Will bitcoin be illegal

Countries Where Bitcoin Is Legal and Illegal

Prableen Bajpai is the founder of FinFix and Analytics Private Limited. She has 10+ years of experience as a finance, cryptocurrency, and trading strategy expert.

The peer-to-peer digital currency bitcoin made its debut in 2009 and with it ushered in a new era of cryptocurrency. While tax authorities, enforcement agencies, and regulators worldwide are still debating best practices, one pertinent 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. Instead, they are created through a computer-generated process known as mining. In addition to being a cryptocurrency unrelated to any government, bitcoin is a peer-to-peer payment system since it does not exist in a physical form. As such, it offers a convenient way to conduct cross-border transactions with no exchange rate fees. It also allows users to remain anonymous.

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

Countries That Say Yes to Bitcoin

Bitcoin can be used anonymously to conduct transactions between any account holders, anywhere and anytime across the globe, which makes it attractive to criminals and terror organizations. They may use bitcoin to buy or sell illegal goods like drugs or weapons. Most countries have not clearly determined the legality of bitcoin, preferring instead to take a wait-and-see approach.

Some countries have indirectly assented to the legal use of bitcoin by enacting some regulatory oversight. However, bitcoin is never legally acceptable as a substitute for a country’s legal tender.

The United States

The United States has taken a generally positive stance toward bitcoin, though several government agencies work to prevent or reduce Bitcoin use for illegal transactions. Prominent 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 increasingly legitimate presence.

The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has been issuing guidance on bitcoin since 2013. The Treasury has defined Bitcoin not as currency, but as a money services business (MSB). This places it under the Bank Secrecy Act, which requires exchanges and payment processors to adhere to certain responsibilities like reporting, registration, and record keeping.

In addition, bitcoin is categorized as property for taxation purposes by the Internal Revenue Service (IRS).

Canada

Like its southern neighbor, the United States, Canada maintains a generally bitcoin-friendly stance while also ensuring 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 generated is considered as business income. The taxation also depends 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 need to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), report any suspicious transactions, abide by the compliance plans, and even keep certain records. In addition, some major 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.

The European Union

On Oct. 22, 2015, the European Court of Justice (ECJ) ruled that buying and selling digital currencies is considered a supply of services, and that this is exempt from value-added tax (VAT) in all European Union (EU) member states. Additionally, some individual EU countries have also developed their own bitcoin stances.

In Finland, the Central Board of Taxes (CBT) has given bitcoin a VAT exempt status by classifying it as a financial service. Bitcoin is treated as a commodity in Finland and not as a currency. The Federal Public Service Finance of Belgium has also made bitcoin exempt from VAT. In Cyprus, bitcoin is not controlled or regulated either. The Financial Conduct Authority (FCA) in the United Kingdom (U.K.) has a pro-bitcoin stance and wants the regulatory environment to be supportive of the digital currency. Bitcoin is under certain tax regulations in the U.K.

The National Revenue Agency (NRA) of Bulgaria has also brought bitcoin under its existing tax laws. Germany is open to bitcoin; it is considered legal but taxed differently depending upon whether the authorities are dealing with exchanges, miners, enterprises, or users.

Countries That Say No to Bitcoin

While bitcoin is welcomed in many parts of the world, a few countries are wary 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 outright 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 essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in bitcoin. Cryptocurrency exchanges are banned. 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’s government and its state bank maintain 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 banned 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, many 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 analyzing ways to regulate the cryptocurrency. Overall, Bitcoin remains in a legal gray area for much of the world.

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Where is Bitcoin illegal? List of countries that banned BTC

You might be wondering… where is Bitcoin Illegal? Read further to find out everything you need to know.

Where is Bitcoin illegal?

There are many countries where Bitcoin is legal. However, the following list contains countries that have banned Bitcoin.

• Algeria – The country’s law clearly states that “the purchase, sale, use, and storage of any type of virtual currency is illegal”.
• Egypt – transactions made using Bitcoin are both immoral from a religious standpoint and illegal according to the country’s Islamic legislator.
• Morocco – Morocco also belongs to countries that banned Bitcoin (both holding and transacting with it). In recent times, however, it seems that the country is working towards a law that will allow the use of Bitcoin under certain conditions.
• Bolivia – The Central Bank of Bolivia has banned Bitcoin and all other cryptocurrencies since 2014.
• Ecuador – The government of Ecuador has banned the use of Bitcoin and other cryptocurrencies while introducing a local stablecoin tied to the US dollar.
• Pakistan – Bitcoin and other cryptocurrencies are deemed illegal in Pakistan and banks are not allowed to deal with or assist customers that are facing problems related to cryptocurrency.
• Nepal – The NRB (Nepal Rastra Bank) declared Bitcoin and other cryptocurrencies illegal in 2017.

Which countries have a banking ban on Bitcoin?

The following countries do not allow their residents to buy and/or sell cryptocurrency using their bank accounts.

