Written by Scott Craig|Posted on September 21, 2022
Andorra, is a small European country sequestered in the Pyrenees between France and Spain. The tiny nation has become a trailblazer in blockchain and digital currency adoption, thanks to the government’s greenlighting of the Digital Asset Act, a regulatory framework for blockchain and cryptocurrencies.
The legislation, approved by the General Council of Andorra, covers two main areas. The first details a framework for ‘programmable digital sovereign money’, a central bank digital currency (CBDC) that would allow the Andorran government to issue its own crypto token. The Digital Asset Act also regulates digital financial instruments such as cryptocurrencies. Local businesses in the blockchain and crypto space are excited about the opportunities that this could create for the country’s economy, attracting businesses and talented individuals by presenting a ‘crypto-friendly’ regulatory environment. What it doesn’t do, however, is make cryptocurrencies legal tender, as although Andorra is not an EU member state, it has adopted the Euro, and as such must follow the European Central Bank in this regard.
Blockchain, bitcoin, and cryptocurrency, in general, are increasingly being adopted by many businesses, chiefly in financial services but also in logistics, real estate, data management, and entertainment. Although the technology offers many advantages due to its decentralized nature, a lack of consistent regulation has exposed the crypto industry to bad actors. Andorra’s status outside of the EU puts it in a flexible position to experiment with effective crypto regulation and boost the micronation’s economy.
One CEO of an Andorran Bitcoin business highlighted how the new laws would not only attract crypto businesses to base themselves in Andorra, but also pave the way for the introduction of Bitcoin as a reserve asset and encourage banks to work with crypto. Local media has also noted how the act paves the way to making cryptocurrencies a day-to-day reality in the lives of citizens.Europe’s sixth smallest country boasts low taxes and a strong finance sector, though it competes for foreign investment with the likes of Monaco and Switzerland. The new regulations give Andorra an extra edge in the growing digital asset economy.
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