As cryptocurrencies become ever more popular and more people begin to become aware of what they are, the markets are really heating up! Bitcoin is now a little over a decade old, and there are now hundreds of altcoins that are being bought and sold on every exchange.

With all of this going on, governments are beginning to look at regulating cryptocurrencies. The decentralized nature of crypto can make this difficult, and some folks even wonder about the legality of cryptocurrencies, asking: is Bitcoin legal?

In this article, we are going to explore the legality of Bitcoin, and answer questions that many people who are not too familiar with crypto may be asking.

Bitcoin isn’t alone here, however. Every single currency in the world has been used for illicit activities and unlike with cash, Bitcoin leaves a serious digital trail behind. Cash doesn’t provide a transparent ledger for anyone in the world to peer through like Bitcoin and other cryptocurrencies do.

Because of instances like this, a lot of people have viewed Bitcoin and cryptocurrencies as only being attractive to people who are up to no good.

Bitcoin and other cryptocurrencies have also been used as a means of money laundering. Criminals would send their dirty bitcoins to online services called Bitcoin mixers or tumblers, which would then bounce the coins all over the world to various wallets that were usually hosted on the dark web. The dirty bitcoin was then cleaned, sending new coins to the criminals’ Bitcoin wallets . They could even trade the bitcoins for various altcoins and then convert those coins back into Bitcoin, making the digital breadcrumbs that much harder for authorities to follow if they needed too.

A lot of people that aren’t familiar with Bitcoin have heard some negative things about it in on the news in the past. When the dark web marketplace, Silk Road, was online, Bitcoin was the currency of choice for the people that bought and sold on the platform. When the owner and creator of Silk Road, Ross Ulbricht, was arrested in 2013 and the Silk Road marketplace was seized by authorities, it made international news.

Activity can be slightly anonymized, as Bitcoin users can generate new wallets at any time they wish, but the amount sent from one wallet to another will always be broadcast to the Bitcoin network. Governments, tax auditors, even your Grandma can look at the blockchain and see transactions happening in real time.

There are many factors that world governments look over when it comes to cryptocurrencies. Bitcoin itself provides a highly transparent platform. It is an immutable ledger that records every transaction made on the network , and the blockchain can be looked over by anyone. It enables anyone to send money and transact with anyone else, anywhere in the world, at any time.

For every potential illegal use, Bitcoin has plenty of legal uses.

Bitcoin offers everyone in the world the ability to store their coins safely and send them to anyone else in the world. Transaction fees are small, and usually go through very quickly. Bitcoin allows you to own your money, and spend it freely with anyone, anywhere, anytime.

With the volatility of the crypto market, a lot of people like to buy coins and do the long play where they hold their coins until it reaches a specified value. They are then free to sell the coins they’ve been holding.

There are so many people in the world making money through trading Bitcoin and hundreds of other altcoins on all of the various crypto exchanges, such as Binance. Long term traders as well as day traders watch the charts day and night, making decisions for trades and even having bots handling some of their trading activity.

A lot of businesses around the world accept Bitcoin and other cryptocurrencies these days. Thousands of people who are into Bitcoin can go into these stores, whether physical or online, and spend their bitcoins on consumer goods, groceries, and more.

Clearly the notion that anyone who uses or is interested in cryptocurrencies is a criminal is false. They may love the idea of truly owning their money, protecting their privacy, the ideologies behind crypto, or just making money through trading.

This is a major use of the altcoin Dogecoin but it can be done with Bitcoin, too. A lot of sites have donation buttons in their footers showing their crypto addresses. Folks who enjoy the site’s content can donate some coins to their favorite content creators, feeling good that they are supporting their favorite creators and encouraging them to keep making cool stuff.

Which countries have laws on cryptocurrencies?

Several countries around the world have begun to sit up and take notice of Bitcoin, adopting some regulations and laws regarding cryptocurrencies. Some countries have even banned cryptocurrencies altogether.

Let’s explore some of these counties and laws and regulations they have enacted on Bitcoin and other cryptocurrencies, so you won’t have to wonder is bitcoin legal in your country.

United States of America

The United States has kept a generally positive outlook on Bitcoin. U.S. authorities want to make sure that crypto isn’t being used for illegal purposes, while also recognizing the legitimate uses that Bitcoin and other cryptocurrencies provide.

The United States Treasury has classified Bitcoin and exchanges as money services or financial institutions instead of labelling it a currency. With this classification putting it in the line of the Bank Secrecy Act, all exchanges and payment processors operating in the United States must ensure that they meet the requirements for legal operations. This means they need to stay on top of reporting and record keeping, and must also meet KYC (Know Your Customer) and AML (Anti Money Laundering) laws.

The Internal Revenue Service has billed Bitcoin and other cryptocurrencies as a digital asset, meaning it is taxable, and traders need to report it as income after converting their coins into fiat currency.

