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The Legality of Bitcoin in Different Countries -
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Bitcoin legality

Bitcoin’s legality world-wide

Bitcoin is one of the most favored digital currencies in the world today. Bitcoin’s ease of use and degree of anonymity involved in the transactions lends itself to its increasing popularity. However, a firm declaration cannot be made as to the legality of Bitcoin in all jurisdictions. Though they are highly popular and though many well-known vendors have started accepting Bitcoins as a payment method, many countries still do not acknowledge Bitcoin’s validity. If you want to deal in Bitcoin, you will have to check with the rules and regulations in your respective countries and then proceed such that you don’t get caught in any legal complications. In some countries, Bitcoin is banned. So, you need to be very cognizant of the accompanying legalities when using or trading these coins. Provided below is broad overview regarding the legality of Bitcoins in various countries around the world and some links where you can get more information regarding the rules.

Why is there a disparity in Bitcoin policy?

Bitcoin is a decentralized digital currency that is not governed by a centralized authority of exchange. Therefore, the value can fluctuate widely within a very short span of time. The central banks or the national governments have make some decisions to ban Bitcoin due to an inbuilt fear or ambiguity regarding the economic effects of these coins. In spite of Bitcoins being developed in countries like the US, UK, Canada, and Australia, some nations are afraid to take the plunge because of two main reasons. First, these coins are highly volatile in nature. Second, because many illegal activities are conducted via transactions using these coins.

List of countries where Bitcoin is banned

It is important to be aware of the illegality of Bitcoin if you are operating in one of these Countries. While some countries have laws that reject trading in bitcoins upfront, some have clearly specified that they or their banks would not support any transactions involving Bitcoin. This leaves citizens of these countries no other choice except to stop using Bitcoin completely. Here is a comprehensive list of countries that have banned Bitcoin to a certain degree.

1.   Iceland
The Central Bank of Iceland, during 2014,  clearly banned Bitcoin stating it is against its Foreign Exchange Act to engage in and encourage the use of Bitcoin. This Act prohibited the use of Bitcoin in the country mainly because of the coins’ potential to destroy the national currency of Iceland. However an important point to note here is that Iceland is against the use of Bitcoin; not against the use of cryptocurrencies. This is evident from the fact that the country launched a new cryptocurrency named Auroracoin recently to bring in a fresh change to the monetary system of Iceland.
2.    Vietnam
The Vietnamese Central Bank and the State Bank of the country conducted many discussions over Bitcoin ever since it came into the picture. They finally released a statement in 2014 stating that these coins were illegal and should not be used by financial institutions and individuals. The Government of Vietnam also said in its statement that Bitcoins could bring about money laundering and other criminal activities as a result of their anonymous nature.
3.    Bolivia
The Central Bank of Bolivia, known as El Banco Central de Bolivia, confirmed in its official statement in 2014 that it was illegal for citizens and financial institutions to use Bitcoin as they are not issued or controlled by a centralized agency.
4.    Kyrgyztan
The National Bank of the Kyrgyz Republic, during its 2014 official release, confirmed that the use of digital currencies like Bitcoin and other altcoins is considered illegal and that people found to be engaged in using these as payment modes would face legal consequences.
5.    Ecuador
While most of the other countries banned Bitcoin due to fear of volatility or anonymity, Ecuador was the only country that banned Bitcoins for the most justifiable reasons. It banned the use of these coins because it was in the process of establishing its own national currency and clearly didn’t want any other form of currency taking economic control in the country. Bitcoin was banned as it got a large number of votes in the general assembly.
6.    Russia
There is no law in Russia that clearly bans Bitcoin. However, the Russian Government has mentioned in various places that the use of digital currencies is banned in the country. Also, websites that deal with Bitcoin were blocked by the Russian Government giving a clear indication that the country was clearly not in favor of digital currencies like Bitcoin. This is further highlighted by the fact that this was happening at a time when the national currency was slowly recovering from a disastrous period.  In a nutshell, in spite of there being no law regarding restriction of Bitcoin in the country, the Russian Government still bans the practical use of coins. There are plans to come with up an official rule or release soon regarding the legality of these coins.
7.    China
China’s take on the legality of Bitcoin in a completely different manner from any of the countries that we listed. Banks and other financial institutions are banned from using Bitcoin in China. However, individuals can use these coins to trade among each other. Since it is the most populous country in the world, China is one of those places where Bitcoin markets are found in large numbers today. During 2013, the People’s Bank of China issued a release where it asked all the banks and other commercial companies to stop dealing with Bitcoin with immediate effect.
8.    Bangladesh
Bangladesh has strict money laundering laws in place. Therefore, it doesn’t encourage the use of Bitcoin. According to a 2014 statement from the Bangladesh Bank, people could face imprisonment if they are found dealing or trading in Bitcoin.

List of countries where Bitcoin can be used

Now, let us take a look at the countries that have accepted Bitcoins as a viable mode of payment. In this list, certain countries have openly welcomed the use of Bitcoin with the help of amendments in their legal provisions; however, some countries have strictly warned people and institutions about the risks involved with using Bitcoins and have stated that people may use it at their own risk. The good thing, though, is that they have not issued a ban on these coins.

