Many countries recognise Bitcoin as legal, while others refuse to accept it
peer-to-peer electronic money With the launch of Bitcoin in 2009, the world was introduced to the idea of decentralized finance. Many customers are curious about whether they may use Bitcoin lawfully, even as tax authorities, police agencies, and regulators around the world continue to debate how to regulate it.
The country you are in determines whether or not you can use Bitcoin. Find out more about the legal status of Bitcoin and how it is regulated—or not—by international authorities.
KEY TAKEAWAYS
- The cryptocurrency Bitcoin has raised financial concerns for governments worldwide.
- Despite its use for buying goods and services, there are still no uniform international laws that regulate Bitcoin.
- Many developed countries allow Bitcoin to be used, such as the U.S., Canada, and the U.K.
- Several countries, including China and Saudi Arabia, have made it illegal to use Bitcoin.
Countries Where People Can Legally Use Bitcoin
The primary worry of central banks and governments regarding cryptocurrencies is their ability to be used for anonymous or non-anonymous account-to-account transactions across borders.
To help address the primary issues preventing cryptocurrency from being widely adopted, centralized authorities have already implemented laws like know-your-customer (KYC) and anti-money laundering (AML) procedures.
Nations are scrambling to adopt laws and regulations that will enable them to capitalize on the expansion and promise of cryptocurrencies.
Below is a list of nations and their opinions on Bitcoin and cryptocurrencies in general:
El Salvador
One of the first two nations in the world to accept Bitcoin as legal cash is El Salvador. A bill introduced by President Bukele was adopted by the El Salvadorian Congress in 2021. The law allowed regular people to use cryptocurrencies to pay for products and services, formally announcing that they would be accepted as a means of value exchange..
The Central African Republic
There are just two nations in the world that accept Bitcoin as real money. El Salvador is the first. The Central African Republic comes in second. In the second quarter of 2022, it accepted Bitcoin as legal tender.
The United States
Businesses and people that keep or transact Bitcoin in the US are referred to as "MSBs." Another name for this is a money services company. The Bank Secrecy Act applies to every MSB.
Having said that, the Treasury has described Bitcoin as a currency that may be exchanged for other currencies and used in place of actual money.
Although regular people and businesses can use cryptocurrencies as payment methods, there are additional restrictions in place for looking into suspected criminal activity or financial misconduct tied to certain cryptocurrencies.
Check out our B2BinPay article to find out more about how companies can store cryptocurrency.
The European Union
The EU does not view the usage of tokens as unlawful since it sees them as a kind of asset.
Although the European Union has a nuanced position on cryptocurrencies, several of its member states have moved to increase their accessibility. Many nations, including Belgium, Finland, and Bulgaria, have passed laws on the use of cryptocurrency.
The European Banking Authority has issued warnings regarding the dangers of cryptocurrencies and does not have authority over transactions using crypto assets. The European Union suggested regulations on cryptocurrency assets in 2022.
Canada
For taxation purposes, cryptocurrencies are regarded as commodities in Canada. Exchanges are categorized as money service companies.
Strict restrictions and regulations have been put in place by the Canadian government to stop the use of cryptocurrencies for money laundering and financing terrorism. Users in Canada are allowed to use and sell cryptocurrencies as long as they abide by certain rules and regulations.
Israel
Israel is a welcoming country for cryptocurrency users, as seen by the large number of cryptocurrency ATMs and establishments who use Bitcoin as payment. At this time, Bitcoin is not regarded as a currency, security, or asset by Israeli tax authorities. However, when a seller sells Bitcoin, they must pay a capital gains tax of 25%.
Australia
The position of Australia is comparable to that of Canada. Cryptocurrencies are viewed by Australian authorities as digital assets having taxable values.
A capital gains event would occur if someone were to buy, sell, give as a gift, or even convert cryptocurrency into fiat money to spend for purchases. In most cases, though, you won't have to pay taxes if you keep your cryptocurrency to profit from its increased value.
Although wallets and exchanges do this for you, you are still required to maintain records of the transactions you make in Australia.
Countries Where Bitcoin Can Be Used Freely
Other countries have also allowed cryptocurrencies to be used in transactions and are working on some form of regulation that allows crypto to become a part of the financial system. Some examples are:
India
India has a complicated position on cryptocurrency that has changed over time. The Finance Minister promised to support blockchain technology in payment systems while outlawing the use of Bitcoin and other virtual currencies for illicit activities in India.
Initially, the Reserve Bank of India (RBI) prohibited organizations under its supervision from buying or selling cryptocurrencies, but this prohibition was later repealed.
Japan
Although Bitcoin can be used legally in Japan, the digital currency is viewed more as a kind of property stored on a virtual device.
