Bitcoin is simply too new for any locality to be "friendly". Banks consider Bitcoin to be high "risk" even if the entity/company has absolutely no cases of fraud, customer complaints, etc.
Among least Bitcoin friendly I would put USA, UK, and to a lesser extent Australia.
Among Bitcoin "friendly" I would put Canada. Probably more accurately is that Canada is Bitcoin neutral.*
The bigger issue is that most Bitcoin related enterprises (this doesn't mean companies buying or selling goods for Bitcoins) need to interface with the existing financial networks in some fashion. Banks however are private property and in most countries an account can be denied or closed for any reason or even a lack of reason as long as the Bank doesn't violate some protected class (race, religion, etc). Banks are highly risk prone (unless it has high rewards) and most startups aren't going to generate meaningful amounts of revenue for any major bank. Hence the default option is close the account. The account has unusual activity, no reason to investigate, close it. The account scores as high risk, don't negotiate contingencies just close it. The account is involved in business the bank has little knowledge or understanding of, don't ask the owner for information just close it. To overcome this on a large scale may require chartering a national bank or credit union that is at least Bitcoin neutral.
* Canada at least respects the rule of law. Canada has stated their EXISTING laws/regulations on MSB and Money Transmitters doesn't cover virtual currencies. This isn't to say Canada doesn't want to regulate Bitcoin related enterprises or that they won't pass new laws in the future however unlike the US they are honest enough to say "hey look Bitcoin likely should be regulated but current statutes don't give us that authority, to do so we need new ones". FinCEN on the other hand did a bunch of mental gymnastics (hint: if you need to define 18 new terms which don't exist in current law in your "guidance" in order for current law to "fit" you have just defacto written new law), to force Bitcoin a square peg into the MT round hole because it was the only one which was even sorta close. This has a whole range of unintended consequences and creates additional vagueness in compliance because some of the MT requirements simply don't even make sense when not dealing with a third party (i.e. MT regs are built around the concept of PERSON-A ----> Money Transmitter (regulated) ----> PERSON B).
actually bitcoin is not illegal in the places listed above.
the best place to start a bitcoin business is europe, but as long as your offering legit goods or services for bitcoin you can pretty much start anywhere.
so if everyone started acting like the real world where there's only handfuls of gold miners /exchangers in an area but millions of retailers. that is how bitcoin can and should legally expand. everyone seems to be under the misguided concept that the only way to make money is through mining or forex exchanging.
where i am (in the UK) my bank manager knows about bitcoin, knows the risks, and knows me. yet has no problems allowing me to do business with bitcoins. the same with many countries.
the problem lies where bitcoin entrepreneurs suddenly think that because they own bitcoin, they can also act anonymously when it comes to their fiat trades too.
this actual thread should not be, which country is the most bitcoin friendly.. but which country has the cheapest money transmission licences. as its the licence to play with large amounts of FIAT that is the problem.. not bitcoin
so that the naive guys that are not finance experts can afford the licences, to naively become an exchange and make their money. i say naively because there's millions of other ways to make money and there are some people with financial exchange experience that can afford the licences, which should be doing it instead. purely on the bases they have better money management skills to be trusted with other peoples money.
there needs to be a big push away from exchanges and mining, and more of a push on retail start ups. its all about knowing the rules and following them. and to not be an "teentrepreneur" rebelling against the 'man' like a teenager rebels against parents.
but i would love to see a pricelist per country/province for money transmission licences
