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Countries where Bitcoin is legal and illegal

Countries where Bitcoin is legal and illegal Photo 1

The use of cryptocurrencies can be seen in people's daily lives more and more often. More and more investors, traders, and ordinary people accept digital coins and are willing to make payment transactions with them. However, before you do anything with the asset (sell/buy or use it pay to something), check if the world's most popular crypto money is law in your state.

Each region has its own rules regarding Bitcoin. E.g. somewhere it is allowed to use it as well as fiat, it is allowed to pay taxes with it and buy different goods. In other countries, using BTCs can easily get you imprisoned to a term of imprisonment. Moreover, in some countries, the status of the oldest crypto coin is still unknown.

Why are there countries where Bitcoin is illegal?

Financial regulators' caution about digital saving is partly logical and understandable. Cryptocurrencies are advanced technologies that somewhat threaten the position of traditional economic and financial systems.

The guiding principle of digital assets is their decentralization, which is beyond the control of any central bank. BTC emerges as a result of complicated mathematical calculations according to a predetermined algorithm. No government decision can affect it.

Modern numerical technology makes it possible to create your individual tokens, of which there are more than a thousand at the moment. Such assets can be traded on exchanges or crypto coin exchanges, carry out cross-border transfers and do not have to be approved by the government. Both the sender and recipient remain anonymous in these transactions. Often, national governments and local regulators try to control the crypto sphere in some way. It is worth noting that this is not always a negative thing.

E.g. sometimes numerical cryptocurrencies are used for their criminal purposes by fraudsters, traffickers of illicit goods, etc. The anonymity of cryptocurrencies allows them to remain virtually inaccessible to law enforcement agencies. In addition, investors who invest in ICOs become legally unprotected.

Where else are bitcoins used? 

In countries where bitcoins are legal, these coins are used to buy various goods and pay to services on the web, they are used to buy gift cards to buy products in most common stores, digital savings are invested in startups, even Coca-Cola in vending machines... All this leads to a great need for legalization of gaining momentum process and legalization of crypto-operations. But each government has its way of doing it: some countries come to it through prohibitions and toughening, while others, having assessed the prospect, come to it at once.

Countries where Bitcoin is legal

The issue of BTC legalization is not that simple. Each of the countries where bitcoin is legal has chosen a different option. Some give BTC a meaningful status and consider it a good financial asset, some consider it a means of payment, and some accept it as an ordinary commodity. In some countries where bitcoin is legal, all residents are willing to work with this asset, while in other governments, only individuals are willing. Who knows if this diversity of approaches will lead to a single coordinated international position or, on the contrary, will make the path to consensus even more thorny.

As of early 2022, most governments on the planet have legalized numerical currencies in one way or another. Among the countries where bitcoin is legal are major nations such as:

  • USA;
  • Japan;
  • United Kingdom;
  • Canada;
  • Estonia;
  • Brazil;
  • Australia;
  • France;
  • Finland;
  • Netherlands;
  • Sweden;
  • South Korea;
  • and others.

After analyzing, we can see that it is are countries with a fairly developed economic and law system. They direct all their efforts to find additional opportunities for development in innovation, rather than getting stuck in the way of prohibitions.

Several governments still have a wait-and-see approach in which digital assets are not banned, but have no law status yet. Most likely, these governments are still learning from their peers and trying to calculate potential pros and cons to their national economies and financial sectors. Some of these states have de facto recognized BTC as an asset, but have not legalized it. Miners and crypto-related companies/exchanges pay taxes, but the mechanism and amount of fees vary everywhere.

At the head of the planet...

Let's look at countries where bitcoin is legal and at the head of the industry. In addition, they have virtually no prohibitions on the development of cryptocurrencies in their state.

USA 

Here, digital savings are firmly entrenched in the lives of citizens, and many new projects are increasingly related to blockchain. The state has a well-developed network of bitcoin ATMs, and since 2017 it has been possible to trade futures to digital saving. BTC is accepted here as a real asset, not a currency. The regulator determines that depositors receive capital gains - taxation is based on that. The legality of all blockchain transactions is monitored by the Financial Crimes Unit and other authorities.