• Cambodia – following statements made by the country’s legal authorities, using and storing cryptocurrency is not allowed, unless a special license is acquired.
• Bangladesh – according to the National Bank of Bangladesh, everyone that uses, stores or exchanges cryptocurrency will be arrested and face jail time.
• China – The country’s stance towards Bitcoin very contradictory. While the country seems to be pro-blockchain technology and has the largest portion of Bitcoin miners (more than 51%), it is still illegal to use and exchange Bitcoin and other cryptocurrencies.
• Colombia – The Superintendencia Financiera pursued all banks to not work with or provide assistance to anyone that is involved with virtual money exchanges. There is, however, no law in place that restricts the use of Bitcoin and other cryptocurrencies.
• India – In February 2018, the Reserve Bank of India (RBI) imposed a ban on the sale or purchase of Bitcoin and other cryptocurrencies, following the budget speech of Finance minister Arun Jaitley.
• Jordan – The Central Bank of Jordan (CBJ) restricts financial institutions/companies and other payment service companies to exchange cryptocurrencies. However, merchants and small businesses are not prohibited from accepting Bitcoin as a payment method.
• Iran – Iran has informed banks to cut ties with customers that use their accounts to buy and sell cryptocurrencies.
• Taiwan – Buying and selling cryptocurrency is not allowed in Taiwan, as is the use of Bitcoin ATMs.
• Saudi Arabia – The government of Saudi Arabia has banned (implicitly) the usage of bank accounts for cryptocurrency purchases as it finds that the latest is a high-risk investment.
• Canada – As of 2018, both the Bank of Montreal (BMO) and the Toronto Dominion (TD) have imposed a banking ban for anyone participating in cryptocurrency purchases using credit cards or debit cards. Reports tend to be quite vague though, as several banks and financial institutions still allow their customers to buy and sell their cryptocurrency.

Countries where Bitcoin is illegal as a payment tool

Meanwhile, in Vietnam and Indonesia, the use of cryptocurrencies as a form of payment has become illegal.

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Should Bitcoin Be Illegal?

As the Silk Road came tumbling down today , and its signature currency— Bitcoin —has been pushed into the spotlight again. Will Bitcoin survive? Should it survive? Should people keep using it if it does? We’re here to talk it out.

Feds Seize Silk Road, Everybody’s Favorite Illegal Drug Website

Once upon a time, you could sign on to Silk Road and buy everything from LSD to Moon Rock molly…

The fact that all this trading was taking place over the internet and with an entirely virtual currency makes this a particularly sticky issue to grapple with, but for better or worse, digital currency is already here. The percentage of people who carry actual cash is dropping as alternatives like credit cards, Square, online banking, and NFC continue invading every corner of the market. But Bitcoin is a different beast.

Drug Enforcement Agency Seizes First Bitcoins From Silk Road Dealer

The Drug Enforcement Agency has seized 11.02 Bitcoins—about $800—from a drug dealer in South…

The Good

For all that Silk Road craziness, Bitcoin has its upsides, depending on who you talk to, anyway.

No one’s in charge

One of Bitcoin’s biggest drawbacks is also its biggest strength: a lack of a regulating body. Whether that’s good or bad is a matter of who you ask.

Bitcoin is complicated , but the system works a little something like this. Each Bitcoin maintains a single, public record of past and current ownership. Then, every 8 minutes, a network of verifiers checks the public Bitcoin ledger against their own to make sure that they line up, at which point they’re rewarded with newly created Bitcoins for their hard work. And that, boys and girls, is how Bitcoins are mined (and regulated). It’s a weird system , but it’s not beholden to any big man with a cigar. It just sort of does its thing. It’s free in a unique sort of way other currencies aren’t.

How a Bitcoin Transaction Actually Works

At this point, you probably have a working understanding of what bitcoins are (at the very least…

Decentralization

It can be kind of hard to wrap your mind around a currency with no inherent value, but the US dollar falls under that very same description. Ever since Richard Nixon axed the gold standard in 1971, US currency has had nothing physical to back it up. From the US Treasury to Bank of America’s databases, our entire currency system is resting on one big, elaborate web of trust. The United States government is pretty good for a third-party regulator, but nothing is without its flaws.

This is the hole that Bitcoin attempts to fill. Instead of relying on some higher authority the Bitcoin market depends on cold, hard math—an algorithm fueled by a decentralized network and open-sourced code that is always available for public viewing. Theoretically, were the US economy to suddenly come crashing down (be it because of bank bailouts, derivative trading, or war), the Bitcoin could continue on nearly unencumbered. In other words, Bitcoin could be a potential buffer against a total global financial system collapse. That is, if it’s not busy crashing for its own reasons. Nothing is perfect, but being separate can be good.

Freedom

Another benefit of this lack of central control is that the government can’t block you from giving out Bitcoins. In 2010, the US government sought to silence Wikileaks by cutting off its money supply. Both banks and credit card companies were forbidden from transferring any incoming donations to the site. No matter how you feel about Wikileaks, it’s hard to deny there’s some troubling implications there.

As soon as the United States started enacting its financial holds, Wikileaks began suggesting that its users donate using Bitcoin—something the government wouldn’t be able to control or stop. Granted, this sense of lawlessness and anonymity can be used for some shady practices, but its this kind of freedom makes Bitcoin powerful for folks who are supporting something unpopular, whether it’s Freedom or a local drug dealer.

The Bad

Of course, there’s a reason anarchy doesn’t work in practice. Without any sort of central regulation, there’s no framework for control. People can leverage Bitcoin for their own unsavory purposes pretty easily. The Silk Road was bursting with those folks.

Anonymity for Evil

Although each Bitcoin is stamped with a transaction history, the signatures are of a shadow people. No identifying information is buried within those numbers, and its nearly impossible to track someone down based on a trail of Bitcoins alone. Free from government control and tracking, someone with ill intent can all too easily acquire not just drugs but weapons or whatever else with little fear of being tracked down. Of course good old-fashioned cash can be pretty untraceable too, but you can’t pay with non-sequential 20s over the internet.

A Dependence on the Undependable

Bitcoin might be free from the fluctuations of the US economy, but that doesn’t mean it’s invincible. Just look at today’s Bitcoin price chart .

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