Bitcoin is going places. The primary cryptocurrency has had a spectacular 2017 so far, rising by 1,400% to surpass $15,000 per coin. It is entering the futures market, making its way into individual retirement accounts, and some of the most prominent institutions are looking to offer bitcoin-based exchange traded funds.

Although bitcoin has seen some great momentum, it continues to be treated differently across regions, jurisdictions and countries. We glance through some of the countries qualified to be called "bitcoin’s capital" based on the open-mindedness of their authorities, regulatory framework, investor enthusiasm, and trading volumes.

Here’s our list of five countries (in no particular order).

Switzerland

Switzerland features as a prominent name among countries considered bitcoin-friendly. It is home to many bitcoin start-ups, including Xapo, Shapeshift, Ethereum Foundation, and Bitcoin Suisse. Switzerland is also rising as a blockchain hub. The Global Blockchain Business Council (GBBC) recently finalized incorporation in Geneva, Switzerland.

Back in 2016, Canton of Zug started accepting up to CHF 200 in bitcoin for council services. Recently, Chiasso showed acceptance to bitcoin and specified accepting up to CHF 250 of tax bills in bitcoin beginning 2018. Chiasso is branding itself as Cryptopolis, “an ecosystem centered in and around the Swiss City of Chiasso (Canton of Ticino) with active connections to international centers of blockchain and Fintech innovation in the world.”

Interestingly, Zug is already dubbed as the "Crypto Valley," and with Chiasso gaining a sweet spot for bitcoin and blockchain start-ups, Switzerland is undoubtedly a strong contender for the title of the "world’s bitcoin capital."

Singapore

Singapore is among the top financial hubs across the globe. From a business perspective, Singapore’s appeal lies in its transparent and sound legal framework complementing its economic and political stability. The island nation ranks second on World Bank’s list for "Ease of Doing Business." The island nation has showed openness for innovation and technology-driven business models.

The Island Revenue Authority of Singapore has clearly placed taxation criteria for virtual currencies such as bitcoin. Having neat laws related to taxation has given a significant boost to its adoption, adding further to its credibility.

According to a news report, Monetary Authority of Singapore managing director Ravi Menon recently said, “As of now I see no basis for wanting to regulate cryptocurrencies.” He added that the focus of the central bank is to “look at the activities surrounding the cryptocurrency and asking ourselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there.”

In August, the Monetary Authority of Singapore issued a guide to digital token offerings in an attempt to bust myths around them.

Japan

The stance that the Japanese authorities initially took towards bitcoin has slowly evolved over time, and the shift has been nothing short of impressive. Earlier this year, Japan recognized bitcoin as a legal method of payment – it continues to be treated as an asset and not as a currency – and set the ball rolling with amendments to the Payment Services Act. The process of registration of virtual currency exchanges was started on April 1, 2017.

Nevertheless, the real push came in September 2017, when Japan’s Financial Services Agency approved the first lot of companies as operators of cryptocurrency exchanges. The registration of exchanges will build greater confidence with the prioritization of issues, such as protection of consumer assets, security breaches and money laundering. Going by the trend over the past few months, and especially post-crackdown by regulators in China, Japan has dominated the bitcoin market in terms of currency trading volume.

South Korea

South Korea is the third-largest market in terms of trading volume and is trading at premiums of more than 20%. Bithumb and Coinone are among the prominent exchanges based in the country.

"Overall, South Korea is believed to have about one million registered daily traders in virtual currency, which is equivalent to about one out of every 50 citizens," highlights an MIT technology review.

Financial Supervisory Service (FSS) Governor Choe Heung-sik recently said, “Though we are monitoring the practice of cryptocurrency trading, we don't have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”

Bitcoin doesn't come under value-added tax or capital gains tax purview in Korea. In September 2017, South Korea prohibited companies from engaging in initial coin offerings (ICOs).

United States

The United States has lived up to its reputation of being an open regulatory regime, although state-wise stance varies. While authorities have been cautious of the rise of cryptocurrencies, keeping a close watch on their growth, they have at the same time allowed it to prosper by issuing regulatory, legal or tax-related guidelines. The Internal Revenue Service issued taxation criteria for bitcoin back in 2014.

Even the Securities and Exchange Commission has spelled out its take on ICOs. (See more: SEC Chair Warns Cryptocurrency Investors to Beware.) The decision by the Chicago Merchandise Exchange (CME) Group to launch bitcoin futures has already created a positive ripple effect. Bitcoin is now a part of the list of assets that an individual can choose to add in his or her retirement account. The U.S. is home to a number of bitcoin and blockchain start-ups, and currently dominates the bitcoin trade at the second spot.

Bobby Ong, founder, CoinGecko told Investopedia, “I see Singapore and Zug, Switzerland as crypto capitals due to the favorable regulatory environment offered by both these cities. Blockchain founders gravitate to cities which are welcoming, and we have seen an explosion of ICOs and blockchain startups incorporating in both these cities. Other cities can also attract blockchain companies by having progressive laws and regulations.”

Ranking by Trading Volumes

  1. Japan
  2. United States
  3. South Korea
  4. Singapore
  5. Switzerland

Ranking by Crypto-friendly Regulation

  1. Switzerland
  2. Japan
  3. Singapore
  4. United States
  5. South Korea

Ranking by ‘Exchange’ Presence

  1. United States
  2. South Korea
  3. Japan
  4. Switzerland
  5. Singapore

Overall, while Switzerland and Singapore are our favorites, we choose Japan for the title of "bitcoin capital of the world" since it has a combination of factors: regulatory approval, currency-wise trading volumes and facilitation to use bitcoin as payments.

The Bottom Line

Over the years, the collective strategy of governments (with few exceptions) has been to watch patiently on the sidelines. However, the dynamism in the crypto-world got many of them to act and come up with suitable approaches.

With the total market capitalization of cryptocurrency climbing further into the hundreds of billions, the decentralized world of cryptocurrencies has come a long way. However, a positive standpoint and clarity in terms of taxation by authorities can provide a major impetus for its journey ahead. (Related reading, see: The World's Top Financial Cities.)

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