The status of Countries where Cryptocurrency Trading is Legal varies substantially from state to state. It is still undefined or changing in many of them. Whereas the majority of countries do not make the usage of bitcoin itself illegal, its status as money (or a commodity) varies, with differing regulatory implications.
While some states have explicitly allowed its use and trade, others have banned or restricted it. Likewise, various government agencies, departments, and courts have classified cryptocurrencies differently. This article provides the list of the Countries where Cryptocurrency Trading is Legal. It also includes regulations, and bans that apply to cryptocurrency.
1. El Salvador
The people of El Salvador have already begun utilizing Bitcoin as a means of wealth storage and payments. The movement galvanized by Jack Mallers, the creator of the Zap and the Strike Bitcoin payments app. He has also helped to create a bill to make Bitcoin legal tender in the country.
The transition to legal tender removes capital gains from the equation and allows people to move and convert Bitcoin without worrying about taxes.
“As of now, El Salvador is set to be the first bitcoin country and the first country to make bitcoin legal tender and treat it as a world currency and have bitcoin on their reserves,” said Mallers during the 2021 Bitcoin conference in Miami.
What followed the announcement from El Salvador was a flurry of politicians and leaders from across various Latin American countries calling for the same type of action with the same motivation — to reduce the reliance on the dollar, slow inflation, increase financial inclusion and bring in more entrepreneurs.
The first Latin American politician outside of El Salvador to express interest was Congressman Carlitos Rejala of Paraguay. In a tweet, the leader called for the nation to advance along with its new generation. The Congressman even added a new photo with laser eyes on Twitter.
Next, a politician from Panama shared similar comments on Twitter after hearing about the movement in El Salvador. Congressman Gabriel Silva said that Panama cannot be left behind and that he plans to propose similar action.
“This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies We will be preparing a proposal to present at the Assembly. If you are interested in building it, you can contact me,” said Silva.
Fabio Ostermann, a State Deputy for the Rio Grande do Sul of Brazil, joined in with laser eyes on Twitter and also retweeted a post from the popular Bitcoin account, Documenting Bitcoin. The Documenting Bitcoin post said that Ostermann had added laser eyes indicating support for Bitcoin.
Another Federal Deputy of Brazil, Gilson Marques, made a new laser eyes profile picture with the hashtags #Bitcoin and #ToTheMoon. Marques also said he was the first deputy of Brazil to say “tax is theft” in the Chamber of Deputies.
Senator Indira Kempis de I. of Mexico added laser eyes to her profile on Twitter and shared some Bitcoin-related posts in a show of support. She also retweeted Tyler Winklevoss who said, “First they ignore you, then suddenly Paraguay, Argentina, Panama, Brazi, El Salvador, and Nicaragua embrace #Bitcoin.”
Kempis also retweeted a Tweet from writer Derek Ross who said, “Mexico has joined Latin America in the #Bitcoin journey. Hopefully, @IndiraKempis follows through with her laser eyes and helps introduce legislature to bring the Bitcoin standard to Mexico. Thank you for starting this revolution @nayibbukele. Very exciting time are ahead.”
The National Deputy for Neuquén, Argentina, Francisco Sánchez, added laser eyes as well and said, “I can’t believe it, but this is how it is.”
In early 2018 India’s central bank, the Reserve Bank of India (RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI.
A petition in 2019 filed by the Internet and Mobile Association of India with the Supreme Court of India challenging the legality of cryptocurrencies and seeking a direction or order restraining their transaction. In March 2020, the Supreme Court of India passed the verdict, revoking the RBI ban on cryptocurrency trade.
In 2021, the government is exploring the creation of a state-backed digital currency issued by the Reserve Bank of India, while banning private ones like bitcoin.
8. United States
The U.S. Treasury classified bitcoin as a convertible decentralized virtual currency in 2013. The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. Per IRS, bitcoin is taxed as a property.
Bitcoin mentioned in a U.S. Supreme Court opinion (on Wisconsin Central Ltd. v. the United States) regarding the changing definition of money on 21 June 2018.
If money services businesses, including cryptocurrency exchanges, money transmitters, and anonymizing services (known as “mixers” or “tumblers”) do a substantial amount of business in the U.S., they required to
- register with the U.S.FinCEN as a money services business
- design and enforce an anti-money laundering (AML) program, and
- keep appropriate records and make reports to FinCEN, including Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs)
Seventeen other countries have similar AML requirements. As of 2018 U.S. FinCEN receives more than 1,500 SARs per month involving cryptocurrencies.
The Reserve Bank Of Zimbabwe is skeptical about bitcoin and has not officially permitted its use. On 5 April 2017 however, BitMari, a Pan-African Blockchain platform got licensed, through its banking partner, AgriBank, to operate in the country.
10. European Union
The European Union has passed no specific legislation relative to the status of bitcoin as a currency but has stated that VAT/GST does not apply to the conversion between traditional (fiat) currency and bitcoin.
VAT/GST and other taxes (such as income tax) still apply to transactions made using bitcoins for goods and services. European Union
In October 2015, the Court of Justice of the European Union ruled that “The exchange of traditional currencies for units of the ‘bitcoin’ virtual currency is exempt from VAT” and that “Member States must exempt, inter alia, transactions relating to ‘currency, banknotes, and coins used as legal tender”, making bitcoin a currency as opposed to being a commodity. According to judges, the tax should not be charged because bitcoins should be treated as a means of payment.
According to the European Central Bank, traditional financial sector regulation does not apply to bitcoin because it does not involve traditional financial actors. 5 Others in the EU stated, however, that existing rules extended to include bitcoin and bitcoin companies.
The European Central Bank also classifies bitcoin as a convertible decentralized virtual currency. 6 In July 2014 the European Banking Authority advised European banks not to deal in virtual currencies such as bitcoin until a regulatory regime was in place.
Finally, in 2016 the European Parliament’s proposal to set up a task force to monitor virtual currencies to combat money laundering and terrorism, passed by 542 votes to 51, with 11 abstentions, has been sent to the European Commission for consideration.
Here the list of Countries where Cryptocurrency Trading is Legal ends. Hope this was helpful.
Happy Trading 🙂