Bitcoin is appealing to criminals and terror organizations because it is possible to use anonymously and execute transactions between any account holder, anywhere and around the world. They could use bitcoin to purchase or sell illegal items such as drugs or firearms. However, patterns have shifted in recent months, as criminals have shied away from bitcoin for fear of being caught.
Most nations have yet to make a confident decision on bitcoin’s legality, opting instead for a wait-and-see attitude. By establishing some regulatory policy, some governments have indirectly agreed to the lawful usage of bitcoin and other coins.
El Salvador is the only country that approves bitcoin as legal money as of June 2021.
The United States of America
In 2013, the United States government recognized bitcoin as decentralized virtual money that you can use for transactions. In September 2015, the CFTC classed it as a commodity. As a property, Bitcoin is also taxable. To summarize, bitcoin is lawful in the United States, while the legality of other cryptocurrencies remains unclear.
Although various governing bodies are working to prohibit or reduce bitcoin used for unlawful actions, the United States has maintained a generally supportive movement toward bitcoin. Bitcoin is accepted by well-known companies like Dish Network (DISH), Microsoft, Subway, and Overstock (OSTK). 67 The digital currency has also entered the futures markets in the United States, bolstering its validity.
Since 2013, the Financial Crimes Enforcement Network of the United States Department of Treasury has issued recommendations on bitcoin and other cryptocurrencies. The Treasury has classified bitcoin as a provider of money services rather than a currency. This brings it into the Bank Secrecy Act, which mandates that exchanges and payment processors follow detailed reporting, registration, and record-keeping requirements.
Furthermore, the Internal Revenue Service classifies bitcoin as property for tax purposes (IRS).
Canada
The Canadian government recognized Impak Coin as the country’s first legalized cryptocurrency in August 2017. Bitcoin had previously been approved in Quebec for a limited number of business types, including ATMs and exchanges.
On the other hand, customers of the Bank of Montreal and a few other Canadian provinces are banned from using their bank cards to conduct bitcoin transactions. Like its southern neighbor, the United States, Canada takes a generally pro-bitcoin position while guaranteeing that the cryptocurrency is not utilized for money laundering. The Canada Revenue Agency (CRA) considers bitcoin to be a commodity.
This means that bitcoin transactions are recognized as barter transactions, and the revenue generated is classified as company revenue. Taxation differs depending on whether the individual is a buying-and-selling firm or is merely interested in investing.
Bitcoin exchanges are classified as a provider of money services in Canada. They are subject to anti-money laundering (AML) regulations.
Bitcoin exchanges must register with FINTRAC, disclose any suspicious transactions, follow compliance guidelines, and preserve specific records. In addition, some large Canadian banks have prohibited bitcoin transactions using their credit or debit cards.
South Africa
South Africa has formally adopted crypto trade and investment rules, with the country’s financial and capital markets officials forecasting a surge in cryptocurrency activity. This is unusual in comparison to much of the rest of Africa. Central banks in several other countries are ordering commercial banks to avoid handling transactions involving crypto assets.
South Africa, which boasts the continent’s most sophisticated financial industry, is taking a different course, predicting a surge in crypto commerce in the country and throughout the continent, according to monetary and capital markets. Cryptocurrencies are recognized already as an investment and taxable asset in the government.
A new intergovernmental working committee tasked with drafting new policies stated, “Crypto-assets cannot remain outside of the South African regulatory purview.”
Costa Rica
Costa Rica is one of the minorities where employers can pay their employees in bitcoin. According to Costa Rican law, employees may be compensated in “generally accepted assets” as a form of payment. Cryptocurrency could be considered a “generally acknowledged asset” in Costa Rica. Employers who want to pay their staff in bitcoin face legal challenges.
First, companies must pay a portion of their employees’ social security benefits based on the value of the cryptocurrency on the payment date. Calculating this daily value takes time, and the volatility of bitcoin values adds to the difficulty.
Second, while employers must pay the legal minimum wage in cash, they may pay salaries in non-cash items like Bitcoins. As a result, workers who only make minimum wage cannot be delivered in bitcoin, but employees who earn more than minimum pay or are paid on a salary can. Workers, not employers, have the authority to choose whether or not to accept payment in bitcoin.
Australia
Bitcoin is not given a solid legal relevance in Australia. According to the Australian Taxation Office (ATO), It is classified as an asset for capital gains tax purposes.
Cyprus
The Cyprus Securities and Exchange Commission (CySEC) has published new facts regarding its crypto-assets regulation stance, implying that additional measures are underway. By incorporating EU anti-money laundering requirements into Cypriot laws, the CySEC hopes to improve the monitoring of cryptocurrencies and related assets.
