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Is Bitcoin Legal?

Bitcoin symbol over world map showing different regulatory zones with fortress walls, chains, and government buildings across continents
April 22, 2025

Last Updated: Dec. 14, 2025

Editor’s Note (December 2025): This article was reviewed and updated to correct statistical claims and add primary source citations. Key updates include revised U.S. crypto ownership figures, clarification of the Central African Republic memecoin controversy, and corrected El Salvador adoption rates. All claims now include source links.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or trading advice. Cryptocurrency investments carry significant risk. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

Bitcoin, the flagship cryptocurrency, is the leading digital asset by market capitalisation and dominance. Its legal status is dependent on the jurisdiction in which it is located. As the foremost digital asset, Bitcoin serves as both a store of value and a means of exchange.

Countries such as El Salvador and the Central African Republic have officially recognised it as legal tender, thereby granting the digital asset full legal status. In other jurisdictions, Bitcoin’s legal status is somewhat uncertain, with several key factors influencing its status. Regulatory bodies are generally receptive to the new financial technology but still wary of the highly volatile nature of digital assets.

The volatile nature of digital assets, such as Bitcoin, makes them a risky investment. Regulatory bodies in various jurisdictions are poised to protect citizens from such investments, which is why the legal status of Bitcoin is so complicated. In this article, we examine the legal status of Bitcoin in key jurisdictions and the factors that influence it.

Bitcoin is legal in the United States and regulated accordingly. The primary crypto asset is held by millions alongside other assets. Security.org’s 2025 Cryptocurrency Adoption Report estimates that approximately 65 million Americans, 28% of adults, own cryptocurrency, with Bitcoin being the most popular.

Bitcoin is treated as either a commodity (by the CFTC) or a property (by the IRS). Capital gains tax applies. Spot Bitcoin and Ethereum ETFs were approved in 2024, onboarding thousands of institutional and retail investors.

Additionally, the Donald Trump administration pledged to establish a strategic Bitcoin reserve as an alternative store of value for the country.

Bitcoin’s legal status is categorised into five subcategories, depending on its current standing in various jurisdictions.

Below are the five subcategories with their respective countries.

El Salvador: Bitcoin was made legal tender in September 2021, alongside the U.S. dollar. Businesses must accept it, with exceptions, as supported by the Chivo Wallet. Adoption remains limited, surveys by Universidad Centroamericana (UCA) indicate only 8.1% of Salvadorans used Bitcoin for transactions in 2024, with the majority preferring traditional payment methods. President Nayib Bukele championed the digital asset revolution in the country with his “One Day, One Bitcoin” strategy.

Central African Republic (CAR): Adopted Bitcoin as legal tender in April 2022, alongside the CFA franc. Aimed at financial inclusion, but low infrastructure (approximately 11% internet penetration) and scepticism hinder progress. The country’s crypto ambitions faced controversy in February 2025 when the government launched a memecoin that crashed 70% within hours amid rug pull allegations.

United States: Legal, treated as property (IRS) or commodity (CFTC). Capital gains tax applies. Spot Bitcoin and Ethereum ETFs were approved in 2024, onboarding thousands of institutional and retail investors.

European Union: Legal under Markets in Crypto-Assets Regulation (MiCA) (2024), treated as a digital asset. AML/KYC and taxation (e.g., capital gains in Germany) apply. Stablecoin giant Tether (USDT) struggles with MiCA compliance, facing possible delisting by top exchanges. The European jurisdiction is notorious for its stringent regulations, which often hinder innovation and entrepreneurship.

Canada, Japan, Australia, & Singapore: Legal as an asset or payment method, with taxation and strict AML/KYC regulations.

Switzerland: Legal, used for specific payments (e.g., taxes in Lugano), treated as a foreign currency or asset.

Restricted

India: Legal but heavily taxed (30% on profits, 1% TDS on transactions). Banks can’t service crypto firms, limiting access. Despite the restricted status, Indians still heavily indulge in cryptocurrency. In July 2024, a major exploit on the country’s largest exchange, WazirX, resulted in approximately $235 million in stolen funds, attributed to North Korean hackers.

Russia: Legal as property, but payment use is banned. Mining is regulated, as electricity is a tricky issue in some areas.

South Korea & Turkey: Legal with restrictions; payments are banned in Turkey, and there is strict oversight in South Korea.

Banned

China: Effectively banned since 2021. Trading, mining, and exchanges are prohibited, though holding is allowed. Despite the ban, the Chinese over-the-counter market continues to thrive. Chainalysis data indicates China-based OTC trading volume reached $23.7 billion in 2024, with quarterly volumes tripling compared to 2021 levels.

Algeria, Bolivia, Morocco, Nepal, Pakistan, & Vietnam: Explicit bans due to concerns over money laundering or currency control.

Egypt, Iraq, & Qatar: Banned, often tied to financial or religious restrictions.

Unclear/No Regulation

Nigeria, Kenya, & Ghana: High adoption (e.g., Nigeria ranks among the top 10 on Chainalysis’s Global Crypto Adoption Index) but regulatory ambiguity. Nigeria bans bank-crypto ties, yet P2P trading thrives.

Venezuela and Paraguay: Informal use to hedge against inflation, but legal status is undefined.

Note: Regulatory status as of April 2025. Cryptocurrency regulations change frequently, verify current status before making financial decisions.

