In this piece, we will take a look at 15 countries where bitcoin is legal and illegal. For more countries, head on over to 5 Countries Where Bitcoin is Legal and Illegal.
2022 has been a rough year for businesses, hedge funds, and the stock market but all these have not suffered as much as the cryptocurrency sector. Heralded at one time as the end of traditional fiat money, cryptocurrencies have taken a beating this year as rising interest rates and a souring economic sentiment led investors to flee from the highly speculative market to safe haven investments such as the U.S. dollar and bonds. As an example, Bitcoin, which is the world’s leading cryptocurrency, is down by a studding 65% year to date as it nears levels before the pandemic crypto rush that saw capital flow to it from falling stock markets and stimulus checks.
At the same time, as cryptocurrencies surged, global momentum to make government let businesses accept them as a mode of payment and even as a legal tender grew alongside. However, government warnings about the risk of cryptocurrencies were also proven right just last month when the collapse of the cryptocurrency exchange FTX Trading Ltd. led to billions of dollars in losses for its customers. While initially portrayed as an ‘honest mistake’, charges filed by the Securities and Exchange Commission (SEC) against the firm’s founder and former chief executive officer Sam Bankman-Fried claim otherwise. According to a Reuters report, the main reason FTX collapsed was that, allegedly, Bankman-Fried and associates made changes to its algorithm which allowed the exchange’s partner hedge fund Alameda Research to continue borrowing from it to make speculative investments even if Alameda’s investments and its collateral dropped in value. The vicious cycle that bankrupted the firm started when Alameda’s FTT tokens, issued by FTX, collapsed in value after Coinbase sold its holdings. This shattered consumer confidence in FTX and led to a massive withdrawal of consumer funds. However, since FTX had lent this money to Alameda for the investments, it was unable to cough up the cash, which then led to its demise.
The collapse of FTX also knocked the wind out of Bitcoin. After dropping from this year’s peak of ~$47,000 to a ~$20,000 level that most analysts thought was the proverbial floor since it cost roughly the same to mine a Bitcoin, the currency would take another beating soon. The drama erupted on November 6th, when Coinbase announced its decision to sell the FTT holdings. Within the next three days as FTX’s customers fled, Bitcoin also dropped from $20,905 to $15,757 – a level it was at during November 2022 – effectively wiping out two years of gains and profits for anyone who had entered trading during this time period. Since that fateful day, the currency is up by less than a thousand dollars, with Bitcoin currently worth $16,456 at the time of writing (see best bitcoin stocks to buy).
Bitcoins
Our Methodology
For this piece, we have divided the countries into two groups – where Bitcoin is implicitly legal and sometimes also a legal tender, and where it is absolutely banned. The countries where it is banned are listed first. Additionally, the legal frameworks of all countries analyzed for the piece do not differentiate between Bitcoin and other cryptocurrencies, except for those countries that have made Bitcoin a legal tender.
15 Countries Where Bitcoin is Legal and Illegal
15. People’s Republic of China
Bitcoin Legal or Illegal: Illegal
The People’s Republic of China is the world’s largest economy by one measure and was one of the most popular regions for Bitcoin mining companies this decade due to the widespread adoption of technology. However, spurred into action due to the high environmental costs of mining and illicit activity, the Chinese government banned all cryptocurrency transactions in the country in 2021 when it forbade banks and other institutions from providing services such as clearing and exchange and made mining in the country illegal. However, such was the Bitcoin craze back then that the market simply shrugged off the announcement, and Bitcoin price continued to rise. Yet even though cryptocurrency trading is banned, the holding of it as an asset is protected by Chinese law according to a lawyer.
14. State of Qatar
Bitcoin Legal or Illegal: Illegal
The state of Qatar is a Western Asian country located in the Middle East. Bitcoin and other cryptocurrencies are completely banned in the country’s Qatar Financial Center (QFC). Qatar states that the reason behind the ban is weak compliance with know your customer (KYC) and anti money laundering (AML) regulations. These regulations are enforced globally by the Financial Action Task Force (FATF) and they require banks and other financial services providers to verify their customer profiles and determine the source of funds that they are transferring inside and outside the country. In fact, the Qatari Central Bank was quick to warn citizens in May 2022 about dealing with any unregulated financial firm after CoinMENA, a Muslim law compliant exchange launched in the country. Qatar is a Muslim country and follows the Sharia Law.