The CySEC’s policy statement lays out specific requirements for crypto companies wishing to join the regulator’s CASP register. This registry is open to everyone and contains information such as the name of the crypto business, its legal form, address, and services.
In addition, the new policy includes a definition for crypto assets that goes a little beyond their specific legal position.
According to the Cypriot regulator, Crypto assets may qualify as financial instruments under the Investment Services and Activities and Regulated Markets Law, depending on their form. While cryptocurrencies cannot be considered legal tender, they may be classified as “electronic money” or “e-money” under the Electronic-Money Directive.
Cyprus embraces blockchain and cryptocurrency firms, and Bitcoin exchanges and initial coin offerings (ICOs) are permitted.
Japan
Being one of the world’s most rapidly rising technological marketplaces, Japan had no choice but to legalize cryptocurrencies sooner or later. The country’s government has initiated a PSA (Payment Services Act)-based framework that allows some cryptocurrencies and exchanges to be used for payment and trade. In Asia, Japan is currently regarded mainly as a center for cryptocurrency trading and exchange.
Poland
The law is increasingly unable to keep up with technological advancements. This is how bitcoin and other cryptocurrencies are treated in Poland. No particular legislation governs cryptocurrency markets.
There are no restrictions in the Polish system forbidding the conduct of activity as a cryptocurrency exchange or exchange office, which means that conducting activities in Poland and trading in crypto in the form of exchange is not forbidden thus permissible.
Portugal
The tax authorities in Portugal have decided to take a tactical approach to the bitcoin exchange. The Portuguese legal system has accepted crypto for trading. Citizens who benefit from purchasing and selling cryptocurrencies are not liable to pay tax. Furthermore, there is no taxation in the trading of cryptocurrencies for other suitable coins.
Individual investors worried about income taxes charged on bitcoin payments will find Portugal desirable alternatives. The situation is different for companies in Portugal that receive bitcoin payments and must pay conventional capital gains taxes. The idea is that if you are paid in bitcoin, you may avoid paying high capital gains taxes.
“An exchange of cryptocurrencies for ‘real’ currency is an on-demand, VAT-free exercise of services,” according to Portugal’s tax authorities.
In a nutshell, it is advisable bitcoin investors can explore Portugal because of its favorable tax policy. Companies aren’t given the same leeway, so it’s unlikely that a slew of businesses will relocate to Portugal shortly to reap the benefits.
Many schemes exist in the country that allows crypto investors to establish a foothold in the Iberian Peninsula. Regulations governing residency and citizenship are equally liberal, putting it at the top of many such lists.
Germany
Germany is one of the minor European countries that accept cryptocurrencies and actively participates in blockchain development.
Bitcoin has been fully authorized in Germany, allowing residents to transact and trade with it. The German government’s acceptance of Bitcoin has increased the value of these currencies on the global market.
France
The country legalized the operation of virtual currencies such as bitcoin and cryptocurrency exchanges, taxation, and given the power to individuals involved in the trading and using such currencies by publishing a regulation notice on July 11, 2014.
Malta
Malta has joined a growing list of countries embracing bitcoin and other cryptocurrencies as a legal means of conducting digital transactions.
Malta’s cabinet has adopted measures regulating cryptocurrency and initial coin offerings (ICOs), officially establishing the country as a full-fledged crypto-legal jurisdiction.
The country’s casual approach toward crypto regulation hasn’t gone unnoticed. Malta has been a source of worry for the Financial Action Task Force (FATF), an intergovernmental policy-making group with 39 member states.
Government parastatal expressed concerns at a private meeting of the FATF over an alleged 60 billion EUR ($71.2 billion) in bitcoin that had flowed through Malta’s borders. There were no charges or even hints that specific individuals had used it for illegal reasons. The primary source of concern is the lack of a regulatory entity to provide oversight.
It remains to be seen whether the small Mediterranean island will face more control. Meanwhile, wealthy crypto investors from outside the EU will continue to explore it because of its 1.5 million EUR ($1.78 million) citizenship offer and relaxed stance on cryptocurrency.
Bermuda
Bermuda’s Digital Asset Business Act 2018 established a regulatory framework for individuals and entities involved in the following activities:
- Issuing, selling, and redeeming cryptocurrency and other digital assets
- Operating as a crypto payment provider, including the provision of fund transfer services
- Managing a cryptocurrency exchange and providing wallet services
- Utilizing a cryptocurrency services vendor
All of this defines what constitutes digital business in Bermuda, a tax-free jurisdiction. As one of the earliest digital business regimes, it works as a magnet for individuals and enterprises alike.
