Cryptocurrencies are taking over the world, and everyone making money from investment wants to buy Bitcoin. The problem is that the legality of Bitcoin is fairly complicated across various countries. As a result, we asked every Blockchain law firm: are Bitcoins legal? Yes, worldwide, it’s usually not against the law to hold Bitcoin. So, below you can see the countries where you will have no issues.
Main Countries Where Bitcoin Is Legal
For the most part, you may use Bitcoin in the following places:
The United States
As one may expect, Bitcoin is quite popular in the United States. The FinCEN issued guidance for Bitcoin, and people are now using it for transactions. Bitcoins are convertible currency, so people can get their equivalent value in money. With that in mind, the IRS also categorized Bitcoin as an asset, which means that it can be subjected to taxes.
Entities that exchange or administer Bitcoin (i.e., through a payment processor or a crypto exchange) are deemed to be a Money Services Business (MSB). The MSB abides by the rules of the Bank Secrecy Act, which means that transactions over $10,000 using cryptocurrency need to be reported to the U.S. Treasury.
Moreover, while the use of cryptocurrency is legal in the United States, regulations were made for cryptocurrency reporting and tracking. In other words, specific transactions that are otherwise suspicious must be reported by both financial and non-financial institutions. Dealing with larger amounts of Bitcoin is not technically illegal but may lead to a number of problems in the long run.
Canada is also one of the places where you may safely use Bitcoins and store them in crypto wallets without any legal problems on your hands. Canada considers Bitcoin a commodity, so the Canada Revenue Agency (CRI) subjects it for tax purposes. In Canada, income resulting from a Bitcoin transaction is seen as capital gain or business, and it needs to be reported just like that.
The European Union
In the European Union, Bitcoin is legal and present under crypto-assets. Bitcoin itself is not illegal in the European Union, but the European Banking Authority advises caution. These crypto-assets are very often outside of their control, and a cryptocurrency trade may end up rather risky. Regulation of crypto-assets has also been proposed, for safety reasons.
Similar to Canada, Bitcoin is legal but is also seen as a financial asset. This means that if certain events occur, the Bitcoin holder may end up being taxed. For instance, if you exchange, trade, gift, sell, or try to convert it into fiat currency, then you will be subjected to capital gains tax. This also applies if you use Bitcoin in order to make purchases. It is necessary to keep a close record of the transactions made with Bitcoin, as you will need it for tax purposes.
So far, El Salvador is one of the few Central American countries where Bitcoin was declared legal. Bitcoin was adopted as a formal method of payment – without needing conversion – in June 2021. Certain challenges are to be expected, but the progression is yet to be seen.
While Bitcoin is more common in the countries mentioned above, there are more countries where Bitcoin regulations have been made. Not every vendor may accept Bitcoin transactions here, but the law enables them to do so.
- United Kingdom
Before you try making a Bitcoin transaction, you might want to check with the regulations of the country. Each place has its own laws and limitations, so you should learn them.
Where Is Bitcoin Illegal?
Bitcoin is legal in most countries and states. However, there are certain states or countries with a volatile economy that may have an implicit or absolute ban. This includes the following:
- The Central African Republic
Each country is unique, which is why a financial advisor should be consulted before making a decision. If you are in a country where the economy is decentralized and volatile, then you may want to contact your attorney.
The Bottom Line
Bitcoin itself is legal almost everywhere in the world. There are certain countries with decentralized economies that either have an implicit ban or an absolute ban. But otherwise, you should be able to use Bitcoin in most parts of the world.