Philippines
Current Economic Situation in the Philippines The Philippines, an archipelago of over 7,000 islands, is among the world’s largest remittance recipients, constituting about 9% of its GDP. With over 2 million overseas Filipino workers (OFWs), families back home heavily rely on cross-border remittance flows to meet household expenses. However, traditional remittance channels often come with hefty transaction fees and delays, prompting many to seek alternatives like cryptocurrency for its speed and affordability. Despite improving employment rates, estimated at 96.9 percent in December 2023, 1.4 percentage points (ppts) higher compared to the previous quarter’s rate of 95.5 per cent, wage stagnation remains a concern for many Filipinos. Limited employment opportunities, particularly for the youthful population, have driven the alternatives of play-to-earn (P2E) games and online platforms that offer crypto-based rewards. The Philippine population has been quick to embrace digital assets. This positive attitude towards cryptocurrency assets began to be recorded during the Covid-19 lockdowns when Filipino families started earning a living by “farming” non-fungible tokens (NFTs) through P2E games, especially the now-defunct video game Axie Infinity. Government Regulations and Policies Cryptocurrencies in the Philippines are generally regulated by two government bodies: The Bangko Sentral ng Pilipinas (BSP) recognizes cryptocurrencies as legitimate tools for payment and financial transactions. Its regulatory framework began with Circular No. 944 in 2017, which provided guidelines for Virtual Currency Exchanges (VCEs). Following 2021 when the BSP introduced rules to that required Virtual Asset Providers to maintain comprehensive records of user activity and regularly report to the BSP As of October 2024, the BSP has licensed of 14 Virtual Asset Service Providers (VASPs) in the Philippines such as the Philippine Digital Asset Exchange (PDAX) and Bloomsolutions, Inc. while also ensuring compliance under the Know-Your-Customer (KYC) protocols of the Anti-Money Laundering Act of 2001 which monitors transactions for suspicious activities. Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) primarily regulates the issuance and management of securities, investments, and other related digital assets in the Philippines. On the consideration that cryptocurrencies are virtual currencies, The SEC, using the Howey Test, In 2023, expanded its regulatory scope to include tokenized securities and financial products utilizing Distributed Ledger Technology (DLT) The SEC further makes regulation that Companies conducting Initial Coin Offerings (ICOs) in the Philippines are required to register with the SEC and adhere to its reporting requirements. ICO issuers are also expected to disclose financial details, project plans, and potential risks to investors. Cryptocurrency Taxation in the Philippines As cryptocurrency transactions increased, the Philippine government introduced tax policies to regulate the sector and generate public revenue. The Bureau of Internal Revenue (BIR) oversees taxation and applying general tax principles to crypto activities in the country. The Bureau identifies the two key areas that are regarded as taxable in the Philippines and they include Capital gains and business incomes. Profits from trading or exchanging cryptocurrencies are subject to capital gains tax, capped at 15%. This provision applies to both individual and corporate taxpayers. Also, crypto trading or mining conducted as a business activity is treated as ordinary income and is subject to income tax rates and value-added tax (VAT). The law also mandates Filipino citizens and residents to report gains from crypto transactions during annual tax filings. Non-compliance can result in penalties, including fines or imprisonment. More recently, the government has been considering new tax rules for crypto transactions which includes imposing a 12% Value Added Tax (VAT) on digital services by companies based outside the Philippines. This has raised concerns among industry stakeholders and individuals about its potential impact on crypto adoption. Current State of Crypto Adoption in the Philippines The Philippines ranks sixth globally in cryptocurrency adoption according to the 2023 Chainalysis report, a drop from second place in 2022. Around 16 million Filipinos own cryptocurrency, amounting to about 13.4% of the total population. The total cryptocurrency market capitalization in the country has exceeded twice the amount in 2023, rising from USD 829 billion to USD 1.72 trillion. DBS Bank highlights the significant web traffic from the Philippines to crypto-related gaming and gambling platforms, reflecting the role of these activities in driving adoption. The country also has 42 operational crypto ATMs and reports a growing number of Bitcoin wallet registrations. Coins.ph, one of the leading platforms, has integrated crypto into services like remittances, bill payments, and mobile top-ups. Despite these advancements, adoption is still concentrated in urban centres, leaving rural areas with limited exposure. Factors Driving Adoption of Cryptocurrency in the Philippines The cryptocurrency market thrives in the Philippines primarily due to its boisterous youth population and the digitally-inclined community. Other factors that drives the adoption of cryptocurrency in the Philippines are underlisted Cryptocurrency Usage in Various Sectors Challenges Facing Crypto Adoption in the Philippines The Potential for Cryptocurrency in the Philippines Despite challenges, the potential for cryptocurrency in the Philippines is immense. The adoption rate of cryptocurrency holds a promise of Increased Financial Inclusion for Filipinos. Cryptocurrencies can further bridge the gap between the unbanked population and banking services, reducing economic inequality. Through integration, blockchain technology can revolutionize sectors like healthcare, supply chain, and education. As OFWs increasingly use crypto, remittance efficiency has higher chances of improvement, directly benefiting millions of households. Conclusion The adoption rate of cryptocurrency in the Philippines reflects a blend of economic necessity, youthful innovation, and a proactive regulatory environment. While challenges like market volatility and regulatory uncertainty are major concerns, the nation’s growing embrace of digital assets signals a promising future. From enhancing financial inclusion to revolutionizing remittances the Philippines appears to be on track to harness the potential of cryptocurrency. By being more innovative with progressive legislation, the Philippines can further take a leading role in crypto adoption, opening the Philippine economy to a future of possibilities and opportunities for millions.
