The legal status of Bitcoin

Questions have been raised about the credibility and legality of using cryptocurrencies when doing business. The best answer to this question refers to your country of residence or where you intend to conduct business transactions using the currencies. There are countries that have explicitly allowed its use and trade, while others have banned or restricted it altogether. The cryptocurrency here refers to bitcoin and its many other altcoins.

The following 8 countries have imposed a “ absolute prohibition ” on the use of cryptocurrencies in trading. This means that cryptocurrencies, including bitcoins, cannot be used in these countries. They include:

1. Egypt

2. Algeria

3. Bolivia

4. Pakistan

5. Morocco

6. Nepal

7. Iraq

8. United Arab Emirates

15 other countries have imposed “ implicit prohibition ” on the use of cryptocurrencies. An implicit ban means that the use of bitcoins and other altcoins is restricted in these countries. The countries include China, Bangladesh, Colombia, Indonesia, Iran, Kuwait, Lesotho, Qatar, Saudi Arabia, Bahrain, the Dominican Republic, Lithuania, Macao, Oman, and Taiwan.

Based on your country of residence, you can determine whether you are free to use cryptocurrencies in business, restricted or totally prohibited for use. However, different governments have classified bitcoin in different ways. For example, the Central Bank of China banned the handling of bitcoins by financial institutions in China. The ban was made in 2014. In Russia, the use of cryptocurrencies is allowed but it is illegal to buy goods using any currency other than the Russian ruble. Therefore, there is an “implicit ban” on the use of bitcoins and probably all other cryptocurrencies in these countries.

Researchers have described the cryptocurrency as a potential tool for evasion of economic sanctions. An example is the evasion of sanctions against Russia, Iran and Venezuela. This caused great unrest that led to a meeting between Russian and Iranian economic representatives. The purpose of the meeting was to discuss the means to bypass the global SWIFT system through decentralized blockchain technology. It is also noted that Russia supported Venezuela with the creation of Petro (El Petro). The Petro is a national cryptocurrency that was started by the Maduro government to earn valuable oil revenue by circumventing US sanctions. This shows why some governments are not kindly complying with the use of cryptocurrencies. However, in August 2018, the Bank of Thailand made clear its plans to create its own cryptocurrency called the Central Bank Digital Currency (CBDC).

Advertising

Ads related to bitcoins and other cryptocurrencies are prohibited on Facebook, Twitter, Google, Linkedln, Bing, Snapchat, and MailChimp. Also in China, the following Internet platforms are prohibited from advertising bitcoins: Weibo, baidu and Tencent. Similar cases are experienced on the Japanese line and the Russian Yandex platform.

Fiscal situation

In the United States of America, the Internal Revenue Service (IRS) decided that bitcoin will be treated as property for tax purposes. The effect of this decision is that Bitcoin will be subject to capital gains tax.

Bottom line

The legality of bitcoins varies from country to country and remains undefined or changes in many of them.