The Japanese government published a cabinet resolution in 2014 that forbade banks and securities firms from dealing in cryptocurrencies since Bitcoin was classified as neither money nor a bond.
But this ruling also brought attention to the fact that, as of right now, no laws specifically forbid people or organizations from accepting cryptocurrencies in exchange for products or services, and that, since April 2018, businesses that do so have been obliged to register and follow certain guidelines.
Mexico
Bitcoin has been legal in Mexico since 2017. The country has plans to regulate it as a virtual asset by the FinTech Law.
Singapore
In Singapore, the regulatory authorities have stated that whether or not businesses choose to accept cryptocurrencies is their own commercial decision, but they have also warned users of the potential dangers of using Bitcoin.
Saudi Arabia
Financial institutions have been cautioned by Saudi Arabia about the possible risks associated with Bitcoin use, and the country does not provide rights or protection to businesses that use it. It is prohibited from banks but is seen as lawful.
UAE
Although the Central Bank of the United Arab Emirates is working on new regulations for numerous retail payment services, which may include the concept of tokens being used for payments, the bank does not currently accept cryptocurrencies as a form of payment.
Angola, Costa Rica, Ecuador, Lebanon, Turkey, Iran, Argentina, Brazil, Pakistan, Chile, South Korea, Malaysia, the Philippines, Thailand, Vietnam, New Zealand, and more are among the other nations where cryptocurrencies are allowed.
Countries Where Crypto Cannot Be Freely and Openly Used (Or Is Under a Banking Ban)
update, the Library of Congress identified 42 nations with implicit prohibitions on specific cryptocurrency uses.
It mentions a few of the following nations:
- Kuwait
- Burundi
- Macao
- The Maldives
- Lesotho
- Libya
- Cameroon
- Zimbabwe
- Vietnam
- Bahrain
- Guyana
- Gabon
- Georgia
Countries With Total Bans on Cryptocurrency
- China
- Qatar
- Egypt
- Algeria
- Morocco
- Nepal
- Bangladesh
- Tunisia
Benefits of Accepting Cryptocurrencies as Legal Tender
More investment and innovation in the country
Legalizing cryptocurrency as a form of payment could attract businesses and tech entrepreneurs to the country to invest and grow.
Economic growth and the creation of jobs could be the inevitable outcome of this. The government's acceptance of cryptocurrencies as a valid form of payment shows the market that it is open to new ideas and cutting-edge innovations in technology.
Consequently, companies and entrepreneurs operating in the technology and finance industries might find it simpler to invest and innovate.
Decentralization and transparency
The transparent nature of cryptocurrency transactions means that financial activity is both observable and immutable. This suggests that all parties are aware of every transaction that has taken place and that it cannot be changed. This more transparency may lead to a decrease in corruption and money laundering.
Decentralization may also improve financial stability by reducing the need for centralized middlemen in the financial system.
Improved financial inclusion for the unbanked populations
This greater financial engagement will ultimately enable new groups to start creating and trading wealth. Cryptocurrencies enable people to move funds fast and easily, making them a viable choice for those who are either unbanked or underbanked.
Why Is Cryptocurrency Illegal?
While it isn't prohibited in many nations, those that have done so for a variety of reasons. One of the most often mentioned reasons is their volatility; other common ones include energy consumption, worries about destabilization, or the ease with which illegal actions can be funded and carried out with them.
Can the U.S. Make Bitcoin Illegal?
It is theoretically feasible. It is unlikely to occur, though, as legislation would need to be passed, which is getting more and harder.
Can You Go to Jail for Using Crypto?
Arresting someone for utilizing cryptocurrency for personal, business, or legal reasons shouldn't be necessary. But, as many have discovered since its introduction, engaging in illicit activity using cryptocurrency can get you into trouble.
The Bottom Line
Ultimately, only two countries in the world right now accept Bitcoin and other cryptocurrencies as legal tender.
However, that number is pretty much guaranteed to grow. Currently, online pools for which country will be next to accept Bitcoin as legal tender are growing in popularity, with countries like Paraguay and the United States leading the community vote.
Legalizing cryptocurrencies as a method of payment can bring both significant benefits and significant risks to some countries. Only time will tell which countries can successfully deal with the challenges and leverage the potential of cryptocurrencies.
Global Bitcoin regulations are still changing as the technology becomes more widely used and accepted. Since the European Union passed the MiCA rule in the middle of 2023, many nations are anticipated to introduce new or modified legislation. As cryptocurrency develops into whatever it will be—an asset, legal tender, money, payment method, or all of the above—the legislative environment is probably going to keep shifting.
REFERENCES
https://www.investopedia.com/articles/forex/041515/countries-where-bitcoin-legal-illegal.asp
https://b2binpay.com/en/countries-which-allow-cryptocurrency-as-legal-payment-method/
https://www.google.com/