Norway
Norway is known for its pioneering energy sector, beautiful World Heritage Sites, and highly digitized economy. The country has experienced a rising interest in cryptocurrency as part of a broader adoption of digital finance in the Nordic region. Norway boasts a developed technological infrastructure, a high GDP per capita, and a government inclined towards sustainable digital innovations. As a result, Norway is rapidly establishing itself as a hub for cryptocurrency adoption. The Norwegian monetary policy has recently made a major shift to the adoption of cryptocurrency, which leaves no grey areas for prospective investors. The country’s sovereign wealth fund has strategically invested in companies like Coinbase and Marathon Digital with every Norwegian citizen effectively owning around $27 worth of cryptocurrency-related stocks through this fund. Current Economic Situation in Norway Norway’s economic landscape is characterized by one of the world’s most robust economies, supported by substantial oil revenues and a sufficiently funded sovereign wealth fund. With the discovery of Oil in 1969, the country’s wealth came largely from its vast oil reserves, which funded a functional welfare state and developed its massive sovereign wealth fund, the Government Pension Fund Global. In the Quarterly report for the first half of 2024, the Norges Bank Investment Management disclosed that the Norwegian sovereign wealth fund is currently valued at $1.7 trillion. However, recent global economic shifts, such as volatile oil prices and inflationary pressures, have prompted the government to diversify its revenue streams and pursue digital innovation. Nevertheless, the diversification policies have only reflected a little in the Nation’s general monetary policy. Norway’s sovereign wealth fund, managed by Norges Bank Investment Management, has recently increased its indirect exposure to Bitcoin and other digital assets, indicating a rising appeal of cryptocurrency as a diversification tool in investment portfolios. Source: Photo by Jonathan Borba on Pexels With the high digitalization rate of the Norwegian economy, the public and private sectors are exploring blockchain and cryptocurrency’s potential to refine traditional finance, payment methods, and investment. Crypto Law in Norway There are no general regulations specifically on cryptocurrency in Norway. This does not, however, mean Cryptocurrency is “unregulated” as transactions on the blockchain are generally regulated by Norwegian statutory law. Consequently, the general law of contracts, crimes, and general transactions applies to cryptocurrency transactions in Norway. For instance, parties who agreed to use crypto assets for settlements in a sales of goods contract, have the right to restitution if such contract is rendered invalid under Norwegian contract law. The Norwegian Ministry of Finance acknowledges the potential of cryptocurrency to enhance efficiency and drive innovation in the financial sector while considering its potential risks too. In Norway, cryptocurrencies are not legally identified as legal tender, rather, they are called “virtual currency” under the Norwegian Anti-Money Laundering (AML) regulations. Moreover, the country’s Financial Supervisory Authority (FSA) mandates that providers of exchange and custody services of virtual currency register with the FSA to mitigate risks of criminal activities, digital vulnerability, consumer and investor protection, and financial stability. In April 2024, Finance Magnates reported that Norwegian authorities plan to regulate cryptocurrency mining activities in the country by restricting data centres, making Norway the first country in Europe to implement such a comprehensive regulation on data centres. Taxation of Cryptocurrency in Norway Cryptocurrency transactions in Norway are subject to taxation as the government classifies crypto assets as financial instruments, which means returns from trading or holding are taxable. Source: Photo by Nataliya Vaitkevich on Pexels The Norwegian tax system subjects cryptocurrencies to two main types of taxation; The wealth tax and the capital income tax. Individuals holding cryptocurrency tokens are expected to value their crypto assets as part of their global net worth for wealth tax purposes. In the same manner, cryptocurrencies can be taxed on the consideration that they are capital assets. At the time of disposal, crypto assets may incur as much as 22% in tax. Financial regulators in Norway have been relentless in adopting a balanced approach towards cryptocurrency, encouraging innovation while ensuring strict compliance. Companies involved in cryptocurrency services are required to register with the Norwegian Financial Supervisory Authority (Finanstilsynet), which enforces AML standards and promotes transparency. Norwegian authorities work closely with European counterparts to harmonize regulations across the continent, given that Norway is part of the European Economic Area (EEA). Despite lacking legal tender status, cryptocurrencies are increasingly accepted, with firms specializing in crypto exchanges, wallets, and consulting services. Current State of Crypto Adoption in Norway While no cryptocurrency is officially supported in Norway or the Norwegian Central Bank (NCB), the NCB and other central banks are actively researching the prospect of a digital version of the Norwegian “krone.” As mentioned in the 2023 Financial Market report, the NCB has developed a basic prototype for digital currency tokens, which in its fourth phase, has been used for a successful cross-border transaction from Norway to the Central Banks of Iceland and Israel. This move reflects the Norwegian government’s positive attitude toward cryptocurrency adoption and a promising financial environment for crypto traders. On individual levels, Norway leads the Nordic region in cryptocurrency adoption, with approximately 9.2% of Norwegians owning digital assets, equating to around 395,000 people. Source: K33 Research, EY This figure is higher than in Denmark, Sweden, and Finland, where adoption rates hover around 6-7%. Source: K33 Research, EY Most Norwegian crypto owners are young, with 78% under the age of 40, and ownership is skewed toward men, who are nearly three times as likely to invest in cryptocurrency as women. Source: K33 Research, EY Bitcoin dominates among Norwegian crypto investors, with 76% of owners holding BTC, while Ethereum follows at 39%. Local exchanges, particularly Firi, have a stronghold in Norway, catering to the increasing demand for accessible crypto trading services. Factors Driving Adoption of Cryptocurrency in Norway Several factors fuel cryptocurrency adoption in Norway: Cryptocurrency Usage in Various Sectors While crypto adoption among individual investors is strong, various sectors are exploring its applications such as: Challenges Facing Crypto Adoption in Norway Despite promising adoption rates, the following