Why you might want to avoid investing in crypto in these four countries

Hong Kong, Singapore, the United Arab Emirates and Switzerland are termed as crypto-friendly countries. These countries are seen as havens for crypto investors because they stimulate innovation in virtual assets by adopting non-disruptive legislation.

However, when it comes to cryptocurrency acceptance, not all countries are on the same page. At the other end of the scale, some regions are skeptical of cryptocurrencies, limiting or outright banning investment in them. Meanwhile, others have steep tax laws that negatively affect crypto investments.

Here is a list of four countries where you should avoid investing in cryptocurrency.

Egypt

Countries in the Middle East have very different perspectives on cryptocurrencies. The UAE, for example, sees cryptocurrency as a boost to the economy. According to asset management firm Recap, Dubai, the country’s second-richest emirate, is second only to London as the most crypto-ready city in 2023. Meanwhile, Egypt, home to the Valley of the Kings, considers the royal coin and other cryptocurrencies illegal investments.

In Egypt, virtual assets are considered a threat to the central financial system and national security. In 2018, the country’s primary Islamic legislature, the Dar al-Ifta, issued a religious decree prohibiting any activity related to Bitcoin under Islamic law.

Additionally, The Central Bank of Egypt (CBE) issued a notice in 2018 warning investors not to trade cryptocurrencies due to their volatile nature. Current banking laws in the country prohibit the trading, issuance and even promotion of cryptos without a nod from the CBE. However, it is worth mentioning that as of January 2023, the CBE evaluated the prospects of a central bank digital currency (CBDC) and even revealed its intention to launch a digital savings and lending project through mobile wallets.

However, until the cryptocurrency sector is fully developed in the region, it is likely that Egypt will continue to view any trade related to virtual assets as criminal activity. Those found guilty of violating crypto laws can pay up to $32,500 in fines or even face jail time.

Nevertheless, Egypt’s stance on crypto has not completely stopped Egyptians from looking for a means to diversify their investments. According to research firm Triple-A, it was estimated that over 3.0 million people, or 2.95 percent of Egypt’s total population, owned crypto in 2022.

Albania

While some nations, such as Egypt, consider cryptocurrency trading illegal, others, such as Albania, have complicated laws and regulations that can stifle innovation. Albania governs the licensing of companies that distribute and trade digital tokens.

In order to create a crypto-related company, one must first obtain approval from the Bank of Albania. It issues licenses based on the submission of comprehensive documentation, including company structure, business plans, sources of funding and reputation. A combined commission assesses the application when it has been submitted by the appropriate authorities, in accordance with the legislation. Furthermore, the company’s administrators, supervisory board and top stakeholders are also evaluated under current laws.

Other factors, such as investor interest, the financial stability of the market, compliance with laws and the threat of cyber attacks are also measured before a license is awarded.

To make matters more complicated, the country introduced a crypto tax that is expected to take effect in 2023. According to the law, gains from crypto investments are subject to a 15 percent tax for individuals, while profits generated by the crypto business will be taxed under Albania’s corporate tax rate.

Bangladesh

Not all countries in Asia view crypto the way Hong Kong and Singapore do. In contrast, the Central Bank of Bangladesh issued a notice in 2017, warning that cryptocurrencies are considered illegal as they violate money laundering and terrorist financing regulations.

Other notices state that virtual currency transactions are not authorized by the central bank and that the firms have no jurisdiction over the issuance and regulation of cryptocurrencies.

In May 2022, the country made headlines after regulators went after crypto users in the country. Citizens were also asked to avoid conducting, assisting and advertising any kind of business through digital currencies such as Bitcoin to avoid legal issues.

Nevertheless, it is worth noting that while crypto activity may be illegal in the country, it is not considered a crime. The statement was confirmed by a representative of Bangladesh Bank, the country’s central bank.

The Netherlands

Unlike the countries mentioned in this list, the Netherlands does not have any laws that explicitly prohibit cryptocurrency-related transactions. In fact, the crypto regulatory laws are quite defined.

In the region, the cryptocurrency industry falls under the Dutch National Bank (DNB). In particular, DNB keeps a check on the potential dangers of money laundering and terrorist financing through crypto.

Furthermore, current laws dictate that providers of virtual asset services must apply for a license from DNB before starting any crypto-related activity. Meanwhile, entities that only facilitate the exchange of cryptocurrencies are exempt from registration, though the same may change in the future.

The Netherlands, on the other hand, is included in this list because of its strict tax rules. In the country, the top rate for personal tax is as high as 49.5 per cent. Meanwhile, the basic tax rate for income up to €73,031 is 36.93 per cent as of 1 January 2023.

Similarly, crypto is taxed in the country based on fictitious gains, regardless of whether one is HODling crypto or trading with them. Individuals must pay a high tax of 31 percent on a deemed gain based on the net worth of one’s crypto. As such, crypto taxes in the Netherlands fall under one of the highest tax brackets around the world.

Conclusion

Not every country is vying for a spot to become the next global crypto hub. Countries like Bangladesh and Egypt have banned cryptocurrency due to its drawbacks. Meanwhile, the likes of Albania and the Netherlands make it difficult for individuals to invest through steep tax laws.