Canada

The list of countries where Bitcoin is legal also includes Canada. Here, BTC has the status of real electronic products. Operations, conducted with its usage, are characterized as barter. The income received from them is turn interpreted as the income from business activity. Mining is widely developed in the state, and Vancouver and Toronto are recognized as major BTC hubs. The reasons are believed to be a stable political situation, suitable climatic conditions, and low cost of electricity. Exchanges have the status of financial companies, which implies compliance with registration requirements. This status also obliges companies to comply with anti-money laundering legislation.

United Kingdom

London is a recognized global financial center. That is why it is not strange that many crypto-projects originate here. The local government is confident that in time whole world will recognize BTC as a payment method, and therefore is ready for such an event right now. People can even buy drinks in pubs and groceries in stores with numerical currencies. Under British law, BTC refers to and is defined as a private unit of currency, but created as a foreign currency. This is the reason why companies and people are taxed if they provide any kind of service or sell any tangible or intangible goods to BTCs.

Japan

The state is actively using these popular coins called Bitcoins. Until some time ago, Japan was the first and only country to grant BTC coins official electronic payment status in early 2017. BTCs in that government can be used not only to pay in stores but also as means to pay rent and buy bonds.

Australia

Australia joined the list of countries where Bitcoin has been law since 2017 and recognized as regular money. It is easy to buy BTC in Australia, even at the most common newsstands and post offices. Depending on the actions with crypto coins, authorities determine a special tax regime. Some Australian politicians even suggest making BTC the government's official currency. In 2018, the Australian Financial Transaction Reports and Analysis Center announced new rules requiring crypto exchanges operating domestically to register with AUSTRAC, maintain records and verify users.

Countries with absolute bans on Bitcoin

Time is running out. There are fewer and fewer regions where Bitcoin is banned and illegal. Somewhere digital assets to banned for national or religious reasons, somewhere authoritarian governments or fears of the integrity of national economies are to blame. According to many publications, at the beginning of 2022, BTC is absolute bans in 8 governments.

Bolivia

In this state, digital savings have been illegal since 2014. Any financial transactions which cannot be controlled by the government - are banned and called "pyramid schemes". The Central Bank of Bolivia has officially banned any currency or coins not regulated by the state or issued at all, including BTC and several other cryptocurrencies.

Algeria

The decision to prohibit bitcoin and other digital savings in this republic came with the creation of the 2018 Finance Bill. This bill emphasized that "purchase, sale, use, and possession of such electronic currency is prohibited. E-currency is a currency used by Internet users online. It characterized by the absence of physical carriers, such as coins, financial bills, payments by checks or bank cards". With this law, the government planned to regain control over numerical transactions and therefore made status to cryptocurrencies illegal.

Macedonia

Back in 2014, Dimitar Bogov, Governor of the National Bank of Macedonia, stated that BTC trading was illegal in the state. "In Macedonia, law means of payment for cash and non-cash payments is denar. Payment transactions abroad are made through operators of payment transactions - financial institutions. Consequently, it is illegal to trade or use bitcoins to payments in Macedonia," Bogov said at the time.

Saudi Arabia

In 2018, a standing committee made up of various government ministries Saudi Arabia's central bank warned that trading in "unauthorized" cryptocurrencies, such as BTC, was illegal and prohibited in the state. The reasons for the bans were allegedly due to possible "negative consequences and high risk to traders," since digital assets are not subject to government oversight.

Afghanistan

Countries where Bitcoin is legal, do not include Afghanistan in their list, as cryptocurrencies are banned here, and their use is punishable.

Pakistan

In April 2018, the State Bank of Pakistan (SBP) bans to use of cryptocurrencies in the state and designated them as illegal savings. "SBP has not authorized or licensed any person or entity to issue, sell, purchase, exchange or invest in any such virtual currencies/coins/tokens in Pakistan," a financial institution said in a statement. It also said that refraining from processing, using, trading, storing, transferring value, promoting, and investing in virtual currencies/tokens are required to "all banks, development financial institutions, microfinance institutions and payment system operators, payment service providers."

Vietnam

This state has banned numerical coins since January 2018, but many are doing so very actively. In 2019, the government allowed a few select crypto money companies to operate in Vietnam, while the rest became illegal. Example companies licensed to launch the first regulated crypto coin exchange in the state were:

  • Linh Thanh Group (Vietnam);
  • Kronn Ventures (Switzerland).

Bangladesh

Any operations with digital saving since 2014 in this state are banned and qualified as illegal money trafficking. The authorities call money laundering the main reason for this, and to violation of law, residents face up to 12 years in prison.

