Bitcoin, the peer-to-peer digital currency created by Satoshi in 2009, has been trending since it introduced decentralized finance to all and sundry.
While it is loved by many, others still oppose it.
Since 2009 to date, Bitcoin has been attracting many opponents.
If you are getting to know Bitcoin, which is surprising, it will be nice to know if your country supports it.
This is because while some financial institutions and agencies are still debating on controlling or regulating it, many crypto enthusiasts are wondering if they can use Bitcoin or if it’s legal in their country.
Nevertheless, using Bitcoin solely depends on which country you are in: if it’s legal or illegal in your country.
Here in this article, we discuss the different countries where Bitcoin is legal or illegal.
Countries Where Bitcoin Is Legal
Bitcoin is one of the renowned products of blockchain technology. Even if blockchain was in existence before Bitcoin, the birth of Bitcoin gave life to the blockchain bandwagon.
As a decentralized payment system, Bitcoin allows anonymous peer-to-peer transactions without intermediaries.
This has induced some governmental concerns in the crypto space.
To limit or avoid the use of these digital assets by fraudulent ones, some legislators have introduced regulations under their country’s anti-money laundering and counter-financing of terrorism laws (AML/CFT), according to Investopedia.
Thanks to the Library of Congress (LOC), which conducts periodic checks of countries’ stances on Bitcoin and cryptocurrencies.
Moving forward, in November 2021, LOC reported 103 countries whose governments directed their financial regulatory bodies to develop a legal framework for financial institutions regarding cryptocurrencies and their use in AML/CFT.
From the list of countries, these are the most renowned:
The United States of America
The United state of America has been a renowned crypto-savvy country since 2013 after it issued guidance on Bitcoin.
The guidance of Bitcoin in the United state of America was issued by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
According to the treasury, Bitcoin is a convertible currency having an equivalent value in real-world currency or can act as a substitute for real-world currency.
Also, the Internal Revenue Service has categorized Bitcoin as property for taxation purposes.
This means that the entities where Bitcoin is exchanged or administered fall under the definition of a money services business (MSB); and should register with the U.S. Treasury.
More regulations are still trying to surface.
However, the country has displayed approval and acceptance of Bitcoin over the years.
The European Union
Bitcoin is not illegal within the European Union as the EU identifies cryptocurrencies as crypto-assets.
While it is being accepted in the EU, the European Banking Authority has warned the public that cryptocurrencies are out of their control, and they are to use it public at their own risk.
In 2020, a proposal for crypto regulation was finalized by the European Commission.
As usual, the regulation is intended to understand and control the usage of these digital currencies.
Canada has been a bitcoin-friendly country like its southern neighbor, the U.S.
According to the Canada Revenue Agency (CRA), Bitcoin is a commodity for income tax purposes.
When a commodity is viewed as a property for taxation purposes, any profit from such transactions involving the commodity is seen as business income and must be reported.
Talking about crypto exchanges, Canada identifies them to be a money service business.
As a money service business in Canada, they are under the purview of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada’s version of AML/CFT laws).
Therefore any crypto exchange in Canada must be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
This will help to regulate the activities of crypto exchanges and curb any insider fraud.
Like Canada, the Australian Taxation Offices see Bitcoin as a financial asset with taxation purposes.
Depending on the crypto activity you execute, you are to be taxed.
For instance, if you sell, swap, or gift crypto, you induce a capital gain tax.
Therefore, you should keep your crypto transactions records for tax purposes.
However, holding crypto long-term in Australia might not induce capital gain tax.
El Salvador shocked the world with one of the fastest and most controversial moves toward Bitcoin.
In July 2021, El Salvador became the first country to declare Bitcoin a legal tender.
El Salvador’s president, Nayib Bukele, was approved by the country’s congress to adopt Bitcoin as a form of payment in the country.
The Central African Republic
Following the footsteps of El Salvador, the Central African Republic became the second country in the world to adopt Bitcoin.
According to CNBC, lawmakers of the Central African Republic’s parliament voted unanimously to pass the bill legalizing Bitcoin and other cryptocurrencies.
As such, Bitcoin is now considered a legal tender in the Central African Republic alongside the regional Central African CFA franc.
Brazil also followed suit to regulate the use of Bitcoin in the country.
According to Brazil’s federal government’s official journal, the President of Brazil, Jair Bolsonaro, signed a bill into law that establishes a complete regulatory framework for the use of Bitcoin in the country.
The president of Brazil also enacted the bill approved by congress without adding or subtracting from it.
The new regulatory framework identifies bitcoin as a digital form of value that can be used as a means of payment and as an investment asset in the South American nation.
An excerpt from the bill defines a virtual asset as
“a digital representation of value that can be negotiated or transferred electronically and used for payments or as an investment.”
Let’s briskly outline other countries where Bitcoin is Legal:
These countries allow Bitcoin to be used in their jurisdictions while working on creating a regulatory framework for digital assets.
- United Kingdom.
Countries Where Bitcoin Is Illegal
To easily understand this part, we are going to split it into two parts:
Countries with implicit and explicit bans.
This is because while some countries made their crypto ban official, some didn’t come in the open to do the same.
While others understand the importance of Bitcoin and try to regulate the asset class, some countries feel pressured by the decentralized nature and are forced to ban the asset class.
Also, because of the anonymity of crypto, several fraudsters are utilizing it to fund operations; this is one of the reasons some countries have painted crypto illegal in their environs.
Countries With Implicit Bans on Bitcoin
Still maintaining data from LOC, there are about 42 countries with implicit bans on crypto or its uses. They include, but are not limited to:
- Central African Republic.
Countries With Explicit Bans on Bitcoin
While some countries could not come in the open to ban crypto, some have explicit bans on the asset class.
According to LOC, as of November 20221, about nine countries have explicit bans on crypto. They include:
Bitcoin has continued its prevalence even after many downtimes and the current crypto winter.
To some people, Bitcoin would have crashed after China’s crypto ban, but to everyone’s surprise, the digital asset has continued trending.
I’m sure you can now make your choice after reading this article.