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Why Are Cryptocurrencies Becoming So Popular In Estonia?

Back in 2011, Estonia was the poorest country in the Eurozone. In fact, the people of Estonia were struggling to increase their economic development. Fast forward to 2018, and now they’re at the forefront of the world for one major reason: The company boosted its economic growth using cryptocurrencies.

On top of that, this region has some of the lowest taxes and a friendly business environment, which pushes the growth of the cryptocurrencies industry. If you are in Estonia, it’s easy to find a wireless connection on nearly every street. With these factors, almost any business would want to be set up their business in this country. The can be done easily online, using their e-residency registration program, which only takes a half an hour to complete.

This registration process ensures that the business will remain compliant with the taxes and banking and covers the whole process of business incorporation. Things are looking good for Estonia since it embraced cryptocurrencies in early 2017. Even prior to 2017, they did not overtax people who held cryptocurrencies. Cryptocurrency traders and businesses within Estonia will not be subjected to the VAT tax.

Only cryptocurrency exchanges are regulated in the crypto space. It is the main reason why it’s not unusual to see a lot of cryptocurrency mining companies within Estonia. They are freely operating within their business-friendly environment. On top of that, the cost of setting up your business in this country is low. Also, they do not restrict the business based on nationality. There is no limit on the investment amount that you can make. Also, cryptocurrency mining companies like Estonia because they have low electricity rates.

How is Estonia’s relationship with initial coin offerings?

In Estonia, initial coin offerings are not regulated as much as any other country. In fact, the Estonian government has expressed their plans to launch a state-sponsored initial coin offering, which increases legitimacy for initial coin offering within the country. Their cryptocurrency would have a name of Estcoin, which will help to promote the country’s residency program.

This is great for cryptocurrency developers who are looking to launch an initial coin offering, but it is not allowed in their own country. Hence, this has resulted in many cryptocurrencies start-ups registering in Estonia and running an initial coin offering there.

How is the legal framework in Estonia?

Estonia’s legal framework was built with the purpose of attracting investors globally. Of course, it has one of the most attractive programs, which is in the e-residency program. It makes things easier for people who want to move their operations to Estonia as you can get incorporated for an affordable price. As a result, many small blockchain start-ups call Estonia home.

However, this country has recently clarified that they will regulate the initial coin offerings to prevent money laundering. Understandably, this move was anticipated as other governments around the world are tightly regulating the initial coin offering space, due to allegations of it being used as a financing method for terrorism and other criminal activities. The last thing that Estonia wants to do in the cryptocurrency environment is to encourage more criminal activities by not regulating the space at all.

How are the legal authorities in Estonia react to cryptocurrencies?

Most blockchain start-ups need to have a good relationship with legal authorities. The reason why Estonia is such a favorite among cryptocurrency enthusiasts is that the government is highly approachable, and they are willing to talk with the cryptocurrency companies. As long as the company is following the country’s rules, the regulators in Estonia are willing to communicate with them face-to-face. Hence, for any blockchain start-up, it is important to have the support from the government to ensure smooth operations.

What about the tax policy?

Among all the countries in Europe, Estonia offers one of the most competitive tax policies. In fact, none of the cryptocurrency subject investments are subjected to VAT tax. However, businesses in Estonia do have to pay normal business taxes. Anyone who wants to launch an ICO in Estonia will also find this country highly favorable because their offerings will not be taxed by income taxes, making Estonia one of the best places in the world to create an ICO.

How much would it cost to run a business in Estonia?

It does not cost as much as any other country to start a business in Estonia. Also, this is a good reason for blockchain start-ups to start businesses within Estonia. As we mentioned earlier, the cost will add up to roughly €4,500 in total. Also, Internet connections are available everywhere.

Thanks to the low cost of running a business in Estonia, many businesses are preferring to work in the country as compared to other countries, which may have cheaper energy, but higher taxes. For instance, China was the ideal country for start-ups. However, as the Chinese government is becoming more stringent with their cryptocurrency policies, more people are moving to Estonia.

Does Estonia have any competitors?

Besides Estonia, there are several other countries that also have similar advantages, making them highly appealing to blockchain developers or cryptocurrency enthusiasts. One of these countries is Switzerland. If you know about Ethereum, this cryptocurrency originated in Switzerland. One of the best features of Switzerland is it has minimal regulations with the blockchain space.

Australia is another country that is appealing to blockchain developers and also start-ups. That said, the cryptocurrency regulations aren’t exactly minimal, but the country has shown their support for the blockchain industry.  Hence, cryptocurrency start-ups are seeking to incorporate their business in Australia in large numbers.

Other countries that have shown willingness in the blockchain industry. Canada offers cheap electricity. South Korea is a strong contender in the cryptocurrency market as they contribute to a large global cryptocurrency trading volume. Also, the United States has extremely tight regulation on high energy costs, but they are still open to initial coin offerings and blockchain companies.

Concluding remarks

Today we see more companies and governments around the world loosening their stance on cryptocurrencies. Despite this, there are few countries that can say that they have implemented things the way Estonia has done to boost economic growth. In Estonia, the government supports cryptocurrency or blockchain start-up companies, which are highly important as companies want to operate with a peace of mind. That said, we can expect to see more cryptocurrency companies making their way to Estonia.

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