In September 2021, El Salvador officially recognized Bitcoin as a legal tender and required all local businesses to accept Bitcoin payments. The government released a Bitcoin wallet to accelerate adoption and proposed a $30 bonus in BTC and a gas fee discount. It was the first-ever case of making a cryptocurrency a legal tender. Bitcoin and other cryptocurrencies have different statuses all over the world. While most countries accept and allow cryptocurrency use, some countries and particular cities have specific regulations for and use of cryptocurrencies. We describe the most exciting and inspiring cases.
Bitcoin as a Legal Tender
The legal tender status means the cryptocurrency obtains the same adoption and usage as national currencies. All businesses are required to accept BTC payments just like local currency payments.
Developing countries with high inflation and unstable economies mostly turn to adopt cryptocurrencies at the government level since such activity may bring more economic independence to post-colonial regions, create an attractive investment climate, and benefit from geographical and resource features to mine Bitcoin. Currently, two countries officially recognize Bitcoin as a legal tender, El Salvador and the Central African Republic, and several others are making steps towards its adoption.
Central African Republic
The country became the second to approve Bitcoin as a legal tender in April 2022. The government sees Bitcoin adoption as a step towards the independence of the French-based CFA used as a local currency. However, by 2020 only 10% of the CAR population had internet access, which is the main requirement to deal with Bitcoin transactions. Critics consider Bitcoin payments economy-damaging and a vast opportunity for money laundering. Nonetheless, the government released a plan to allow people to invest in mining and other industries in Bitcoin with affordable conditions.
Thanks to Senator Indira Kempis, the country is considering recognizing Bitcoin as a legal tender. There are three possible ways of adopting Bitcoin in Mexico: adding Bitcoin to the national treasury, creating a financial bond instrument backed by BTC, and mining BTC. Unfortunately, the plan was banned by the Central Bank of Mexico and the financial regulator. Still, Senator Kempis aims to support the bill through the democratic process.
The island country’s new prime minister, Sitiveni Rabuka, is pro-Bitcoin and is actively considering BTC as a legal tender. The island can use its resources for BTC mining, being volcano-based, and benefit from Bitcoin remittances.
The small town is considered a Crypto Valley and Europe’s crypto capital. Zug is the home to over 400 Swiss crypto startups, nearly half of all crypto startups in Switzerland.
The Canton of Zug has been accepting payments for government services in Bitcoin since 2016. In September 2020, Zug citizens, both individual and business, got an opportunity to pay taxes in Bitcoin and Ethereum, which were then converted to Swiss francs.
The region attracts crypto businesses through its low-tax policies and progressive approach to crypto adoption.
The city is one of the most influential crypto hubs, hosting numerous industry events and crypto companies. Dubai aims to become the world’s crypto capital, encouraging businesses to enter its jurisdiction by providing low-tax policies and business-friendly regulations.
In February 2023, Dubai’s Virtual Assets Regulatory Authority released a rulebook to regulate crypto companies in the state, requiring them to get a license. It broke the ice since crypto companies had an uncertain status. With regulations, crypto activity in the state has become clear and prevented scam projects.
Singapore was one of the first countries to adopt a regulatory framework for cryptocurrencies, making it a tax haven for businesses and providing growth opportunities. All payment-related services are governed by a single legislation, allowing for unhampered blockchain technological innovations while the government addresses crypto-related risks. The gambling industry is subject to separate regulations.
Singapore recognizes cryptocurrencies as legal assets that are used like any other asset. The government aims for Singapore to be a hub for crypto businesses and ideas but not for speculation and trading. Therefore, institutional investors are more welcome than retail ones.
Government Metaverse and Blockchain
Seoul, South Korea
In January 2023, the city government released the Seoul Metaverse platform, which allows citizens to access municipal administrative services such as education, economy, and tax affairs via the Metaverse. The platform is the first-ever municipal administration in the Metaverse, intending to create an accessible, equal, and inclusive space for all citizens to obtain administrative services 24/7, visit the mayor’s cabinet, attend student gatherings, virtually tour the city library, and more.
This tiny island is facing the effects of climate change and is at risk of disappearing into the sea in about 100 years.
The government has decided to use blockchain technology to preserve the history and independence of the Tuvalu nation. They are moving towards a paperless administration and a cashless system so that all data will be stored on the blockchain, ensuring nothing will be lost except the island itself. Implementing blockchain will help unite the nation and preserve its history wherever the people are based.
The DollarPesa team is inspired by the examples of cryptocurrency and blockchain implementation in various countries and cities and the range of problems the technology can solve. We hope the industry will continue to make significant strides in development and unlock new potential use cases.