Countries Where Bitcoin Is Legal & Illegal

So where will you get this when trying to use Bitcoin?
So where will you get this when trying to use Bitcoin?

The peer-to-peer digital currency Bitcoin made its official debut in 2009 and with it ushered in a new era of cryptocurrency. While tax authorities, enforcement agencies, and regulators globally are still debating best methods, one relevant question: is Bitcoin legal or illegal? The answer—it depends on the location and activity of the user.

Bitcoins are not issued, endorsed, or regulated by any central bank or govt. Instead, they are developed with the help of a computer-generated procedure called mining. Other than being a cryptocurrency unrelated to any government, Bitcoin is a peer-to-peer payment system because it doesn’t exist in a physical form. As such, it provides an easy way to conduct cross-border transactions with no exchange rate fees. It also enables users to remain anonymous.

Consumers have a greater ability to buy goods and services with Bitcoin directly at online retailers, pull cash out of Bitcoin ATMs, and use Bitcoin at some brick-and-mortar stores.Right now, the currency is being traded on exchanges, and virtual currency-related ventures and ICOs draw interest from across the investment spectrum. Although Bitcoin seems to be a well-established virtual currency system, there are yet no uniform international laws that regulate Bitcoin.

Countries Where Bitcoin Is Legal

Bitcoin could easily be used anonymously to conduct transactions across any account holders, anywhere and anytime across the globe. The majority of the countries have not clearly stated the legality of Bitcoin, opting instead to take a wait-and-see approach. Some countries have indirectly assented to the legal use of Bitcoin by enacting some regulatory oversight. But, Bitcoin is never legally acceptable as a replacement for a country’s legal tender.

The United States

The United States has taken a generally positive stance toward Bitcoin, even though various government agencies work to stop or diminish Bitcoin used for illegal transactions. Popular businesses like Dish Network (DISH), the Microsoft Store, sandwich retailer Subway, and Overstock.com (OSTK) welcome payment in Bitcoin.The digital currency has also made its way to the U.S. derivatives markets, which speaks about its growing legitimate presence.

The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has been offering guidance on Bitcoin since 2013. The Treasury has described Bitcoin not as currency, but as a money services business (MSB). This places it under the Bank Secrecy Act, which needs exchanges and payment processors to follow specific responsibilities like reporting, registration, and record keeping. Also, Bitcoin is categorized as property for taxation purposes by the Internal Revenue Service (IRS).

Canada

Much similar to its southern neighbor, the United States, Canada has taken a generally Bitcoin-friendly stance while also making sure the cryptocurrency is not used for money laundering. Bitcoin is viewed as a commodity by the Canada Revenue Agency (CRA). This means that Bitcoin transactions are viewed as barter transactions, and the income produced is considered as business income. The taxation is also dependent on whether the individual has a buying-selling business or is only concerned with investing.

Canada considers bitcoin exchanges to be money service businesses. This brings them under the purview of the anti-money laundering (AML) laws. Bitcoin exchanges are required to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), report any suspicious transactions, follow all the compliance plans and even keep particular records. Additionally, some significant Canadian banks have banned the use of their credit or debit cards for Bitcoin transactions.

Australia

Similar to Canada, Australia considers Bitcoin neither money nor a foreign currency, with the Australian Taxation Office (ATO) ruling it an asset for capital gains tax purposes.

Countries That Say No to Bitcoin

While Bitcoin is welcomed in most parts of the world, a few countries tend to avoid it because of its volatility, decentralized nature, perceived threat to current monetary systems, and links to illicit activities like drug trafficking and money laundering. Some nations have directly banned the digital currency, while others have tried to cut off any support from the banking and financial system essential for its trading and use. 

China

Bitcoin is banned in China. All banks and other financial institutions like payment processors are restricted from transacting or dealing in Bitcoin. Cryptocurrency exchanges are banned. On several occasions, the government has cracked down on miners.

Russia

Bitcoin is not regulated in Russia, though its use as payment for goods or services is illegal.

Vietnam

Vietnam’sgovernment and its state bank have outright stated that Bitcoin is not a legitimate payment method, though it is not regulated as an investment.

Bolivia, Columbia, and Ecuador

El Banco Central de Bolivia has prohibited the use of Bitcoin and other cryptocurrencies. Columbia does not allow Bitcoin use or investment. Bitcoin and other cryptocurrencies were banned in Ecuador by a majority vote in the national assembly.

The Bottom Line

Although Bitcoin is now almost 10 years old, various countries still do not have explicit systems that restrict, regulate, or ban the cryptocurrency. The decentralized and anonymous nature of Bitcoin has challenged many governments on how to allow legal use while preventing criminal transactions. Many countries are still thinking of ways to regulate the cryptocurrency. Overall, Bitcoin remains in a legal gray area for much of the world.

 

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