Some U.S. states have even drafted their own laws regarding Bitcoin. New York wrote the BitLicense Act in 2015, giving Bitcoin businesses and startups the green light to operate within the state. Later on in 2017, Washington wrote and passed a bill that applied money transmitting laws to cryptocurrency exchanges.

United Kingdom

In the UK, the Financial Conduct Authority in Britain has declared Bitcoin a commodity and has no plans for crypto regulation.

Japan

Japan was the first country in the world to declare Bitcoin as legal tender. Japan passed a law in 2017 bringing cryptocurrency exchanges under Know Your Customer and Anti Money Laundering laws.

Japan also has the Financial Services Agency, which checks up on exchanges and has the power to suspend them if they are not up to snuff. Two exchanges have been suspended in Japan so far, with others being issued improvement orders to up their game in the security department.

Mexico

Mexico banned banks from dealing with virtual currencies in 2014. The next year, however, the Mexican finance ministry said that Bitcoin and other cryptocurrencies could be used for payments and was subject to money laundering laws, while also clarifying they do not consider Bitcoin legal tender.

Later on, in 2017, the national legislature of Mexico wrote and passed a bill bringing cryptocurrency exchanges under the oversight of central banks.

Egypt

Egypt has taken a harsher approach to Bitcoin and other cryptocurrencies, with the Grand Mufti declaring Bitcoin trading forbidden in 2018. It’s not technically legally binding, however, because it is only forbidden in Islamic law thanks to the risk associated with trading.

Europe

The European Central Bank is doing its best to push for tighter regulations on cryptocurrencies as part of a larger operation working to crack down on money laundering. They also recognize, however, that Bitcoin and other cryptocurrencies are commodities that recognize no borders.

In 2017, European Central Bank officials said they didn’t perceive Bitcoin as a threat, and Mario Draghi, the president of the institution, offered more clarification, saying that Bitcoin and other cryptocurrencies weren’t mature enough for legal regulations.

India

The Indian central bank has issued warnings against cryptocurrencies, clarifying in 2017 that Bitcoin is not legal tender. The Indian government does not currently have any regulations covering Bitcoin or any other cryptocurrencies, but may be looking at introducing regulations in the future.

The Indian central bank has, however, banned financial institutions in India from working with Bitcoin exchanges and other cryptocurrency related services. The ban has been challenged and, as of August 2019, the Indian Supreme Court is still considering the case.

China

China has no current plans to ban cryptocurrencies (after all, it has the largest crypto market in the world), but it has cracked down on certain aspects. Payment processors and other financial institutions in China are barred from having anything to do with Bitcoin or any other cryptocurrencies.

Canada

Canada has remained quite Bitcoin friendly. It was one of the first countries to introduce any type of legislation for cryptocurrencies, passing Bill C-31 in 2014. This bill deemed virtual currency businesses as money services which brings them into compliance with Know Your Customer and Anti Money Laundering laws.

The Canada Revenue Agency declared Bitcoin a commodity, and considers income from cryptocurrency ventures as business income. This means that it is taxable, with the taxation dependent on whether a business offers buying and selling services or whether the business just revolves around investing and trading in different cryptocurrencies.

Bolivia

Bolivia has taken a staunch position against Bitcoin and all other cryptocurrencies. In 2014, the country officially banned all digital currencies, allowing people to transact only with currency issued by the Bolivian government.

Argentina

Argentina has no laws or regulations regarding cryptocurrencies. The Argentinian central banks, however, have issued warnings about the risks involved in using cryptocurrencies.

Bangladesh

Bangladesh is another country that is not a big fan of Bitcoin and cryptocurrencies. In 2015, Bangladesh officially declared the use of all cryptocurrencies as illegal, and citizens caught using it could catch jail time as it is a punishable offense.

Australia

As of 2017, cryptocurrency exchanges in Australia have to register with Austrac, the Australian financial intelligence agency. This is to make sure all crypto exchanges and other businesses related to Bitcoin are in compliance with Know Your Customer and Anti Money Laundering laws.

In Australia, Bitcoin and other cryptocurrencies are seen as a bartered good instead of an asset or legitimate currency. As such, income gained through Bitcoin trading and investments are still taxable by the Australian government. The Australian government also debated on a bill that would place criminal charges on exchanges operating in the country without the proper licensing.

Australian central banks have said that further regulations for Bitcoin and other cryptocurrencies is not needed for the use of cryptocurrencies as a form of payment.

Iran

In 2018, Iranian central banks declared that businesses should have nothing to do with Bitcoin and other cryptocurrencies. It is also reported that there is often censorship on cryptocurrency related websites in the country.

Morocco

In 2017, Morocco declared that using cryptocurrencies within the country was illegal and violated foreign exchange laws and regulations.

Russia

Russia is friendly toward Bitcoin and other cryptocurrencies, doing its best to protect citizens from fraudulent schemes and other scams, while also allowing businesses and individuals to work with cryptocurrencies.

In 2017, Vladimir Putin himself issued a mandate that called for the creation, development, and implementation of a single payment space in the Eurasian Economic Union. This would allow for the proper licensing of crypto mining operations as well as more heavily scrutinize the sale of new tokens, in the case of exit scams from creators.

