Crypto assets have grown massively over the past few years, and are becoming increasingly interlinked with the regulated financial markets.
Global use of crypto has skyrocketed in recent years, by almost 400% between 2020 and 2022, only to accelerate further in 2023. The benefits offered by crypto, such as low ownership cost, anonymity and safe and fast transactions, are all factors influencing the rise of the digital asset in global markets.
This increase in crypto usage has caught the attention of cities worldwide and many have seen the opportunities for investment and innovation potential - fuelling the race to be seen as crypto-friendly jurisdictions. As the industry becomes more regulated, especially in terms of crypto tax, some countries offer more favourable systems than others - from 0% on capital gains in some countries to up to 45% in others.
Recently, Rishi Sunak, former Chancellor of the Exchequer turned Prime Minister, set out plans in April 2022 to make the UK a “global hub for crypto-asset technology and investment”, to ensure the UK is on track to meet this goal.
Despite volatility in the space due to the FTX crisis, cryptocurrencies are capturing the attention of major retailers, investors and financial institutions as the likes of Namecheap and Starbucks allowing customers to buy giftcards through a bitcoin payment platform.
It’s not just the UK that has seen the benefits of adopting a more crypto-friendly approach - whether for investors or for the crypto community to relocate.
Miami in the United States is one of the first areas to adopt stablecoins, accepting $7m worth of gift contributions from MiamiCoin, a digital coin created by the non-profit CityCoin. Miami’s mayor, Francis Suarez, is pushing for residents to be paid in Bitcoin and pay for taxes and fees in digital currencies.
Hong Kong has also confirmed its commitment to developing its cryptocurrency infrastructure, and New York’s Mayor Eric Adams said he wants to make the city the “centre of the cryptocurrency industry.”
But what cities are likely to be the most popular destinations for the crypto community, and become a hub for crypto-related start-ups and fuel investment?
At Recap, our expert researchers have examined eight key data points determining crypto-readiness of the most populated cities around the world.
- Quality of life score
- Crypto-specific events
- People working in crypto-related jobs
- Crypto companies
- R&D spend as a percentage of GDP
- Number of crypto ATMs
- Capital gains tax rate
- Ownership of crypto in each country.
See below for the world’s most crypto-ready hubs:
With a strong financial infrastructure and a thriving startup ecosystem, London has come first place as the leading crypto-hub in the world.
The city alone has 2,173 people working in crypto-based jobs making it the highest number of people working in this industry compared to anywhere else. With over 800 crypto-based companies in the Big Smoke, there are many options for those wanting to delve into the crypto world.
Additionally, out of all the cities, London hosted the second highest number of crypto-related events and conferences throughout the year, helping attract and retain crypto companies.
While the UK’s capital leads the race as the biggest crypto-hub in the world, the study found that only 11% of people in England own/use crypto, compared to 45% of people in Nigeria, which came in 14th place.
Dubai comes in second place as it pushes to become the leading centre for cryptocurrency and blockchain technology in the Middle East, following a year of multiple new laws for crypto exchanges to operate in the city. One recent YouGov survey also found that two-thirds of UAE adults are interested in cryptocurrency.
With 0% tax, Dubai is an appealing place to live for crypto investors - and may be the second choice for some UK residents, as Holborn Assets revealed 200,000 Britons currently reside in the city. Dubai also has 772 crypto-based companies for residents to choose from when it comes to finding a career in the sector. The city also has a high quality of life with a score of 175.84 - the seventh highest overall.
In what may be to the delight of its Mayor, New York took third place with the highest number of companies specialising in the field at 843, as the city makes a play for the cryptocurrency crown.
The Big Apple also has some of the biggest investment in R&D and people working in crypto-based jobs at over 1,400. Events are also prevalent in the city - with one such - CryptoMondays - taking place weekly for people to share their views, network and find jobs in the crypto space.
Coming fourth is another crypto tax haven - Singapore. With 25% ownership of crypto, over 1,000 people working in the industry and 800 crypto-based companies, the city doesn’t require investors to pay capital gains tax.
Following the launch of the new Crypto.com arena - replacing the Staples Center - Los Angeles came fifth, highlighting how more mainstream the currency has become in the US. LA has developed a thriving crypto community as of late, with the support of the government, a state-wide pool of diverse talent, and a relatively high research and development expenditure too.
Despite having just a small proportion of the population of the other cities in the list - Zug has also emerged as a leading crypto-ready city. Known as Switzerland’s crypto capital, Zug has connected startups, corporates, investors and other stakeholders to establish the city as a crypto-hub.
With 0% capital gains, residents in Zug also have the unique opportunity to pay for their taxes in crypto - and it has the highest quality of life score of all the cities analysed - at 212.78.
Hong Kong, Paris, Vancouver and Bangkok complete the top ten due to low capital gains tax, high volume of crypto ATMs and the number of people in the crypto field.
Interestingly, San Salvador in El Salvador, came 41st in the table with only ten people working in crypto-based jobs - but is the only place where Bitcoin is considered a legal tender. Residents are able to spend it like currency as shop prices are also quoted in Bitcoin.
Laws around cryptocurrency differ significantly between countries. Some countries, like the UK, the UAE and Switzerland have laws which support the rollout of the currency. However it’s actually banned or heavily restricted in countries such as China, Vietnam and India, which were then omitted from the list.
In the United States, crypto is looked at as a commodity, and is regulated by the CFTC and SEC. In the UK and EU, it's considered a private currency.
In countries where crypto is considered a taxable asset, crypto tax software and a crypto tax calculator can help with compliance; these are tools that help individuals and businesses calculate and file their taxes on cryptocurrency transactions.
Like many countries, the UK is forming new rules and regulations around crypto taxation. Whether this will help or hinder London’s place as a crypto-hub is something to look out for in the future.
For this study, our expert researchers found the 200 most populated cities in the world, and compared these against eight relevant index points to find the most crypto-ready city in the world. The data points included:
- Quality of life score: Taken from Numbeo
- Crypto-specific events: A crypto-specific event is an event on Eventbrite matching the keyword “Crypto”.
- People working in crypto-related jobs: A crypto worker is a LinkedIn member who is in a job role matching the keywords “Crypto” “Blockchain” “Web3” “Bitcoin” or “NFT”.
- Crypto-specific companies in each city: A crypto-specific company is a company on LinkedIn matching the key word “Crypto”.
- R&D spend as a percentage of GDP
- Number of crypto ATMs: Taken from Coin ATM Radar
- Capital gains tax rate in each country.
- Ownership of crypto in each country.
Once the data had been collected, an index score was given to each city in each data set, depending on the crypto-readiness desirability of the result. E.g. The cities with higher tax ranked last and received a lower score out of 100; whereas the number of crypto companies is desirable, so cities with the highest amount ranked on top with a higher score. The cumulative percentages for each city were totaled and ranked out of 800, with the highest index figure being most crypto-ready, and vice versa.