Cryptocurrencies have been embroiled in controversies since their inception. Its volatility and effects on the environment have been under criticism and top economists have even referred to it as a “Ponzi scheme.” Nevertheless, there are some countries such as El Salvador that trusts the crypto’s decentralization power. In September 2021, Bitcoin was made a legal tender by El Salvador and the next to follow in its footsteps is the Central African Republic in April this year.
The legal status of cryptocurrency varies by country. Here is a list of the top countries that have made cryptocurrency legal, illegal, or unregulated (with some restrictions).
Algeria
A financial law was passed in Algeria in 2018 that made all crypto transactions illegal including holding and trading digital assets. Any breach of the law is considered an offense and is punishable.
Bolivia
Crypto was made illegal in Bolivia in 2014 and as per the Bolivian government, cryptocurrencies are not a reliable investment. A resolution was issued by the Bolivian Central Bank banning cryptos, rather than the rug pull cases and scams which fetched investors a fortune.
China
In September 2021, China’s central bank declared all cryptocurrency-related transactions illegal and imposed a blanket ban, sending the clearest signal yet of the country’s determination to crack down on the industry.
The People’s Bank of China announced on its website that all cryptocurrencies along with Bitcoin, and Tether, are not fiat currencies and cannot be distributed on the market. It also stated all activities related to crypto along with services offered by offshore exchanges to domestic residents are illegal financial activities.
Cuba
The latest country to join the crypto bandwagon is Cuba which permits and regulates cryptocurrencies such as Bitcoin.
Egypt
In Egypt cryptocurrencies such as Bitcoin are barred under Islamic law. The country’s main Islamic advisory body Dar al-Ifta announced a religious decree in 2018. A Central Bank license is required to trade or promote cryptos and in September 2020, the banking laws were made stringent by the country 2020.
European Union
Cryptos are neither legal nor illegal in the European Union. Bitcoin and other digital assets are just crypto-assets. Due to the increasing cases of money laundering by using crypto-assets European Union (EU) lawmakers are strengthening the rules on cryptocurrency transfer.
According to Reuters, the new proposal will require cryptocurrency companies operating in the EU, such as exchanges, to obtain, store, and submit information on any of their users involved in any transfers.
The proposals seek to broaden the anti-money laundering (AML) requirement, which is already in place in the traditional payment space. This would require cryptocurrency exchanges to report any transactions exceeding EUR 1,000 ($1100) to the authorities.
Indonesia
Cryptocurrencies along with Bitcoin are barred as a way of payment due to the latest regulations issued by Indonesia’s central bank in 2018.
Iran
The crypto industry in Iran is unregulated; however, in April 2021, the Central Bank of Iran (CBI) authorized domestic banks and money exchangers to use locally and licensed mined cryptocurrencies to pay for imports to the sanctioned country.
Energy-consuming mining of cryptocurrencies such as Bitcoin was issued a ban for four months by Iran after the city endured unplanned outages due to enormous crypto-mining operations held in the country.
It is noteworthy that Iran accounts for approximately 4.5 percent of the world’s Bitcoin mining as per blockchain analytics firm Elliptic.
India
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is yet to be launched by the government. The Bill seeks to outlaw all private cryptocurrencies in India, but it allows for particular exceptions to promote the underlying technology of cryptocurrency and its applications, according to the document.
India has imposed a 30% tax on crypto investors and a 1% TDS on all crypto intra-traders. Currently, India has not regulated cryptos but it won’t be legalized either.
According to Economic Affairs Secretary Ajay Seth, the country is “fairly ready” with its consultation paper on cryptocurrencies and has consulted domestic as well as institutional stakeholders such as the World Bank and the International Monetary Fund.
Russia
A ban on the use and mining of cryptocurrencies in the Russian region was suggested by Russia’s central bank in January 2022. Threats to financial security, citizens’ welfare, and its monetary policy sovereignty were cited as the reasons for this proposal.
The move is the most recent in a global cryptocurrency crackdown, as governments from Asia to the United States are concerned that privately operated and highly volatile digital currencies will impair their control over financial and monetary systems.
For years, Russia has argued that cryptocurrencies could be used to launder money or finance terrorism. However, as per Blockchain analytics firm Elliptic, Russian leaders are resorting to cryptocurrencies to circumvent the imposed US and its allies’ sanctions following Russia’s invasion of Ukraine. The research firm discovered a Russian crypto wallet with ‘significant asset holdings.’
Turkey
Cryptocurrencies either directly or indirectly were banned in April 2021 due to a regulation issued by the Central Bank of the Republic of Turkey.
The United States
Cryptocurrencies are legal in the United States. According to the Financial Crimes Enforcement Network (FinCEN) of the United States Department of Treasury, Bitcoin is an adaptable currency with an equivalent value to real currency or one that can be utilized as a replacement for real currency. Bitcoin has also been classified as property by the Internal Revenue Service for taxation purposes.