Countries with implicit bans Bitcoin 

The asset has implicit status in 7 other countries. Although it may be surprising to see some of them on this list.

Morocco

Back in 2017, the Ministry of Economy and Finance, Bank Al Maghreb, and the government's capital market authority issued a joint press release on the use of virtual currency. In law, representatives of authorities laid out the principles of cryptocurrencies. In addition, they noted that some articles in the press could mislead the public, leading people to believe that this virtual currency was recognized as money by the state.

Egypt

In 2018, Egypt's chief mufti, Sheikh Shawki Allam, issued a fatwa banning trade in digital saving. She ruled that BTC is "forbidden by Islam." The fatwa influences faithful but is not legally binding. Moreover, in the spring of 2019, there was a draft document requiring private financial institutions in the state to obtain licenses to work with platforms to issue and trade cryptocurrencies, but there is still no full-fledged regulation of the industry in the state. However, it is noted that due to the COVID-19 pandemic and rising unemployment, Egyptians have begun to use digital saving more frequently, so the status of coins here is still recognized as implicit.

Zambia

Two years ago, the Central Bank of Zambia (BoZ) announced that cryptocurrencies are not law tender in the state. However, relevant changes in current financial legislation have not been made yet, which means that BoZ can't yet absolute prohibition the local crypto market and again refers to an area with implicit status.

Qatar

The Central Bank of Qatar declared BTC transactions illegal. The relevant circular even warned of fines imposed on people who violate the rules. "This crypto coin is very unstable, can be used for financial crimes and electronic hacking, and risks losing value due to lack of guarantors or saving," local central financial institution added at the time.

Nepal

In 2017, the National Bank of Nepal called BTC exchanges "illegal." At the same time, the case of arrest of 7 Nepali exchange operators resonated widely.

China

In this state, you cannot say about an absolute prohibition on cryptocurrencies, and certainly not given the active promotion of future numerical yuan, however, several restrictions still exist, so the status here is implicit. Crypto transactions for financial institutions, as well as the launch of new ICOs, are prohibited. At the same time, the market of crypto money in China is considered one of the largest in the world: it is possible to mine and sell coins without problems. Today, all the government's efforts are aimed at creating its CBDC - numerical yuan.

American Samoa

The Central Bank of Samoa has issued a warning against the use of numerical currency, including BTC, as part of a larger effort to combat fast-enrichment schemes. In the same statement, the bank defined numerical currency as "the use of electronic money that is different from money we use physically, such as our banknotes, coins or even our ATM cards."

Opponents of digital assets most often cite the speculative nature of cryptocurrencies and the lack of intrinsic value of coins. In addition, many government execs are very concerned about the state of national economies with the arrival of cryptocurrencies in local markets. It is worth noting that in some of these countries, bans and warnings have failed to eradicate BTC and the use of cryptocurrencies in general, so the status here is either implicit or illegal.

Situation in Russia

The year 2020 was a significant stepping stone to clarify the situation in the Russian Federation as a country where Bitcoin is legal or not. At the end of July, Vladimir Putin signed the law "On Numerical Financial Assets" (DFA). According to the new document, from January 1, 2021, cryptocurrencies in the Russian Federation exchanged implicit status to the status of a legalized financial instrument, but with several features that caused a wave of criticism from the crypto-coin community.

Thus, document legalized transactions with cryptocurrencies in Russia but prohibited to use of numerical currencies as a means of payment. That is, it's possible to buy and bequeath crypto money, but it is not possible to pay for goods or services with it or receive remuneration for mining. According to amendments: violators face a fine of up to 100 thousand rubles or imprisonment of up seven years. To law entities, there is a fine of up to Br1 million.

The Ministry of Finance today established that all holders of crypto-coin in Russia are to required report their savings in annual tax reports. If they avoid doing so, they could receive a fine of 30% of the value of the tokens in their possession. However, these proposals are still at the level of plans.

The Russian crypto community is waiting for final decisions on all existing amendments as early as this year to determine the situation to the industry in the Russian Federation. If all planned amendments are approved, it could lead to both appearance of workarounds to making money and absolute destruction of the crypto market in the state, numerous bans, and so on. Neither one nor the other option is likely to be beneficial to the government, as they would deprive the treasury of potentially significant tax revenues, so the assignment of illegal status or complete eradication is unlikely.


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