Crypto are truly a worldwide phenomenon, also in the Nordic countries. Places such as Norway, Sweden, Finland, and Denmark, which are considered some of the best countries to live in in the 21st century have quite a lot to offer in terms of blockchain and cryptocurrencies.
However, by following some of the most mainstream crypto media it’s easy to get a slightly different picture than what the reality actually is.
For example, most websites and media outlets try to focus on the developments of blockchain in countries like the United States, United Kingdom, South Korea, Japan and Singapore.
Very few small countries gain the notoriety they so much deserve.The only example of a small country getting any kind of media coverage is Malta, which managed to turn itself into a cryptocurrency hub in little under a decade.
But why not focus on countries that are some of the world leaders in terms of technology?
Cryptocurrencies caught the attention of the Norwegian government way back in 2013 when the first warning was issued about the risky nature of these digital assets.
The following statements were few but it was easy to see the government’s concern about cryptocurrencies through warnings about Initial Coin Offerings in the country.
Cryptocurrencies are not banned or heavily regulated in the country, but the government is keeping an eye on these digital assets.
When it comes to taxation, every Norwegian citizen that holds cryptocurrencies needs to report it to relevant authorities, disclose the amount they have, and the amount they make through trading these assets on a monthly basis.
This creates a trust-based taxation system, which most crypto investors tend to avoid. Because of this, Norway issued a law that would exempt cryptocurrencies from VAT tax, thus showing its intention to be a crypto-friendly regime. However, taxpayers were not convinced at all.
As of right now, Norway is actually neighbouring one of the first smart cities in the world, Liberstad. The city is already in the works and has announced that it will use cryptocurrencies as its main medium of exchange. Liberstad is practically an enclave in Norway and would be a great display of the effectiveness of crypto in a competitive Western economy.
The Finnish government does not have a comprehensive regulation on cryptocurrencies at this point of time, however, the country’s financial regulator and central bank have warned the population about the risks associated with digital assets multiple times.
The only agency that has more or less stayed on the low-end with regards to cryptocurrencies is the Finnish Tax Authority, which has collected millions in capital gain tax.
The law works quite simply in Finland in terms of crypto tax. If and when a citizen converts cryptocurrencies, especially Bitcoin into fiat currency, that profit is considered capital gain, and therefore falls under the country’s capital gain tax guidelines.
However, the population of Finland fears that the government will want to ban cryptocurrencies sometime in the future due to the disruption they’ve caused in the country’s state-run gaming monopoly.
Yes, that’s right, according to a local gaming news outlet, NorskeCasino, most of the Nordic nations, excluding Denmark, have a state-run monopoly on the gaming industry, in an effort to somehow minimise the population’s participation in it.
However, all of these attempts have essentially backfired ever since cryptocurrencies became available in these countries. Players have been using cryptocurrencies to access forbidden websites, which has caused the Finnish government to introduce new regulatory guidelines. This sparked surveys all over the country, condemning the monopoly in every way.
This could be assigned as a feature to cryptocurrencies as they garner more and more notoriety as “lawbreakers”.
Sweden is almost entirely similar to other Nordic countries in terms of cryptocurrency adoption. There is no comprehensive cryptocurrency regulation which would require local crypto companies to register as investment service providers, nor the requirement to disclose information about customer trading data.
In terms of taxation, the law is similar here as well, as citizens have to disclose their monthly crypto activity and have the tax calculated accordingly.
The additional benefit that Swedes have is the exemption from VAT tax, but the future is a bit blurry. The Swedish Central Bank has on more than one occasion called Bitcoin a very risky investment and not subject to any compensation policy from the government, thus pretty much killing the hopes of ever adopting the crypto in a comprehensive manner.
However, the citizens themselves have been the ones that were working on implementation through some of the most innovative ways the world has seen.
One such innovation came in the form of microchips, which are currently being worked on by multiple Swedish tech companies, for the storage of cryptocurrencies.
Their current form can only handle fiat currencies and connect to the user’s bank account. The microchips are inserted by the users under their skin and used for paying in restaurants, retail stores and pretty much anywhere where one may find a terminal.
It may sound like a paragraph from a Sci-Fi book, but it is indeed the reality.
Denmark doesn’t have an official regulatory framework for cryptocurrencies as well, but it does have a lot of guidelines when it comes to capital gain tax as well as the VAT tax.
The capital gain tax is exactly like in Sweden, where the traders need to report their profits as well as capital to the tax agency and calculate the due payments.
When it comes to VAT though, it’s a bit more complicated. Crypto payments are not subject to VAT, but when it comes to selling some kind of product or service through cryptocurrencies, then it’s a much different deal.
For example, a cloud mining company was selling hashrate in the country, which sparked a large controversy in courts, that tried to label it as VAT-included business.
The court succeeded, and any product or service related to crypto will now have to include VAT.
That’s pretty much all that you need to know about the Nordic cryptocurrency market. The region is quite crypto friendly and creates an environment based on trust much more than enforced law. However, should one defy this trust, they’re likely to face some charges regardless of how harmless the action may have been.