13. Kingdom of Belgium
Bitcoin Legal or Illegal: Legal
The Kingdom of Belgium is a Northern European country with a relatively high GDP per capita. Cryptocurrencies are not outlawed by Belgium and there are no significant barriers to either mining Bitcoin or others or using them for transactions. However, Bitcoin is not a legal tender in the country. Gains resulting from the trading of Bitcoin and other cryptocurrencies are taxed under Belgium law, and authorities have often warned people about their speculative nature.
12. Republic of Ireland
Bitcoin Legal or Illegal: Legal
The Republic of Ireland is a sovereign state in Europe with a high income and one that is often criticized for its loose tax laws. There is no ban against either Bitcoin or other cryptocurrencies in the country, and the only regulations covering Bitcoin are those that are in place in the entire European Union. Taxes on Bitcoin are subject to the nature of the transaction, and the rates vary if it is regularly used or if rarely used.
11. New Zealand
Bitcoin Legal or Illegal: Legal
New Zealand is an island nation in the Pacific Ocean. There is no specific legislation that bans the mining or trading of Bitcoin in the country. However, like others, New Zealand also taxes cryptocurrency transactions. Exchanges and other businesses must obtain a license from the government before providing services, and taxes are paid for selling Bitcoin if the intent behind the sale and the preceding purchase was to sell the currency and not hold it.
10. Commonwealth of Australia
Bitcoin Legal or Illegal: Legal
The Commonwealth of Australia is an Oceanic country that is rich in natural resources. There are no laws against either mining or transacting in Bitcoin or other cryptocurrencies in Australia. However, Bitcoin is not equal to money in the country. Instead, the law treats Bitcoin as an asset that is held, and for companies, this includes taxation if the Bitcoin is part of daily operations or has been bought with the intention of making a profit.
9. Netherlands
Bitcoin Legal or Illegal: Legal
The Netherlands is a Northern European country that is one of the most prosperous regions in the world. The country does not have any specific laws to regulate cryptocurrency, and Bitcoin along with others generally has to follow the same regulatory framework for other financial products. The Dutch government also requires that Bitcoins should be disclosed on the annual tax returns and that a capital gains tax will be applied to them. Additionally, companies are required to convert their cryptocurrency payments into the Euro and declare them on the income statement.
8. Swiss Confederation
Bitcoin Legal or Illegal: Legal
The Swiss Confederation, commonly known as Switzerland is a landlocked European country with a high standard of living. Cryptocurrencies are classified as intangible assets in Swiss law, are not legal tender, and have no specific laws against in. On the individual level, Switzerland does not tax cryptocurrencies on any capital gains. However, for tax assessment, they must be converted to the Swiss Franc at the year’s end at a rate provided by the government.
7. Federal Republic of Germany
Bitcoin Legal or Illegal: Legal
The Federal Republic of Germany is a European nation with the largest economy on the continent. Germany requires a license for companies to deal in Bitcoin, and its regulators have called for a global framework to deal with cryptocurrencies as prices plunge globally and more links to established financial institutions are made. Germany also treats Bitcoin as private money, and banks in the country can also store and sell Bitcoin.
6. United Kingdom of Great Britain and Northern Ireland
Bitcoin Legal or Illegal: Legal
The United Kingdom of Great Britain and Northern Ireland is a European country located just off of the coast. There is no special regulatory framework for Bitcoin in the country, and the buying and selling of cryptocurrencies by individuals is subject to a capital gains tax which is payable on any gains that are made on disposal. For corporations, Bitcoin taxation in the U.K. depends on the nature of the transactions and whether they are one off or part of daily activity.
Click to continue reading and see 5 Countries Where Bitcoin is Legal and Illegal.
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Disclosure: None. 15 Countries Where Bitcoin is Legal and Illegal is originally published on Insider Monkey.