Germany

Germany considers Bitcoin and other cryptocurrencies legal tender. Germany also taxes cryptocurrencies differently, depending on whether German financial officials are dealing with miners, traders, businesses, or just regular users.

Pakistan

In 2018, the central bank of Pakistan banned financial companies from working with cryptocurrency businesses. Bitcoin remains legal to use in the country among individuals and businesses, however.

Namibia

Namibia is another country staunchly opposed to cryptocurrencies, declaring any purchases made with Bitcoin illegal.

Vietnam

Vietnam has declared Bitcoin and other cryptocurrencies as illegal for financial institutions and other businesses, as well as citizens. The Vietnamese government links cryptocurrencies to money laundering and does not see any digital currency as a legitimate form of payment.

Iceland

Bitcoin trading is banned in Iceland as the Icelandic government does not think Bitcoin is compatible with their Foreign Exchange Act. Interestingly enough, a new cryptocurrency called Auroracoin was launched in Iceland, with its founders looking to build an attractive alternative to the Icelandic banking system.

Singapore

Singapore’s Monetary Authority has examined whether rules are needed for the protection of Bitcoin investors, but has placed no ban on the trading or use of Bitcoin or any other cryptocurrency. Singapore is, however, looking to add Know Your Customer and Anti Money Laundering laws and financing rules on exchanges.

A regulatory framework for Bitcoin payments in Singapore is being worked on, and the central banks in Singapore have issued warnings on the risks associated with using cryptocurrencies.

Thailand

Thailand originally outlawed Bitcoin and every other digital currency. In 2014, though, they quickly reversed the decision. Clarification was added that Bitcoin is not legal tender, and the central banks warned of the risks associated with using cryptocurrencies.

Thailand is now looking to approve a few new laws regarding cryptocurrencies. These laws would set forth rules that would protect investors in Bitcoin and set Know Your Customer and Anti Money Laundering regulations, along with making any income from Bitcoin and other cryptocurrencies taxable income.

Ecuador

The National Assembly of Ecuador officially banned Bitcoin along with all other cryptocurrencies in 2014, setting guidelines for the creation, development, and implementation of a brand new currency handled and run by the state.

Costa Rica

Costa Rica central banks announced that while the Costa Rican government does not view Bitcoin and other digital currencies as legitimate currencies, they are not illegal. They are also not backed or regulated by any Costa Rican laws.

Some merchants in Costa Rica are open for business and accepting Bitcoin and some other cryptocurrencies as a means of payment, however.

Switzerland

Switzerland is very Bitcoin friendly. Bitcoin can be used to pay city fees, and Swiss Federal Railways, the railway company owned by the Swiss government, even sells Bitcoin at its ticket machines.

Crypto related businesses in Switzerland must comply with Know Your Customer and Anti Money Laundering laws, and may need to obtain a banking license in some cases. Aside from this, Switzerland has no legal stipulations or regulations in place regarding the use of Bitcoin by businesses or citizens.

Ukraine

In Ukraine, Bitcoin and other cryptocurrencies are not legally regulated. Mining operations are seen as legal types of entrepreneurship.

Sweden

Sweden is another country very friendly to Bitcoin and other cryptocurrencies. Sweden has proclaimed Bitcoin and other digital currencies as legitimate forms of payment, and crypto exchanges operating in Sweden are required to comply with Know Your Customer and Anti Money Laundering laws.

Ireland

Ireland has no laws or regulations regarding Bitcoin or any other digital currency.

New Zealand

New Zealand does not have any laws or regulations regarding Bitcoin or any other digital currency. The Reserve Bank of New Zealand stated that “non banks do not require approval for schemes that involve the storage or transfer of data such as bitcoins, as long as they do not involve issuing physical circulating currency such as notes and coins.”

Netherlands

The Netherlands have no laws or regulations regarding the use of Bitcoin or any other digital currency.

France

Bitcoin and cryptocurrencies are perfectly legal in France, with laws and regulations passed by the French government in 2014 pertaining to taxation of digital assets and crypto exchanges.

Portugal

Portugal has no laws or regulations regarding Bitcoin or any other digital currency at the present time.

Italy

Italy has no laws regarding the use of Bitcoin or other digital currencies by private citizens, though some laws are being written up for business uses.

Malta

Malta is looking to be friendly to cryptocurrencies. Malta has no laws regarding Bitcoin, and the Prime Minister of the country announced his approval of a nationwide strategy to promote Bitcoin and blockchain tech. The Prime Minister praised Bitcoin and blockchain technology for its ability to handle incredible amounts of data in an immutable and decentralized ecosystem.

Norway

In Norway, Bitcoin and other digital currencies are not defined as money, but as assets. Profits from trading bitcoins are subject to tax.

Finland

Purchases of goods or services using Bitcoin in Finland is taxable, and profits earned through trading or mining are seen as taxable income. Losses are not considered tax deductible in Finland.