A Guide to Bitcoin’s Legality Worldwide
A new era of cryptocurrency ushered in 2009 with the introduction of Bitcoin, the first digital currency. Deemed as the currency of future, Bitcoin’s popularity seems to mount with each passing day. Today, hundreds of cryptocurrencies are available to choose from, but Bitcoin continues to top the list.
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Countries where bitcoin is banned
Countries where bitcoin is legal & officially accepted
- Finland and more
Countries where bitcoin is legal but officially not accepted
A new era of cryptocurrency ushered in 2009 with the introduction of Bitcoin, the first digital currency. Deemed as the currency of future, Bitcoin’s popularity seems to mount with each passing day. Today, hundreds of cryptocurrencies are available to choose from, but Bitcoin continues to top the list. In view of the fact that, Bitcoins are not issued, endorsed, or regulated by any central bank, one pertinent question is—is bitcoin legal or illegal?
The legal status of bitcoin differs considerably from country to country. In many countries, the legal status of Bitcoin is still undefined or changing. So, it depends on the location and activity of the user. In some countries, it is openly allowed to use and trade in Bitcoin, while in some it is banned or restricted. Although, bitcoin is fairly welcomed in many parts of the world, there are few countries (like Bangladesh, Bolivia, Ecuador & Kyrgyzstan) where it is considered as illegal.
Thus, different government agencies, departments, and courts have classified bitcoins differently.
Here we have prepared a list of the legal status of bitcoin in different countries, by taking countries from each continent of the world to present you an idea about its acceptance, use, and restriction worldwide.
Legal Status of Bitcoin in different continents:
The Central Bank of Nigeria (CBN) in January 2017 passed a circular to ban cryptocurrencies in the country. However, soon it clarified its stance saying, “Central bank cannot control or regulate bitcoin. Just the same way no one is going to control or regulate the Internet. We don’t own it”.
Though the Reserve Bank of Zimbabwe has not officially permitted the use of bitcoin, in April 2017, BitMari, a Pan-African blockchain platform got the license to operate in the country.
South Africa: Legal
The Reserve Bank of South Africa, in December 2014 declared that virtual currency had ‘no legal status or regulatory framework’.
United States: Legal
The US is home to numerous cryptocurrencies, blockchain related startups and has the highest number of Bitcoin ATMs in the world. In 2013, the U.S. Treasury classified bitcoin as a convertible decentralized virtual currency. Then in September 2015, the Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity and thus bitcoin is taxed as a property. In September 2016, a federal judge ruled that “Bitcoins are funds within the plain meaning of that term”.
Based on a federal budget bill (C-31), passed in 2014, Bitcoin is expected to be regulated in Canada under anti-money laundering and counter-terrorism financing laws. The Authorite des Marches Financiers, the regulator in the province of Quebec, has declared that some bitcoin-related business models including exchanges and ATMs are regulated under its current MSB Act.
As of 2017, Bitcoin is legal in Mexico and is to be regulated by the Fintech Law.
The Ecuadorian government has banned the use of bitcoin and other digital currencies. Since the establishment of a new state-run electronic money system, the National Assembly of Ecuador has banned bitcoins and other decentralized cryptocurrencies. This government controlled new system will be tied directly to the dollar.
In 2014, the Central Bank of Bolivia issued a resolution banning bitcoin in the country.
In Argentina, bitcoin is considered as money, but not legal currency. Under the Argentina Civil Code, bitcoin can be considered as a good or thing and the transactions using bitcoins may be governed by the rules for the sale of goods under the Civil Code.
The National Bank of the Kyrgyz Republic, on July 2014, declared that the use of virtual currency, in particular, bitcoins is illegal. The use of bitcoins as a mode of payment in the country is considered as a violation of state law.
Saudi Arabia: Legal
The government has not banned the use of bitcoin in the country. However, being highly volatile and prone to risk, the Saudi Arabian Monetary Authority (sama) have warned from using it and its dealers are not guaranteed any protection.
The Bangladesh Bank, in 2014 declared the use of digital currency as illegal and declared that “anybody caught using the virtual currency could be jailed under the country’s strict anti-money laundering laws”.
Bitcoin is not currently regulated in the country. The Reserve Bank of India, in December 2013, said that it had no plans to regulate bitcoin. However, the finance ministry of India has set up an inter-governmental committee to study and suggest a framework for the regulatory and legal future of digital currencies in the country.
At present, the trade of bitcoin is not regulated by laws. However, as of May 25, 2017, the State Bank of Pakistan does not recognize digital currencies. Federal Board of Revenue is investigating the traders of digital currencies for tax evasion and money laundering.
To regulate bitcoin, People’s Bank of China, on 5 December 2013, prohibited financial institutions from handling bitcoin transactions. However, private parties can hold and trade bitcoins. On 4 September 2017, China imposed an immediate ban on ICOs.
Digital currencies and Bitcoin is officially recognized as money in Japan. In 2017, the country’s government officially recognized bitcoin as a method of payment. On 7 March 2014, the Japanese government made a cabinet decision on the legal treatment of bitcoins. The decision did not see bitcoin as currency or bond under the current Banking Act and Financial Instruments and Exchange Law, prohibiting banks and securities companies from dealing in bitcoins. The decision also acknowledges that there are no laws to unconditionally prohibit individuals or legal entities from receiving bitcoins in exchange for goods or services. Taxes may be applicable to bitcoins. In February 2016, “Japanese financial regulators have proposed handling virtual currencies as methods of payment equivalent to conventional currencies”.
The Monetary Authority of Singapore declares that it is a commercial decision if businesses accept bitcoins in exchange for their goods and services, in which MAS does not intervene. However, it has warned users of the risks associated with using bitcoin. The Inland Revenue Authority of Singapore, in January 2013, stated that bitcoin transactions may be treated as a barter exchange and the businesses dealing with bitcoin currency exchanges will be taxed based on their bitcoin sales.
Bitcoin is regarded as private money in the country. The German Finance Ministry, on 19 August 2013, declared bitcoin as a “unit of account” and can be used for the purpose of tax and trading in the country, meaning that purchases made with it must pay VAT as with Euro transactions.
Initially, Russia has banned the use of bitcoin in the country. However, as of November 2016, the Federal Tax Service of Russia declared that bitcoins are not illegal in the country.
United Kingdom: Legal
Bitcoin is treated as ‘private money’ and is currently unregulated in the country. The government treats it as a ‘foreign currency’ for most purposes, including VAT/GST. Profits and losses on cryptocurrencies are subject to capital gains tax.
On 11 July 2014, the French Ministry of Finance issued regulations regarding the operation of virtual currency professionals, exchanges, and taxation.
As of July 2017, Australia officially announced that bitcoin will be treated “just like money” and it will no longer be subject to double taxation. Thus, most of the countries have accepted Bitcoin, only a few still remain hostile towards it.
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