Bitcoin has been around for more than 10 years by now, still, there is no comprehensive approach on how to deal with the legality of the most popular cryptocurrency. Some countries embrace new technology, while others see a huge threat because of money-laundering and terrorist financing.
The way a country decides to approach Bitcoin and cryptocurrency can have a direct effect on how you can deal with cryptos. Depending on the country you live in, certain activities can be forbidden like trading or mining. Or on the contrary, you can deduct taxes after cryptocurrency trading or you can run mining as a business completely tax-free as a company in other countries.
Let’s see how Bitcoin is regulated by countries worldwide.
European countries supporting Bitcoin and blockchain technology
Malta has been supporting bitcoin and blockchain technology directly since 2017 when the country’s prime minister announced a national strategy to promote cryptocurrencies. Since then many major service provider has relocated their business into the country.
Switzerland is a worldwide financial hub that is also a leader in fintech innovation. They have introduced specific regulations guiding Bitcoin businesses in the country which means certain Swiss crypto companies have the same licenses as banks, providing a safe and trustful environment to conduct business related to cryptocurrency.
Slovenia is one of the most supportive European countries in terms of taxing proceeds from crypto. The profit from exchange rate movements are not subject to income tax which can save a lot of money in case of a bull market. In addition to this, those miners who run cryptocurrency mining as a business are not subject to VAT.
Estonia’s government positioned the country being the first digitalized nation in the world, which can be achieved by utilizing the benefits of blockchain technology. They have a couple of proof-of-concept project which are based on the technology behind cryptocurrencies, including the field of healthcare and administration.
Gibraltar also took the lead on regulating cryptocurrency related businesses and introduced financial licenses for those crypto related businesses who are based in the country. The licenses are depending on the nature of the activities and can cost up to $40k but it is a great help to build trust for the whole crypto community.
Georgia is actively embracing blockchain technology in the governmental administration, just like Estonia. They have built their own land registry system that is based on the distributed ledger technology with the help of Bitfury, the leading mining provider company, who are also originally from Georgia.
Asian countries open to cryptocurrencies
Uzbekistan completely legalized trading with cryptocurrencies in 2018 and at the same time removed the tax obligation related to both crypto trading and mining making these activities completely tax free in the country to foster foreign investments.
Japan leads the innovation in terms of financial revolution as well beyond other technological advancements. Bitcoin is accepted country-wide in retails stores and several exchanges operate in the country. Due to the registration process applicable for the crypto exchanges, users trust the market participants which helped to grow acceptance rapidly in the country.
Singapore, the financial hub of Asia, similarly to Switzerland welcomes the new technology as well. The tax authority issued specific guidance related to the taxation of Bitcoin transaction, where they state they treat this as a barter exchange. Otherwise, businesses that are dealing with bitcoin are taxed based on their bitcoin sales.
Asian countries banning Bitcoin
China was one of the first countries who implicitly banned Bitcoin. They introduced a ban for financial firms to hold or trade cryptocurrencies in 2013, then in 2014, they ordered banks to close bank accounts related to cryptocurrency activity. Later on, in 2017 crypto exchanges were completely banned in the country which was followed by additional restrictions in 2018 on Bitcoin mining.
Taiwan, similar to China, Taiwan. says a big NO to crypto. The local regulator made it very clear, that as Bitcoin is not issued by any monetary authority it must not be accepted as payment. Since 2014 it is also not allowed to install any Bitcoin ATM in Taiwan.
Bangladesh even went further with banning cryptocurrencies. The representative from the central bank of the country explicitly stated that anyone who is using virtual currency, accepting it as payment or use it for transactions could be jailed because of violating the country’s anti-money laundering laws.
Pakistan introduced a complete ban on virtual currencies, tokens and coins in 2018 for both private and corporate individuals. Banks are monitoring accounts and may close accounts if a suspicious transaction appears related to any cryptocurrency activity.
Vietnam has a two-sided relationship related to cryptocurrencies. While Bitcoin is not restricted or regulated by the law, the central bank of the country declared that mining or trade Bitcoin is considered an illegal method of payment can be punished with up to $9k fine.
Jordan again not explicitly against Bitcoin by direct regulations and laws, but they are discouraging users to use cryptocurrencies. The Central Bank of Jordan prohibited banks and other financial institutions to service companies and individuals who are dealing with Bitcoin and altcoins.
South-American countries against cryptocurrencies
Bolivia imposed an absolute ban on Bitcoin. Since the resolution accepted in 2014 by the governors of the Central Bank of Bolivia, it is illegal to use, trade or mine Bitcoin or any other currency in Bolivia which is not regulated by any country or union.
Ecuador also issued an overall ban on Bitcoin and digital currencies a couple of years ago. The reason behind the ban was that they wanted to introduce their own state-owned electronic money system and the usage of other cryptocurrencies did not support this strategical move, so it was easier for them to ban this asset class completely.
Colombia is also fully against the technological development that Bitcoin could provide to the country and its individuals. The financial authority of the country stated in 2014 the financial institutions in the country are not allowed to engage in any activity with such individuals who has any connection related to cryptocurrency businesses.
From the above, you can see there are a lot of different ways countries can treat the regulation around Bitcoin. No matter where you live if you are dealing with cryptocurrencies, make sure you are aware of the local regulations concerning Bitcoin and blockchain technology.