1.    Australia
It is quite legal to use Bitcoin in Australia. During 2013, the Reserve Bank of Australia issued an official release in which it clearly stated that citizens were free to choose the type of currency that they wanted use in completing transactions. Transactions done through Bitcoin were deemed barter by the RBA and Bitcoin were defined as property. The ATO (Australian Taxation Office) too has set separate tax rules for transactions involving Bitcoin.
2.   Czech Republic
Here, Bitcoin is not banned, but they not fully accepted either. The Analytical Department of the Finance Ministry of Czech Republic, during 2013, issued a statement in which it stated that if the the value of Bitcoin transactions went more than 1,000 Euros it would be considered as “high-risk” and that if the value went beyond 15,000 Euros, it was considered “suspicious”. From these, it is clearly evident that the country allows trading in Bitcoins for values less than 1,500 Euros.
3.    Denmark
The Financial Supervisory Authority (FSA) of Denmark, during 2013, stated that it was not the regulatory authority for transactions involving Bitcoin and therefore had no authority to prevent or ban its people from using this digital currency. However, it pointed out the risks associated with these coins because of their anonymity and how they could be used in cases like money laundering. Denmark has plans to amend its financial laws to give a clause for the legalization of Bitcoin as well.
4.    Estonia
The Central Bank of Estonia refers to Bitcoin as  a Ponzi scheme or an illegal/fraudulent scheme. Since it is a small country, the Financial Intelligence Unit has set up rules in place to make trading in Bitcoin as strict as possible for its people. Currently, all people trading in Bitcoins in Estonia need a valid license. If any party is involved with Bitcoin transactions worth more than 1,000 Euros in a month, he/she is required to personally meet the Financial Authorities of the country with his/her ID so that a copy can be made and stored by the Government.
5.    Finland
During 2014, the financial regularities of Finland released about a declaration that Bitcoin is a digital currency that is used by different countries for various purposes. It was also under the belief that Bitcoins is used widely to conduct illegal transactions. Therefore, during 2014, the Central Board of Taxes (CBT) in Finland confirmed that the commission amount which was charged by certain exchanges on Bitcoin transactions would be declared as VAT Exempt.
6.    France
In France, though there is no direct ban on the use of Bitcoin, though there are very strict rules pertaining to the same which makes trading with these coins a difficult process. When you open a digital wallet in France, your identity is verified thoroughly. Also, gains that you get from Bitcoin transactions are treated as capital gains and are taxable. The number of coins that you hold (assets) must be reported to the wealth tax unit on a regular basis. Payment ceilings are similar to those of cash transactions as well. All transactions should satisfy the regulations of the European Union so that the authenticity of these transactions is maintained.
7.   Germany
This is one of those countries that have openly accepted the use of Bitcoin. According to the financial authorities of Germany, Bitcoin is considered a private money and can be used in any kind of transactions by individuals and institutions. However, the taxation part is calculated differently for dealers, individuals, miners, exchanges, and the like.
8.   Lithuania
This is a similar case of  a “not accepted, not banned” country. During 2014, the Lithuanian Bank issued an official release in which it stated that individuals and institutions should be fully aware of the risks associated with the use of Bitcoins before trading with them. However, Bitcoin is not legally accepted as a form of currency in the country.
9.    Luxembourg
Here, the CSSF (Commission de Surveillance du Secteur Financier), announced in 2014 that one has to possess a valid license for dealing in digital currencies. After a thorough investigation of parties, CSSF started granting licenses during 2015 when the first ever BitLicense of the country was given to SnapSwap.
10.    Poland
The Ministry of Finance of Poland announced in 2014 that it didn’t consider Bitcoin to be illegal. It didn’t consider them legal either and that it was not a proper electronic money that could be regulated. However in 2015, many banks had to take the action of closing down some of their customers’ accounts as these customers were found dealing in offensive and criminal activities with the help of Bitcoin.
11.    United Kingdom
In the UK, Bitcoin is considered to be private money. While there is no hard and fast rule banning it from use in operations, it is not fully encouraged either. VAT amount charged on these coins vary according to the purpose. When Bitcoin is bartered for sterling, euros, US dollars or other currencies, VAT is not chargeable on the coins. However, in all other cases, dealers need to pay VAT. Also, gains from these transactions are deemed as capital gains and are therefore taxable.
12.    Slovenia
The Slovenian Ministry of Finance made the statement “Bitcoin is neither a currency nor an asset”, there’s no taxes on profits from exchanges, however, Bitcoin mining is taxed.
13.    Hong Kong
The Monetary Authority of Hong Kong confirmed in 2013, that it would be carefully supervising the usage of Bitcoin in its country and its growth in the foreign areas to make further decisions. Since it was only a digital currency, this authority didn’t have control over the use of Bitcoin.
14.    India
The Reserve Bank of India (RBI) has been making frequent announcements to the general public that digital currencies like bitcoins come with loads of risks and challenges. It also states that one should use this with high caution. It started to monitor the use of Bitcoin all over the country and even raided a few areas where people were trading with them. Though there is no official announcement yet about banning or regulating Bitcoin in India, it is currently very rarely used in certain areas due to strict investigation and observation from the RBI.