Belarus
Cryptocurrencies will be allowed in Belarus beginning March 28, 2019, according to a recent government ruling.
Many exchanges, ICOs, and smart contracts will be legal in the country, in addition to the most popular crypto-currencies. The government decided to push for the growth of a digital economy. Cryptocurrency transactions will be tax-free, according to the news.
Holland
It is one of the countries that has embraced bitcoin and other digital currencies with open arms. In Holland, a specific region is known as “Bitcoin City,” where all bitcoin transactions are legal, including retail purchases, trading, and business.
On the other hand, the Dutch government has yet to regulate or legally approve bitcoin use.
Singapore
It is legal to use and trade bitcoin and other popular virtual currencies in Singapore, but the government has no control over their operations or prices. Cryptocurrencies are intended to be uncontrolled by their very nature.
Singapore’s economy is one of the world’s most stable and developed. It’s known as one of the best places globally to conduct business, thanks to its proximity to industrialized and developing countries.
In Southeast Asia, Singapore is a fintech hotspot. The central bank of Singapore believes that while the government should control the cryptocurrency ecosystem to avoid money laundering and other criminal activities, there should be a continuous avenue for innovation. As a result, some have referred to the city-state as a crypto-friendly regulatory and legal climate. It also fits with Singapore’s pro-business approach, which has earned the city-state a lot of admiration.
In an interview, Sopnendu Mohanty, Singapore Central Bank’s Chief Fintech Officer, claimed that the city financial state’s institutions consider “allowing crypto to be an experimental construct.”
Singapore’s legal framework for crypto is governed by the Payment Services Act of 2019. The law establishes explicit expectations that balance the need for regulation to avoid unlawful conduct and the need for crypto to thrive. In Singapore, cryptocurrency is also tax-free.
Using cryptocurrency should be easy for retailers and customers in Singapore. In some circumstances, bitcoin usage in Singapore is taxable.
Thailand
In 2017, Thailand’s central bank declared bitcoin to be legal in the country. Digital currency trade and exchange are permitted as long as sufficient precautions are taken. Cryptocurrencies can only be exchanged for Thai Baht at approved bitcoin exchanges in Thailand.
Thailand’s central bank, on the other hand, prohibits its users and affiliated financial institutions from engaging in any cryptocurrency-related activity.
India
India has finally chosen to embrace cryptocurrencies, with bitcoin being the first to be included on the list. The country has set some particular provisions to keep up with the trend, including a tax on virtual currency transactions.
With some special measures, laws, and regulations, the Indian government may sooner or later regulate cryptocurrencies in the country.
The European Union
The European Court of Justice stated on October 22, 2015, that buying and selling virtual currencies is deemed a services provider and is therefore exempt from VAT in all EU member states. Moreover, certain EU member states have formed their bitcoin policies.
By defining bitcoin as a financial service, Finland’s Central Board of Taxes (CBT) has granted it VAT-free status. In Finland, Bitcoin is considered a commodity rather than a currency.
Bitcoin is likewise VAT-free in Belgium, according to the Federal Public Service Finance. Bitcoin is also unregulated and uncontrollable in Cyprus.
In the United Kingdom, The Financial Conduct Authority (FCA) is pro-bitcoin and wants the regulatory bodies to accept it. In the United Kingdom, Bitcoin is subjected to taxes.
Bulgaria’s National Revenue Agency (NRA) has included bitcoin in the country’s tax regulations. Bitcoin is legal in Germany, although it is taxed differently depending on whether the authorities work with exchanges, miners, businesses, or individual users.
Switzerland
Switzerland is well-known for a variety of reasons. It is well-known in the financial world for its Swiss banking standards, which allow for high levels of anonymity while minimizing risk. This is not a surprise that the nation has lax laws for crypto investors.
However, the unique system of dividing regions into cantons significantly impacts what may and cannot be done. Each of Switzerland’s 26 cantons has its legal criteria on how cryptocurrencies should be treated.
Cryptocurrency may be taxed in one Swiss canton but not in another. And the rules that trigger taxation may differ from canton to canton. Capital gains from movable private wealth are tax-free in Zurich, implying that Bitcoin and other cryptocurrencies are tax-free. Mining profits, on the other hand, are taxed like ordinary income. Mining and trade are classified as regular income in Bern, where the laws are stricter. The canton of Lucerne is much more in line with the canton of Zurich, and capital gains are tax-free.
El Salvador
El Salvador is the only country worldwide that accepts bitcoin as legal tender. The country’s Congress backed President Nayib Bukele’s plan to use bitcoin officially as a mode of payment in June 2021