Countries That Legalize and Ban Cryptocurrencies – The legality of cryptocurrencies, such as Bitcoin, continues to be a hotly debated topic across the globe. One of the main reasons for this debate is the highly volatile nature of cryptocurrency prices.
This article aims to explore the list of countries that have legalized cryptocurrencies and those that have imposed bans.
Countries that Ban Cryptocurrencies
Many countries express concerns over the price volatility of cryptocurrencies. Additionally, the decentralized nature of cryptocurrency systems, which could potentially undermine existing monetary systems, is another point of contention.
Countries that ban cryptocurrencies often cite their use in illegal activities such as drug trafficking and money laundering as a major concern. Some nations have outright banned cryptocurrencies, while others have implemented policies that effectively restrict them from being traded or used within their financial systems. Here are some notable examples:
- China: The Chinese regulators have explicitly banned cryptocurrency trading and associated financial services, including any banking and payment services involvement with cryptocurrencies. The government has also clamped down on Bitcoin mining activities within the country.
- Morocco: This North African country has banned cryptocurrency transactions. In November 2017, Morocco’s foreign exchange office announced that cryptocurrency transactions violated foreign exchange regulations and would be met with penalties. Despite regulatory skepticism, Bitcoin trading continues to grow in Morocco, with a significant increase in February 2021, driven by both curiosity and a desire for financial autonomy.
- Vietnam: The Vietnamese government and its central bank have declared that Bitcoin is not a legal payment method. However, there are no regulations concerning Bitcoin as an investment asset.
- Bolivia, Colombia, and Ecuador: The Central Bank of Bolivia has prohibited the use of Bitcoin and other cryptocurrencies. Colombia has banned Bitcoin as both a currency and an investment asset. Similarly, Ecuador has agreed to ban the use of Bitcoin and other cryptocurrencies.
- Iran: Iran has temporarily banned the large-scale mining of cryptocurrencies up to 22 September due to power outages in major cities caused by Bitcoin mining. President Hassan Rouhani stated that this measure was taken to address the electricity shortages, with unauthorized miners being a significant factor.
Bitcoin and other cryptocurrencies are obtained through mining, a process that involves computers competing to solve complex mathematical problems, requiring significant amounts of energy, often derived from fossil fuels.
Countries That Legalize Cryptocurrency
As of now, El Salvador stands out as the only country to have declared Bitcoin as legal tender. However, several other nations have recognized the potential of Bitcoin and other cryptocurrencies, particularly as investment vehicles.
- United States: The U.S. has shown a generally positive policy inclination towards Bitcoin. Despite some government efforts to curb its use for illegal transactions, major U.S.-based companies like Microsoft, Subway, and Overstock have embraced Bitcoin payments. Furthermore, digital currencies are accepted for trading in the derivatives market.
- South Korea: With a Bitcoin usage rate of 3.79%, South Korea views the service as secure, allowing easy Bitcoin purchases at outlets like 7-Eleven.
- Canada: Similar to the U.S., Canada adopts a Bitcoin-friendly policy approach, treating it as a tradable commodity.
- Finland: Bitcoin purchases in Finland are tax-exempt. According to Triple A data, Finland has a crypto ownership rate of 1.88%, with transactions facilitated by ATM machines.
- Ukraine: Bitcoin.com reports a significant growth in Bitcoin users in Ukraine, increasing by 86.68% in the first quarter.
- Russia: The Federal Tax Service of Russia legalizes Bitcoin for transactions, with a notable crypto ownership rate of 11.91%.
- Australia: Australia does not recognize Bitcoin and other cryptocurrencies as money or foreign currency. However, the Australian Taxation Office (ATO) regulates them for capital gains tax purposes.
- Denmark: While not recognizing it as official currency, Denmark allows transactions using Bitcoin, home to 1.37% of cryptocurrency users.
- European Union: The European Court of Justice (ECJ) has regulated the buying and selling of cryptocurrencies, exempting such digital currency transactions from value-added tax (VAT) in the EU.
- El Salvador: El Salvador has made history by adopting Bitcoin as a legal tender, following the approval of President Nayib Bukele’s proposal by Congress.
- Japan: A survey among 1,000 respondents in Japan revealed a cryptocurrency ownership rate of approximately 4%.
- Nigeria: Citing bitcoin.com, Nigeria has seen a dramatic increase in cryptocurrency usage among the youth, surging by 211%.
Conclusion
The global perspective on cryptocurrency continues to evolve, with various nations either embracing or cautiously evaluating its impact. From investment assets to legal tender, the integration of digital currencies into national economies signifies a shift towards embracing technological advancements in finance. As more countries explore and adapt to the potential of cryptocurrencies, the global financial landscape is poised for significant transformation.
