The question is Bitcoin legal, is one which is often asked, particularly in recent months with different countries’ rules and regulations regarding cryptocurrency hitting the headlines on what seems like a daily basis. So let’s take a look at Bitcoin and the attitude in which different countries’ governments have towards Bitcoin and other cryptocurrencies.
The rules and regulations around cryptocurrency of course applies to all of them, however due to Bitcoin being the market leader and first of its kind, a lot of the time when they are discussed in the media it is only Bitcoin which is mentioned. And as more and more cryptocurrencies enter the market, and more and more people invest then it is only going to increase the amount of coverage it gets as regulators step up the debate about their uses.
Bitcoin laws in different countries
If we break things down by country then very few have actually made Bitcoin illegal, although one place hitting the headlines in recent weeks with regards to this is India, where the Finance Minister Arun Jaitley has said “The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.” This quote has been somewhat misinterpreted by the world’s media though, as a number of outlets have claimed that India has made cryptocurrencies illegal, when in fact they have seemingly misread his quote. Jaitley has however stated that they are instead looking to encourage the use of blockchain technology in payment systems.
Whereas it seems that India hasn’t yet made cryptocurrencies illegal, they are just not recognising it as a legal tender and are discouraging its use, there are some countries that have made Bitcoin illegal.
Bangladesh is the one with perhaps the strictest rules, with Bangladesh Bank stating in 2014 that anyone caught using cryptocurrency could go to jail! Other countries where Bitcoin is illegal are Ecuador, Bolivia, Algeria, Kyrgyzstan, and Nepal.
Where is Bitcoin legal tender?
So as you can see the list of countries which have made Bitcoin illegal is in fact very small, however there is so far only one country which recognises Bitcoin as legal tender, with Japan being the only one so far.
Even if a country doesn’t see Bitcoin as a legal tender though it doesn’t mean that you cannot use it to pay for things. The difference between paying in legal tender, and something that isn’t recognised as legal tender is that the customer or merchant has no protection and that payments are discretionary. In layman’s terms a payment with Bitcoin can be seen as a swap deal between two products.
Another question raised when it comes to the legality of Bitcoin is can Bitcoin be used to purchase illegal goods? Of course, anyone with an interest in Bitcoin and cryptocurrencies would have at some point or another read about the whole Silk Road fiasco. For the uninitiated, Silk Road was an online marketplace on the dark web, on which people could purchase all manner of illegal goods such as narcotics, weapons, fake IDs etc. A large number of people were using Bitcoin to purchase goods through the site, so much so in fact that when the website was closed down the FBI seized roughly 26,000 Bitcoins that had gone through the website. Since then Silk Road has twice relaunched itself, however each time it has again been closed down and the owner’s arrested and given pretty hefty prison sentences.
So in answer to the question is Bitcoin legal, the answer is yes, however as mentioned there is currently only one country which sees it as a legal tender as such. Whether the number of countries recognising it as a legal tender increases, we will just have to wait and see, but one thing’s for sure and that is that the debate around the regulation of Bitcoin in different countries is set to continue for a while yet.