7 Countries Where Bitcoin Is Legal and Illegal

We will take a look at 7 countries where Bitcoin is legal and illegal. 2024 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 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 staggering 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.

Countries that Allow Bitcoin

Bitcoin can be used by anyone who has it for anonymous transactions among account holders anywhere in the world. This has created some anxieties about money in different countries. 

Although some lawmakers and officials may not allow its use due to lack of control and connections with illegal dealings, many governments have put laws under their anti-money laundering and counter-financing of terrorism statutes (AML/CFT) against it.

Price Waterhouse Coopers (PwC) published a report on global regulatory approaches towards cryptocurrencies. Selected countries were identified through their financial regulators being directed by the governments to develop regulations and priorities for the financial institutions with regard to AML/CFT in relation to cryptocurrencies.

Also PwC discovered various countries where cryptocurrencies are prohibited from using. Here are some examples of countries where crypto is legal and banned.

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Countries Where Bitcoin Is Illegal

While several nations across the globe embrace Bitcoins, its volatility coupled with its decentralized nature makes it unwelcome in other countries. 

Some also consider it a menace to their prevailing monetary systems since they suspect that it facilitates illicit activities such as drug trafficking, money laundering, or terror threats; hence banning this digital currency completely while others

7 Countries Where Bitcoin is Legal and Illegal

People’s Republic of China

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 2024 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.

State of Qatar

The state of Qatar is a Western Asian country located in the Middle East. The Qatar Financial Center (QFC) completely bans Bitcoin and other cryptocurrencies within the country. Qatar states that the reason behind the ban is weak compliance with Know Your Customer (KYC) and anti-money laundering (AML) regulations.

The Financial Action Task Force (FATF) enforces these regulations globally. It requires banks and other financial services providers to verify customer profiles and determine the source of funds they transfer within 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 Sharia Law.

Republic of Ireland

New Zealand

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. 

Commonwealth of Australia

The Commonwealth of Australia is an Oceanic country that is rich in natural resource. There are no laws against 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. Companies are subject to taxation if they use Bitcoin in their daily operations or acquire it to make a profit.

Netherlands

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. 

In the Netherlands, individuals must disclose their Bitcoins on annual tax returns, and capital gains tax applies to them. Additionally, companies must convert cryptocurrency payments into euros and declare them on their income statements.

Federal Republic of Germany

The Federal Republic of Germany is a European nation with the largest economy on the continent. Germany requires companies to obtain a license to deal in Bitcoin. Its regulators have urged the creation of a global framework to address cryptocurrencies, especially as prices drop worldwide and connections to established financial institutions increase. Germany also treats Bitcoin as private money, and banks in the country can also store and sell Bitcoin.

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The Impact of Legal Status on Bitcoin’s Future

• How Legality Affects Bitcoin’s Adoption

The legal status is a contentious factor for the success of Bitcoin. Nations where Bitcoin is legal and regulated to some extent typically exhibit higher levels of market adoption and maturity compared to countries where Bitcoin has been banned or remains unregulated. On the other hand, in countries that discourage the use of or have banned Bitcoin, the use is still low and exists in somewhat legal limbo.

• Potential for Changes in Legal Status

That is the reason that the admissibility and regulation of bitcoins still remain a topic of debate and they are changing with each passing day. In the future, some of the countries that currently have a negative attitude towards Bitcoin or have banned it in one way or the other could form better policies and laws to regulate its usage. On the other hand, the countries that are currently accommodating to Bitcoin may change this position in the future, and completely regulate Bitcoin.

• The Global Trend Towards Regulation

While there is a general tendency toward banning Bitcoins all over the world, there is a tendency to set regulations for its usage rather than an illimitable ban. While users and miners continue to debate whether cryptocurrencies are worthy investments and useful tools, regulators have been weighing the pros and cons as they license cryptocurrencies.