United States, El Salvador, Japan, Germany, Switzerland, United Kingdom, Canada, Australia, Singapore, Malta, Brazil, South Korea, New Zealand, Ireland, Belgium, Netherlands, Finland, Bulgaria, France, Mexico, South Africa, Argentina, Chile, Estonia, Italy, Luxembourg, Philippines, Thailand, Vietnam, Malaysia, Costa Rica, Angola, Ecuador, Lebanon, Turkey, Iran

Factors Affecting Bitcoin’s Legalisation

A range of factors determines Bitcoin’s legal status in various countries and is heavily influenced by the country’s financial laws. The financial regulatory bodies in most countries are responsible for protecting the interests of their citizens. Yet, they don’t want to prevent them from leveraging the new economic system powered by blockchain.

Financial Stability, Monetary Policy Concerns, and Tax Evasion

Stability is a core issue for most governments. People often prefer stable national currencies over Bitcoin, which actively exhibits greater volatility. Bitcoin’s decentralised nature also challenges central bank control over monetary policy.

Naturally, traditional financial institutions are skeptical about financial systems outside their control. Central Bank Digital Currencies (CBDCs) serve as a middle ground between the two parties, bridging the old monetary system with new cryptocurrency technology.

Governments restrict Bitcoin to prevent capital outflows and ensure tax compliance, as its borderless nature can facilitate offshore transfers and tax evasion. These three factors, along with numerous others, determine Bitcoin’s legal status in most countries.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT)

Bitcoin’s pseudonymous transactions raise concerns about illicit activities. The nature of the public ledger, which is a transparent record of all transactions ever made on the blockchain network, doesn’t reveal much about the identity of users. This feature creates a breeding ground for illicit activities that plague the crypto industry.

The industry mitigates this by implementing strict regulations or bans to comply with global AML/CFT standards, such as the FATF’s 2019 guidelines on cryptocurrencies. AML is a key issue in the cryptocurrency landscape. The former CEO of Binance, Changpeng Zhao, has run into legal trouble with the United States over AML issues and allegations of facilitating transactions for sanctioned countries.

Conclusion

Bitcoin’s legal status varies globally, shaped by economic, regulatory, and social factors. Only El Salvador (since September 2021) and the Central African Republic (since April 2022) recognise Bitcoin as legal tender, aiming for financial inclusion but facing low adoption due to volatility and infrastructure issues.

In jurisdictions such as the United States, the European Union, Canada, Japan, and Singapore, Bitcoin is recognized as a form of property or digital asset, subject to taxation and anti-money laundering (AML) and know-your-customer (KYC) regulations. The U.S. approved Bitcoin ETFs in 2024. India and Russia impose heavy restrictions, taxing profits or banning payments. At the same time, China and countries like Algeria and Qatar enforce outright bans, citing risks of money laundering and capital control. Nigeria and Venezuela see high informal use despite unclear regulations.

Key factors affecting legality include financial stability concerns, AML/CFT compliance, preventing tax evasion, and striking a balance between innovation and consumer protection. Bitcoin’s legal status remains a significant challenge to its global adoption.

Countries like China, which comprise a substantial portion of the world’s population, have banned cryptocurrency, restricting the industry from its massive population. A more receptive approach to digital assets by various jurisdictions would enhance Bitcoin’s adoption rates, deepening its adoption and solidifying it as an alternative financial asset to fiat.

Change Log

  • Dec. 14, 2025 – Updated article schema
  • Dec. 5, 2025 – This article was reviewed and updated to correct statistical claims and add primary source citations. Key updates include revised U.S. crypto ownership figures, clarification of the Central African Republic memecoin controversy, and corrected El Salvador adoption rates. All claims now include source links.
  • April 22, 2025 – Originally published

Sources

  1. Security.org. (2025). 2025 Cryptocurrency Adoption and Consumer Sentiment Report. https://www.security.org/digital-security/cryptocurrency-annual-consumer-report/
  2. U.S. Securities and Exchange Commission. (2024). Bitcoin ETF Approval. https://www.sec.gov/
  3. Instituto Universitario de Opinión Pública (IUDOP), Universidad Centroamericana. (2024). Bitcoin Usage Survey – El Salvador. https://uca.edu.sv/iudop/
  4. World Bank. (2024). Individuals Using the Internet (% of Population) – Central African Republic. https://data.worldbank.org/indicator/IT.NET.USER.ZS?locations=CF
  5. CoinGape. (2025). CAR Meme Coin Crashes 70% After Scam Allegations. https://coingape.com/car-meme-coin-crashes-70-after-scam-allegations-heres-all/
  6. European Union. (2023). Markets in Crypto-Assets Regulation (MiCA). Official Journal of the European Union. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114
  7. The Record. (2024). Indian crypto platform WazirX confirms $230 million stolen during cyberattack. https://therecord.media/wazirx-crypto-platform-confirms-230-million-heist
  8. Chainalysis. (2024). Eastern Asia Geos Report: Institutions Drive Adoption in 2024. https://www.chainalysis.com/blog/eastern-asia-crypto-adoption-2024/
  9. Chainalysis. (2024). 2024 Global Crypto Adoption Index. https://www.chainalysis.com/blog/2024-global-crypto-adoption-index/
  10. Financial Action Task Force (FATF). (2019). Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers. https://www.fatf-gafi.org/en/publications/fatfrecommendations/documents/guidance-rba-virtual-assets.html
  11. Income Tax India. (2022). Taxation of Virtual Digital Assets. https://incometaxindia.gov.in/

Last updated: December 2025

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