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In general, cryptocurrency regulation has always been a contentious topic that continues to spark debates among global regulators. When Satoshi Nakamoto launched Bitcoin—the first successful cryptocurrency—in 2009, they intended to introduce a global digital asset that no centralized party, organization, or authority could control. Now, how do governments approach such a decentralized currency?
The answer varies from one country to another as global decision-makers grapple with how to regulate the new asset class.
In the United States, for instance, cryptocurrency regulation is complicated due to the asset’s multiple layers, such as trading and mining. As such, each activity would require its own regulations overseen by a different regulatory authority.
Meanwhile, other jurisdictions like El Salvador and the Central African Republic have adopted Bitcoin as legal tender, making the asset recognized by law as a means to pay monetary debt.
The legality of Bitcoin depends on where you are and how you use it. Below is a breakdown of Bitcoin’s legal status in various countries as of August 2023:
Is Bitcoin legal in the United States of America?
- Bitcoin is legal, but policies vary based on each state.
- In 2014, the Internal Revenue Service (IRS) classified Bitcoin as a property for tax purposes, requiring individuals to report gains and losses.
- In 2015, the state of New York unveiled the BitLicense, granting Bitcoin and crypto firms permission to conduct virtual currency activities.
- In 2017, the Commodity Futures Trading Commission (CFTC) classified Bitcoin as a commodity akin to gold and other precious metals, subjecting it to commodity trading regulations.
- In 2018, the US Securities and Exchange Commission (SEC) classified Bitcoin as a property and not a security and that it should be taxed as such. The regulator also considered Bitcoin as more of a traditional currency like the US dollar.
- In 2019, Wyoming passed several laws, including legislation that considers cryptocurrencies a legal exchange medium.
- In 2021, Texas introduced a virtual currency act, recognizing the legal status of virtual currency.
- In 2021, the Federal Reserve, the central bank of the U.S., said Bitcoin is a “speculative asset.” The Fed had previously urged citizens to avoid investing in the asset.
Is Bitcoin legal in Canada?
- While Bitcoin isn’t legal tender in Canada, the government specified it is legal, acknowledging that cryptocurrencies can be used as a medium of exchange.
- The Canada Revenue Agency (CRA) considers Bitcoin a digital commodity. Hence, BTC transactions are taxable.
Is Bitcoin legal in El Salvador?
- In 2021, the Central American country became the first nation to make Bitcoin legal tender.
- Under El Salvador’s Bitcoin Law, residents can pay for goods, services, and taxes using BTC, and every merchant must accept it as a legal form of payment.
Is Bitcoin legal in Panama?
- Lawmakers in Panama passed a bill to regulate the use and commercialization of cryptocurrencies in 2022.
Is Bitcoin legal in Brazil?
- In 2023, Brazilian President Luiz Inácio Lula da Silva signed a law, which decrees the Central Bank of Brazil to regulate and supervise virtual asset service providers.
- At the time of the legislation’s announcement, the Comissão de Valores Mobiliários (CVM), Brazil’s equivalent of the US Securities and Exchange Commission, was reportedly seeking to create a regulatory framework more aligned to the volume of crypto trades in the country.
Is Bitcoin legal in Argentina?
- Argentina does not regulate crypto exchanges, but its central bank has repeatedly warned about the risks of cryptocurrencies.
- In February 2023, Argentina’s National Securities Commission (CNV) was reportedly seeking to establish requirements and rules for crypto companies operating in the country.
Is Bitcoin legal in Paraguay?
- In August 2022, President Mario Abdo Benítez vetoed a proposed bill to regulate Bitcoin and other cryptocurrencies for further amendments.
- In December of the same year, however, Congress failed to pass the new bill, garnering only 36 votes, short of the 41 it needed to pass.
Is Bitcoin legal in Europe?
- As of March 2022, Bitcoin and other cryptocurrencies were being regulated at the country level in the European Union.
- The European Commission has proposed a set of rules to regulate digital assets and crypto firms called Markets in Crypto-Assets (MiCA), which would set out a comprehensive regulatory framework for all 27 member countries that will oversee crypto users and service providers.
Is Bitcoin legal in the United Kingdom?
- Citizens in the U.K. can buy and sell Bitcoin and other cryptocurrencies, which are classified as property and subject to taxes based on their income from activities such as trading and staking.
Is Bitcoin legal in Russia?
- Citizens in the U.K. can buy and sell Bitcoin and other cryptocurrencies, which are classified as property and subject to taxes based on their income from activities such as trading and staking.
Is Bitcoin legal in Saudi Arabia?
- The Saudi Central Bank has warned against trading in Bitcoin and other cryptocurrencies due to the new asset class’ volatile nature and risks from potential scams in 2018. However, it appointed a crypto chief to lead the kingdom’s virtual assets and central bank digital currency program.
Is Bitcoin legal in the United Arab Emirates?
- The United Arab Emirates’ Abu Dhabi and Dubai were one of the first jurisdictions to launch a regulatory framework for virtual assets and their related activities. Through licensing with the Financial Services Regulatory Authority of the Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority, local and international industry service providers can conduct regulated virtual asset activities from the country.
- In 2023, the emirate of Ras Al Khaimah unveiled its Digital Assets Oasis (RAK DAO), a free zone dedicated to virtual asset, artificial intelligence, and Web3 businesses.
Is Bitcoin legal in China?
- China has banned cryptocurrency trading and initial coin offerings (ICOs) for its citizens. However, it has been actively exploring the use of blockchain technology for various purposes.
- Meanwhile, Hong Kong has introduced new rules to allow retail investors to trade cryptocurrencies on exchanges licensed by the jurisdiction’s Securities and Futures Commission.
Is Bitcoin legal in Japan?
- Japan’s Financial Services Agency declared Bitcoin and other cryptocurrencies as legally accepted forms of payment and characterized them as property.
- The country also introduced a licensing system for cryptocurrency exchanges to ensure consumer protection.
Is Bitcoin legal in India?
- In 2018, the Reserve Bank of India (RBI) banned the use of Bitcoin and other cryptocurrencies, but later revoked the ban. Instead, the government of India announced a 30% tax on gains from crypto assets and a 1% tax deducted at source.
Is Bitcoin legal in South Korea?
- Bitcoin is legal in South Korea, with the country implementing anti-money laundering (AML) and Know-Your-Customer (KYC) regulations for cryptocurrency exchanges.
Is Bitcoin legal in Australia?
- Bitcoin is legal in Australia, and the Australian Transaction Reports and Analysis Centre (AUSTRAC) regulates cryptocurrency exchanges to prevent money laundering and terrorism financing.
Is Bitcoin legal in Nigeria?
- Nigeria has not banned Bitcoin, but the Central Bank of Nigeria has placed restrictions on cryptocurrency transactions.
