Since the success of Bitcoin as a digital currency, a lot of different coins have emerged in the cryptocurrency market and the legalization on the use of it has been put in question. While some countries have embraced the use of cryptocurrencies, other countries have banned the use of it and leaders of some countries are having tight discussions on the security of cryptocurrency users and its effect to the country’s business economy.
The continuous development of new cryptocurrencies has put governing officials to set laws and regulations that would make help cryptocurrency users determine whether the use of it is legal or not. While some of the countries worldwide countries may have not been very open on accepting cryptocurrencies, there are some countries which legally accept the use of it.
Countries Where Cryptocurrencies are Legally Accepted
- The United States of America (USA): The country is a federal republic with 50 states and each country has its own laws and regulation on cryptocurrencies. The U.S. Treasury classified bitcoin as a convertible decentralized virtual currency in 2013 and later in September of 2015, classified it as a Commodity by the Commodity Futures Trading Commission and the Treasury has defined Bitcoin as a money services business (MSB). Among the countries worldwide, the US government has been more open towards the use of some cryptocurrencies in the business sector.
- Canada: Some bitcoin-related business models including exchanges and ATMs are regulated under the current MSB Act as declared by the Authorite des Marches Financiers. Following another banking ban in Canada from Toronto Dominion, the Bank of Montreal announced in April 2018 that it would ban customers from participating in cryptocurrency purchases with their debit or credit cards. Impak Coin is the first legalized cryptocurrency that the Canadian government accepted in August 2017. The Quebec regulation authority had previously legalized bitcoin for some a few business models which includes ATMs and exchanges.
- Australia: Australia allows its residents to trade, mine, and buy bitcoins. In December 2013, the governor of the Reserve Bank of Australia said that "There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies."
- New Zealand: The Reserve Bank of New Zealand states: "Non-banks do not need our approval for schemes that involve the storage and/or transfer of value (such as ‘bitcoin’) – so long as they do not involve the issuance of physical circulating currency (notes and coins).
- United Kingdom: As of 2017, the government of the has stated that bitcoin is unregulated and that it is treated as a 'foreign currency' for most purposes, including VAT/GST.
- Sweden: The Swedish government is in general very favorable in trading, exchange, and use of bitcoin. The Swedish Tax Agency has given a preliminary ruling on Value Added Tax (VAT) on bitcoins, stating that trade in bitcoins is not subject to Swedish VAT, rather, subject to the Finansinspektionen (Financial Supervisory Authority) regulations and treated as a currency. For certain businesses interacting with fiat currencies, the current regulation dictates that an application for approval/license must be filed and all the AML/CTF and KYC regulations applicable to more traditional financial service providers must be followed.
- Japan: Legalizing cryptocurrencies in Japan is no surprise at all. In fact, the country is now widely known as the center for cryptocurrency trading in Asia. With its growing and developing technology market, the legalization of cryptocurrency has also contributed much in other sectors of its business economy. Its government implemented a specific Payment Services Act based framework which allows some cryptocurrencies and several exchanges to be used for payment and trading matters.
Here are some other countries where cryptocurrency is legalized
- Bosnia and Herzegovina
- Czech Republic
- Hong Kong
- South Korea
- Trinidad and Tobago
Countries Where Cryptocurrencies are Not Legally Accepted
There are some countries that consider bitcoins’ flexibility, decentralization, and usability as harmful attributes to their economies by connecting them with criminal and anti-national activities. Some of these countries are:
- Cambodia: On 19 June 2018, the National Bank of Cambodia (NBC), the Securities and Exchange Commission of Cambodia and the General-Commissariat of National Police stated that "the propagation, circulation, buying, selling, trading and settlement of cryptocurrencies without obtaining license from competent authorities are illegal activities" and "shall be penalized in accordance with applicable laws
- Vietnam: The has considered Bitcoin as an undesired mode of payment and declared it an illegal payment method.
- Ecuador: all cryptocurrencies including Bitcoin are unregulated and illegal in Ecuador and considered it a threat to its national digital currency. The use of non-nationalized cryptocurrencies in the country is strictly banned.
- China: Thou citizens have been into Bitcoin transactions, it is not officially legalized in China.
- Indonesia: The use of cryptocurrencies as payment methods has been banned in 2018 by the Bank of Indonesia but the country's financial regulator has approved cryptocurrency futures trading on regulated exchanges.
- Israel: The country recognizes cryptocurrencies as a taxable asset. All miners and traders must pay corporate income tax on top of the 17 percent VAT, with sold digital currencies asserting a capital gains tax of 25 percent.
Some countries where cryptocurrency is not legalized
- Saudi Arabia
Cryptocurrency has progressed a lot since it was first introduced in the market and the leaders of all countries are taking into consideration on legalizing it, maybe not today, but in the future.