Andorra green light for Bitcoin and Blockchain with Digital Assets Act

by · July 16, 2022

A small light of progress shines from Andorra, a small European country located between France and Spain. The country’s government, the General Council of Andorra, recently approved the Digital Assets Act, a regulatory framework for digital currencies and blockchain technology.

The plot is divided into two parts. The first concerns the creation of digital money, or “programmable digital sovereign money”, which can be exchanged in a closed system. In reality, this would allow the Andorran state to create its own symbol.

The other half of the law refers to digital assets as financial instruments and intends to create an environment where blockchain and distributed ledger technologies can be regulated. For Paul (who withheld his last name), CEO of the local Bitcoin business 21Million, the new law may attract new business. He told the Cointelegraph:

“The result they are trying to achieve is to actually attract new businesses to locate in the country by offering some legal clarifications that make it easier and more transparent. They see this as a way to attract talent and entrepreneurs to the new economy.”

Note that cryptocurrencies and digital currencies are not legal tender in Andorra, and the Digital Assets Act does not make any proposals regarding barter. This privilege is reserved exclusively for the preferred currency of the European Central Bank, the euro. That has not stopped Paul, an avid Bitcoiner, from arguing for Bitcoin (BTC) adoption in Andorra:

In a blog post, Paul emphasized that Andorra could adopt a Bitcoin standard, extract Bitcoin with renewable energy, take on Bitcoin as a reserve asset and welcome Bitcoin-centric companies from around the world.

The national newspaper Diari d’Andorra reported that the Digital Assets Act is a step towards “making cryptocurrencies a daily reality.” From a business perspective, Paul said that the level of “crypto-friendliness” depends on the activity.

“I have a friend who runs a mining business here – no problem – and electricity is cheap. If you do financial advice, then the same: quite friendly with low tax rate. If you want to run a stock exchange, it can be a little difficult to find a bank that works with you; the government itself would not mind. “

In an interview in May, Andorra’s Minister of Economic Affairs and Trade Jordi Gallardo mentioned that blockchain was one of the best investment areas for the small country. However, it is not clear whether the minister referred to Bitcoin (the world’s leading blockchain) or research on distributed ledger technologies that support blockchains.

There is some confusion regarding Bitcoin, blockchain and crypto in Andorra. Source: Shutterstock

Josselin Tonnellier, co-founder of StackinSat, told Cointelegraph that there is confusion regarding crypto, blockchain, non-fungible tokens and Bitcoin. StackinSat is hosting a major European Bitcoin conference, Surfin ‘Bitcoin, in Biarritz, France just outside Andorra, where the group’s headquarters are also located.

Paul, who is a regular participant in Surfin ‘Bitcoin, confirms that the feeling and confusion in Andorra remains the same: “The regulator does not distinguish between’ crypto ‘and Bitcoin. They have not become the’ orange game ‘yet.” Taking the orange pill is Bitcoin-linguistic for when a beginner to Bitcoin begins to understand the principles of the groundbreaking cryptocurrency.

Tonnellier emphasized that awareness of digital currencies and technologies is on the rise, but there is a risk of fraud and loss without the right educational tools or framework in place:

“According to a recent report from KPMG, more French people are exposed to ‘crypto’ than to the stock market. […] France is known for being a hotbed of “shitcoinery.”

Although there is no “shitcoin” rating chart, such coins are tokens other than Bitcoin, which according to the latter’s spokesmen risk falling to zero. Squid Game Token was one of the most newsworthy shitcoins in 2021.

Back in Andorra, Tonnellier explained that the country is best placed to engage in technologies such as Bitcoin. “Andorra is one of the few European countries outside the jurisdiction of the European Parliament.” In many ways, it can actually be compared to Switzerland on a smaller scale:

“Andorra is very attractive to entrepreneurs thanks to the low tax, but Switzerland has a good lead in promoting the development of activities around Bitcoin and cryptocurrencies in general. This may change in the coming years thanks to this legal text that frames Bitcoin and blockchain activities. “

Related: French central bank governor announces phase 2 of wholesale digital euro project

With less than 500 square kilometers of land, Andorra is among Europe’s smallest countries. Contrary to many people’s beliefs, Andorra is not a tax haven; the microstate terminated banking secrecy in 2018. Nevertheless, taxes are significantly lower than in neighboring France or Spain, while financial services make up up to 20% of the economy.

Andorra or Switzerland? Source: Kokono.com

Although it is unclear what digital assets the government intends to regulate with the Digital Assets Act, the economically motivated movement may help diversify Andorra’s economy and welcome blockchain and crypto – based companies. For Paul, it is one step closer to Andorra to use Bitcoin.