A small light of progress is shining from Andorra, a small European country nestled between France and Spain. The country’s government, the General Council of Andorra, recently approved the Digital Assets Law, a regulatory framework for digital currencies and blockchain technology.
The act is divided into two parts. The first concerns the creation of digital currency, or “programmable digital sovereign currency”, which can be exchanged in a closed system. Indeed, this would allow the Andorran state to create its own token.
The second half of the law refers to digital assets as financial instruments and aims to create an environment in which blockchain and distributed ledger technologies can be regulated. For Paul (who hid his last name), CEO of local Bitcoin firm 21Million, the new law could attract new businesses. He told Cointelegraph:
“The result they are trying to achieve is to attract new companies to set up in the country by offering legal clarifications that make things easier and more transparent. They see it as a way to attract talent and entrepreneurs to the new economy.
Note that cryptocurrencies and digital currencies are not legal tender in Andorra and the Digital Assets Law does not make any proposals regarding the means of exchange. This privilege is exclusively reserved for the preferred currency of the European Central Bank, the euro. That didn’t stop Paul, a Bitcoin enthusiast, from advocating for the adoption of Bitcoin (BTC) in Andorra:
I had been working on this one for a while but finally decided to share it! Here is the case I am making for an adoption of bitcoin in Andorra! https://t.co/xHxl78YChO
— Paul ADW (@PaulADW) July 14, 2022
In a blog post, Paul pointed out that Andorra could adopt a bitcoin standard, mine bitcoin with renewable energy, take bitcoin as a reserve asset, and welcome bitcoin-centric businesses from all over the world.
National newspaper Diari of Andorra reported that the Digital Assets Act is a step toward “making cryptocurrencies an everyday reality.” From a business perspective, Paul said the level of “crypto-friendliness” depends on the activity.
“I have a friend who runs a mining operation here—no problem—and electricity is cheap. If you do financial advice, it’s the same thing: pretty cool with a low tax rate. If you wanted to run an exchange, it might be a bit tricky to find a bank that works with you; the government itself would not care.
In an interview in May, the Andorran Minister of Economy and Business, Jordi Gallardo, mentioned that blockchain was one of the main areas of investment for the small country. However, it is unclear whether the Minister was referring to Bitcoin (the world’s first blockchain) or research into the distributed ledger technologies that underpin blockchains.
Josselin Tonnellier, co-founder of StackinSat, told Cointelegraph that there is confusion regarding crypto, blockchain, non-fungible tokens, and Bitcoin. StackinSat hosts a major European Bitcoin conference, Surfin’ Bitcoin, in Biarritz, France, just outside Andorra, where the group’s headquarters are also located.
Paul, who is a regular at Surfin’ Bitcoin, confirms that in Andorra the sentiment and confusion remains similar: “The regulator doesn’t differentiate between ‘crypto’ and Bitcoin. They have not yet been “looted orange”. Taking the orange pill is the language used by bitcoin when a bitcoin newbie begins to understand the seminal cryptocurrency principles.
—Joss Tonn (@Joss_do_it_BTC) June 18, 2022
Tonnellier pointed out that awareness of digital currencies and technologies is on the rise, but there is a risk of scams and losses without the right educational tools or frameworks in place:
“According to a recent KPMG report, there are more French people exposed to ‘crypto’ than to the stock market […] France is known to be a hotbed of “shitcoinery”.
Although there is no classification table for “shitcoins”, these coins are tokens other than Bitcoin, which supporters of the latter believe are at risk of falling to zero. Squid Game Token was one of the most newsworthy shitcoins of 2021.
Back in Andorra, Tonnellier explained that the country is in the best position to operate with technologies such as Bitcoin. “Andorra is one of the few European countries outside the jurisdiction of the European Parliament.” Indeed, in many respects it could be comparable to Switzerland on a smaller scale:
“Andorra is very attractive for entrepreneurs thanks to its low taxation, but Switzerland has a good head start in promoting the development of activities around Bitcoin and crypto-currencies in general. This could change in the years to come thanks to this text of law which regulates the activities of Bitcoin and the blockchain.
Related: French central bank chief announces phase 2 of wholesale digital euro project
With less than 500 square kilometers of land, Andorra is one of the smallest countries in Europe. Contrary to popular belief, Andorra is not a tax haven; the microstate renounced banking secrecy in 2018. Nevertheless, taxes are significantly lower than in neighboring France or Spain, while financial services account for up to 20% of the economy.
Although it is unclear which digital assets the government intends to regulate with the Digital Assets Law, the economically driven move can help diversify the Andorran economy and welcome blockchain-based businesses and cryptography. For Paul, this is one more step towards the adoption of Bitcoin by Andorra.