15.    Indonesia
In a similar case like India, Indonesia too has not banned Bitcoin completely; however, Indonesia warns people and institutions heavily against using these as it could be used for various illegal activities like money laundering, theft, and other scams. The Bank of Indonesia released an official statement in 2014 in which it stated that Bitcoin users should be ready to take ownership of the risks that come along with using the cryptocurrency.
16.    Israel
Lots of authorities like the Bank of Israel, Ministry of Finance, Israel Money Laundering and Terror Financing Prohibition Authority, and the Israel Tax Authority and Israel Securities Authority got together to issue a statement regarding the risks and volatility associated with Bitcoin. However, they were of the opinion that these coins were legal. Quite recently, the Bar Association of Israel announced that Bitcoin could be used as a legal mode of payment for paying lawyers.
17.    Malaysia
After a meeting with all the Bitcoin dealers in 2013, Bank Negara Malaysia didn’t release any official statement about the usage of these coins. It only confirmed that Bitcoin is not a form of recognized legal currency in the country. Later in 2014,  the bank released a statement that it would not regulate Bitcoin in Malaysia and that people who continue to use/trade in these coins should do so at their own risk.
18.    Norway
Bitcoins are assets and not currencies, according to a statement released by the Norwegian Tax Administration. Gains arising from these are taxable under wealth tax.
19.    Singapore
As per releases from the Monetary Authority of Singapore (MAS) and Inland Revenue Authority of Singapore, Bitcoin is a high-risk currency as it might be very difficult for people to get back their money’s worth if they are cheated in this process. The group also clearly stated that it will not interfere in the management and supervision of Bitcoin as well as how merchants handle transactions using Bitcoin. However, businesses that do transact in Bitcoin should pay taxes to the Government.
20.    Switzerland
In 2013, a 45-member team from the Swiss Parliament placed a request before the Swiss Government seeking clarification about any regulation on Bitcoin in the country. In 2014, the Swiss Federal Council replied that digital currencies were legally considered and therefore, ruled out any regulation mechanisms for the same.
21.    Taiwan
One of the strange things about Taiwan is that, it allows Bitcoins but doesn’t allow Bitcoin ATMs. Though the financial authority has been making frequent announcements about the volatility and high risks associated with these coins, it doesn’t formally impose a ban on individuals dealing in Bitcoin.
22.    United States
The US is probably one of the most welcoming countries when it comes to Bitcoin. Some of the leading market players like Microsoft, Dell, Overstock, and Dish Network have accepted Bitcoin as a mode of payment. This goes to show how freely Bitcoins is in circulation in the US markets today. Ever since 2013, when Bitcoin started making inroads into the US, steps have been taken to control its misuse. Financial Crimes Enforcement Network, a part of the US Treasury, has been giving out a regular set of guidelines on the use of Bitcoin and how it needs to be used safely. Recently, Bitcoin has entered the US Derivatives Markets as well, which only goes on to prove that is slowly becoming one of the common and legal forms of currency in the US.
23.    Canada
While the US views Bitcoins as money service business, Canada views it as a commodity. Nevertheless, the difference is only in the way it is being defined. In terms of acceptance, Canada is similar to the US. Though Bitcoin is freely available in Canada, steps have also been taken to restrict illegal activities. As per its strict vigilance to eradicate unscrupulous ways of Bitcoin usage, the Revenue Agency of Canada requires all Bitcoin exchanges to register with FINTRAC (Financial Transactions and Reports Analysis Centre) so that all transactions are reported, tracked, and checked for any wrong doings on a regular basis.
24.    Argentina
The National Constitution of Argentina has not banned Bitcoin completely, but doesn’t consider it a legal currency either.
25.    Brazil
In 2013, a law was passed in Brazil which legalizes the use of Bitcoin for all kinds of payments. Bitcoin holdings are considered assets and profits arising from these are taxable as part of capital gain taxes. However, if transactions are less than USD $16,000, taxes are not applicable.
26.    Mexico
In 2014, the Bank of Mexico sent out a statement to all its people informing them about the potential risks associated with digital currencies and how one needs to tread carefully while dealing with these coins. Though the country didn’t impose a complete ban, it posed several restrictions on its financial institutions when dealing with Bitcoin. Financial institutions are not allowed to deal with cryptocurrencies directly as per this release.
27.    New Zealand
The Reserve Bank of New Zealand released a statement in which it didn’t impose a ban on Bitcoin. On the other hand, the bank found this technology quite interesting; however, it came with too many risks and a great deal of price volatility, which doesn’t sound encouraging enough to be used as a legal currency on an everyday basis.


The above mentioned countries do not form an exhaustive list.  This is just a broad overview of some of the major nations that have accepted or rejected Bitcoin. All of these countries have, in one form or another, sent out notices and releases to individuals and financial institutions in their respective nations about the undue risks associated with Bitcoin.

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