Is Bitcoin legal?
Bitcoins are not regulated, allotted, or sanctioned by any central bank. They are created through a cybernetic method which is dubbed mining. It is a peer-to-peer payment system because it does not exist in any physical form and it must be traded online. Also, it permits the users involved in the transaction to remain anonymous. There is no global legal law to regulate the usage of bitcoin. Bitcoin is legal in some countries and illegal in others. Bitcoin has been used by individuals to purchase and sell goods like weapons and drugs. Some countries have adopted the wait-and-see approach. Bitcoin legality based on country is extensively discussed below:
Countries where Bitcoin is Legal
The United States
In the US Bitcoins are legal. However, there are several government agencies which are working towards reducing and averting the usage of bitcoin, especially for illegal transactions. Some of the prominent businesses like Overstock.com (OSTK), Dish Network (DISH), and Dell accept payment in bitcoin. In the US bitcoin is viewed as an asset for taxation according to the Internal Revenue Service. Also, in 2013, the U.S Department of Treasury, Financial Crimes Enforcement Network, issued guidance on bitcoin use. Additionally, the Bank Secrecy Act expects the payment exchanges and processes to follow requirements such as registration, record keeping and reporting. However, in some states, Bitcoin is illegal.
According to Canada Revenue Agency, Bitcoin is a commodity. That means all the bitcoins transactions are regarded as barter transactions, and the income that is generated is viewed as business income. All the Bitcoin exchanges must be registered under the Financial Transactions and Reports Analysis Centre, abide by compliance plans, report any suspicious transactions and keep specific records. The Senate Banking Committee is supposed to draft guidelines for the legislature of all the virtual currencies.
Australia government view bitcoin as the non-harmful mean of the transaction. Thus, they allow trading, buying, and mining of Bitcoin across the country. The Australian Taxation Office (ATO) classifies Bitcoin transactions as barter. Therefore, they are subject to taxation laws.
The European Union
Individual European countries have different views towards Bitcoin. Some of the nations have allowed Bitcoin use while others are issuing warnings or undecided.
Finland: It is treated as a product, not as currency. The Central Board of Taxes has offered bitcoin a value-added tax excepted status by categorizing it as a monetary service.
Belgium: they have made bitcoin exempted from value-added tax.
Cyprus: they are not regulated or controlled, but they are not illegal.
United Kingdom: it is under tax regulations and wants the regulatory environment to make it legal.
Germany: It is legal, but it is taxed in a different way contingent on the establishments who are dealing with miners, initiatives, and exchanges.
Unlike China, Japan embraced the cryptocurrency technology and they regulated the space. As of now, almost half of the bitcoin exchanges happen in Japan. There are thousands of stores that accept bitcoin as a form of payment and you can widely find bitcoin ATMs around cities.
Countries where Bitcoin is Illegal
Vietnam links bitcoin to criminal activities such as money laundering that is why it has been made illegal in the state. The state bank and the government assert that bitcoin is not a legitimate mode of payment.
The State Bank of Vietnam issues a statement prohibiting the credit institutions to deal with cryptocurrency and use of Bitcoin.
The Bolivian Central Bank banned any coins or currency that is not regulated by the government. Bitcoin was on the list.
The National Bank of Kyrgyz Republic made it clear that use of bitcoin was prohibited in July 2014.
The government allowed payment in electronic money. However, other digital currencies such as bitcoins were banned for its citizens.
The Chinese government is still deliberating on prohibiting bitcoin use. However, it has allowed individuals to exchange bitcoin among themselves.
Lack of central payment system led to the ban on bitcoin in Bangladesh. If one is caught trading in Bitcoin in Bangladesh, they are acting against the law under the Money Laundering Control Act of 2012 and the Foreign Currency Act of 1974.
According to Kedar Acharya the deputy director of Nepal Rastra Bank, bitcoin is illegal. The Nepalese government banned bitcoin because one cannot track transactions.
Morocco banned the use of bitcoin in November 2017. They banned it because bitcoin is a hidden payment system that cannot be backed by any financial institution.
Summary of Bitcoin legality by Country
|United States||Legal/ Regulated|
|Bosnia and Herzegovina||Unregulated|