Whether cryptocurrency is legal or not depends on the laws of the region you live in. But since you are about to spend your precious time reading my article, I will be telling you the nitty-gritty of the legalities of Bitcoins. Bitcoins have been gaining quite a lot of popularity since late 2019.
Many countries tend to turn a blind eye to cryptocurrencies and the potential it offers. These countries are afraid that if cryptocurrencies become legal, the conventional financial system may collapse.
Whereas there are some countries where Bitcoin is completely legal and is viewed as a substitute to their respective fiat currencies. There are also some countries where Bitcoins are considered as property. So, are cryptocurrencies legal?
I am a Bitcoin investor myself and I have been doing this for the last 5 years and what I have realized after investing in Bitcoins all this year is that even though Bitcoin is not legal in many countries. But will soon be legal, given the popularity, coverage in the mainstream media and more importantly the value it has.
Countries where Cryptocurrencies are legal
There are a handful of countries where cryptocurrencies, Bitcoins in particular are legal. In these countries, Bitcoins are widely accepted as a payment method.
The United States of America
Since 2013, Bitcoins have been legal in America. Bitcoins are also considered to be assets in the United States. Therefore the Internal Revenue Service has officially declared that people holding bitcoins would have to pay property taxes on their Bitcoin holding. It is also widely used as a decentralized virtual currency all over the United States.
Want to know are cryptocurrencies legal? When we talk about cryptocurrencies, we have to talk about Japan. Often referred to as the crypto hub, Japan contributes 60% of the cryptocurrencies in the world.
Japan being, one of the most developed tech-oriented countries in the world had to legalize Cryptocurrencies. Cryptos are legal in countries on the PSA guidelines. PSA, also known as Payment Services Act allows cryptocurrencies to be traded in a limited quantity.
Cryptocurrencies became legal in France in 2014. Do note that heavy taxes are imposed on the trading of cryptocurrencies in France.
Apart from other controversial materials, the Netherlands have welcomed Bitcoins with open arms. There is also a city dedicated to Bitcoins in the Netherlands called ‘Bitcoin City’. You can find crypto ATMs in every nook and corner in Bitcoins, especially in Bitcoin city and Amsterdam.
Want to know are cryptocurrencies legal? Cryptocurrency is legal in Vietnam, but it is heavily controlled. It is legal as a trading and investing option but not as a mode of payment. The Vietnamese government makes sure that Bitcoins are used for ICOs and trading but not for transacting on a day-to-day basis.
Trading in Bitcoins is legal in Singapore but not it is not used as a valid payment method.
Reasons Why It Is Legal In Some Countries
There are several reasons why these countries have welcomed cryptocurrencies with open arms.
1. No Inflation
Since Bitcoins can be mined only up to 21 million, there is no scope of inflation in Bitcoins. Bitcoins are highly deflationary in nature which means the value of goods and services won’t surge if payments in Bitcoins are made as alternatives to fiat currencies.
2. Cryptocurrencies Work on Blockchain Technology
Want to know Are cryptocurrencies legal? Blockchain technology is the most sought after technology for storing information. The healthcare industry is on the verge of implementing Blockchain technology into their networks to serve patients better and with the utmost level of data sharing. Blockchain technology makes sure that there is transparency in data sharing.
3. Digital Payments are Made Easier
Cryptocurrencies have made digital payments way smoother. People these days do not like to carry big chunks of cash in their wallets. Doing this not only puts them at the risk of getting robbed, but there is no point in carrying cash when a payment can be done with just a tap of one’s phone screen.
Payments with cryptos are user to user encrypted, which means there are no banking bodies in between.
Countries Where Cryptocurrencies are Illegal
Cryptocurrencies are illegal in these following countries
China is the most populated country in the world and the use of Bitcoins and any other cryptocurrency for that matter is totally banned. The communist Government of China keeps a watch on all the finances of its citizens. The use of Bitcoins and other cryptocurrency can land them in jail. China has banned all sorts of cryptocurrencies since 2017.
Want to know are cryptocurrencies legal? All sorts of cryptocurrencies are banned in India. Recently the Government of India made it very clear that Bitcoins and all other cryptocurrencies are illegal in India. India is soon about to launch its own Central Bank Digital Currency.
All cryptocurrencies are illegal in Bolivia. The Government of Bolivia made sure that Bitcoins are strictly restricted.
Bitcoins and other cryptocurrencies are banned in Russia. Russia, too like many other countries, is planning to launch their own Central Bank Digital Currency. Russia’s CBDC would be called crypto rubel.
Reasons Why Cryptocurrencies Are Not Legal In The Above Countries
Bitcoins have its fair share of problems, which is why it is not legal in these countries.
1. Highly Volatile
Bitcoins are highly volatile in nature. The value of Bitcoins swings from second to second, let alone every minute or hour. It cannot be used as an alternative or substitute of fiat currencies if it is so volatile.
2. No Legal Body Backing it
There is no central body that guarantees the validity of Bitcoins. Bitcoins work on the basis of trust. The moment that trust is gone, so will Bitcoins and other cryptocurrencies.
So to answer your question, are cryptocurrencies legal? There is no definite answer to is bitcoin legal or not. If you are living in the US, it is legal and if you are living in some country in Africa then it is illegal. So before proceeding any further let us take a glimpse of the countries where Bitcoins are legal and where Bitcoins are illegal.