well-defined regulatory and investor protection-focused framework. Cryptocurrencies are not considered legal tender in the country. However in some cases, depending on the construct of the virtual currency, they may be described as electronic money.
Gibraltar’s government is seeking to strengthen its position as a global leader by exploring further cryptocurrency regulation. In 2017, the Gibraltar Financial Services Commission (GFSC) issued a statement announcing that it will monitor the ongoing use of ICO’s within the DLT Framework.
Since 1st January 2018, any firm carrying out by way of business, in or from Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to others (DLT activities), needs to be authorised by GFSC as a DLT Provider.
The GFSC requires licensed firms to demonstrate they have adequate financial resources, IT systems, and controls to comply with anti-money laundering and terrorist financing rules. The application process at this stage, will largely mirror the application process applied to all other activities authorized and supervised by the GFSC.
The crypto license application process starts with a pre-application engagement, following the full application and a presentation, demonstrating how the activities will meet the requirements created in the guidelines. The fees vary between $13,500 (£10,000) and the more complex cases may be taxed as high as $40,700 (£30,000).
In 2021, Gibraltar convened a Market Integrity working group to further define appropriate market standards for cryptocurrency exchanges in co-ordination with standards defined by other jurisdictions such as the UK and the EU. At the end of March 2021, the government of Gibraltar in conjunction with the GFSC has announced its plans to develop landmark regulations that aim to regulate the promotion, sale and distribution of digital tokens within the country.

Gibraltar as a modern and crypto friendly jurisdiction


In the present Bulgarian legal framework, cryptocurrencies (Bitcoin, altcoins) are still perceived, audited and declared before NRA (National Revenue Agency) as a financial asset.
The legal status of cryptocurrencies in Bulgaria got some development with the amendment to the Anti-money Laundering Act (AML Act) from November 2019.
The legal definition is as follows: “any digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically”. Also, cryptocurrencies are not considered legal tender in the country.
Cryptocurrency-related service providers are obliged to register with the Bulgarian National Revenue Agency. The registration process is inexpensive, simple and fast.
Given the aforementioned regulations on cryptocurrency-related services, the low corporate income tax and the member-State status in the European Union, Bulgaria is seen as a favorable country for crypto entrepreneurs.

Actual Legal Regulation of Cryptocurrencies in Bulgaria

1Legal.Net Team
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