The Fintech Friendliness Index

Methodology

CoinJournal.net researched and compared different metrics across the United States to create a “FinTech Friendliness” rating for each state. From startup survival rate to the number of Crypto ATMs, our research considered 30 different metrics under 5 key categories in the final weighting. This is our rating of how welcoming the state is overall to new FinTech, Crypto and Blockchain startups, and we’ve given each state a score out of 100, and a ranking from 1-50.

Philip Hoey, Director of CoinJournal, commented on the findings:

“This reveals a fascinating landscape of innovation and regulatory diversity across the United States, with Nevada leading the charge as the most conducive environment for fintech startups. This disparity in state rankings underscores not only the varying degrees of market readiness and regulatory frameworks but also the critical role that cultural integration and access to financial technologies play in fostering a thriving fintech ecosystem.

The data clearly indicates that states with a holistic approach towards fintech, combining favorable regulations, robust startup climates, and high levels of cultural acceptance of fintech, are setting the benchmarks for the future. This not only attracts innovative startups but also paves the way for the United States to maintain its position as a global leader in the fintech revolution.”

Cultural Integration

We began by considering how well fintech has integrated into the state, and so approximately how culturally accepting the state is to new financial technologies. We gathered information on the 14,000 merchants and ATMs across the U.S. which accept cryptocurrency transactions using Coinmap and compared this with the state populations to find the number of crypto merchants per capita in each state.

In this metric, New Mexico came out on top as the most crypto-integrated state with 105 crypto ATMs per million and roughly 10 merchants per million that accept crypto. Surprisingly, New York came last, due to its low number of crypto-ATMs per person – only 1 ATM per million New Yorkers, while other states average 34!

The Fintech Friendliness Index

Without further ado, here is Coinjournal’s 2024 Fintech Friendliness Index:

Healthy Competition

Next, we considered the number of recent successful startups which had begun in each state. We used Wellfound’s database of startups to track the number of Fintech, Crypto or Blockchain startups from each state.

We considered the history of startup success in a state to indicate fintech industry experts are present in the workforce, as well as a proof of concept that the industry landscape is suitable for fintech startups to succeed.

It will come as no surprise that New York and California topped these metrics, but notably, it was Wyoming that took 3rd.

Startup Climate

This metric is the consideration of how good the state is for starting a business of any kind. For this, we made use of the Forbes ranking, which considered 18 metrics over 5 main categories: Business costs (Taxes, wages, natural disasters), Business climate (small business survival rate, small business growth rates), Business funding, State economy, and available skilled workforce.

Forbes ranked North Dakota as the best state for launching a business in 2024, and Vermont as the worst. You can read more about their methodology on their site.

Business Loan Approval Rates

Starting or expanding a business often takes serious funding, which means business loans for many. We integrated research by National Business Capital on business loan approval rates of various types and sizes into our weighting. We analyzed startup loan approval rates at different loan amounts to gauge how easily startups can get the funds they need to get launched and stable.

We found it is easiest to get loans approved in Utah, and hardest in West Virginia.

Fintech State Regulations

The final thing to consider is how the state laws regulate the fintech industry within each state. As fintech, and particularly cryptocurrency and blockchain technology, are relatively new and developing industries, the laws and regulations which apply to them are not always up to date. This often leads to regulations which don’t match the state of the industry or ones which are borrowed from other industries dictating the market, which can handicap the growth of fintech within that state.

This was perhaps the most difficult metric to pin down, as the state laws are too numerous and too disparate to form a full ranking. Instead, we researched the regulations of each state and considered how clear and favorable they are to fintech startups. We gave those with clear, fintech-friendly laws a boost to their score, and those with the most restrictive, ambiguous, or improper laws a reduction to their score.

Nevada, Wyoming and Texas were amongst those states whose regulations are most defined without being restrictive to innovation. The states with traditionally less of a focus on the financial or tech industries generally had unclear or restrictive regulations, and so took a score penalty – these included West Virginia, Mississippi, and Montana.

 

#1 – Nevada

Our research shows that Nevada is the best state in the U.S. to launch a fintech startup. Its flexible tax regime and legislation favorable for fintech have caused fintech startups to flock to the state. It places in the top 10 states for most fintech startups per capita, and 3rd for merchants registered to use cryptocurrency payments. Though Nevada didn’t top any of our metrics, it was one of the very few states to score well in each, earning it our top score overall.

#3 – California

The Golden State, long known to be at the forefront of the tech industry, must settle for 3rd place in our ranking. It is home to the 2nd most fintech startups and is one of the top 5 places to get a business loan approved. However, its regulations for fintech companies are somewhat complex, and fintech is surprisingly not as integrated into culture as much as other states – California is among the 10 states with the fewest crypto-dealing ATMs per person.

#6 – New York

New York is home to, by far, the most fintech startups in the U.S. And yet, it didn’t hit the top 5 in our ranking. The regulations in the state are strict but clear, and the local financial ecosystem provides huge opportunities. However, it suffered in our ranking due to the surprisingly few crypto-accepting merchants and ATMs. Furthermore, due to its gigantic business costs, stiff competition and unavailable workforce, Forbes rated it the 2nd worst state to start a business. However, specifically for Fintech startups, we cannot deny the opportunity available in this high-risk, high-reward environment.

#12 – North Dakota

Although Forbes ranked North Dakota as the best state to launch a startup, we found it less suitable for Fintech startups specifically. North Dakota’s economy is less developed in the tech and financial services sectors and therefore is lacking in the regulatory frameworks that fintech startups require. This isn’t just evident to us – it has caused a low number of fintech startups in the State, the 4th lowest overall, which in turn is leading to industry experts looking elsewhere. However, should the state’s fintech regulations come up to speed, we don’t doubt it could become a new fintech hub of the U.S.

For the Startups

Choosing the right location is crucial for the success of any fintech startup. Our comprehensive Fintech Friendliness Index offers a deep dive into the diverse landscape of opportunities and challenges across the United States. This guide illuminates the economic climates, regulatory frameworks, and resource availability unique to each state, and we hope it can provide a roadmap for budding entrepreneurs navigating the fintech frontier.