Is Bitcoin Legal? (Most Up to Date Guide)
in Bitcoin (BTC)
Is Bitcoin legal?
As Bitcoin grows in popularity we’ve noticed that more people are concerned about the legal status of Bitcoin in their country. For years Bitcoin was ignored by governments, but that’s no longer the case.
During the last bull run the crypto market reached nearly a $1 trillion market cap which attracted the attention of regulators. Since then governments have been increasingly interested in Bitcoin and other cryptocurrencies. Here’s how that’s worked out so far.
Please note: nothing in this article is legal advice. We are not attorneys, and everything in this article is educational content published as a result of our own research.
What Countries is Bitcoin Legal in?
It’s important to draw a distinction between Bitcoin and other cryptocurrencies. Bitcoin is legal in most countries but many altcoins remain in a sort of legal limbo. For example, in the USA there is still the question of whether XRP is a security or not.
So it’s important to realize that even if Bitcoin is legal where you live, you shouldn’t assume that this legality applies to all currencies.
Rather than listing all of the countries where Bitcoin is legal, it’s much simpler to look at where Bitcoin is not allowed. The following countries have made Bitcoin illegal:
These laws banning Bitcoin can change at any time though, as we saw with India’s recent overturn of a Bitcoin ban. This Wiki page is a valuable resource to help you keep up to date with crypto regulations around the world.
Is Buying Bitcoin Legal?
There are some countries where Bitcoin is legal but certain Bitcoin services, like Bitcoin exchanges, are not. The premier example is China where Bitcoin is tolerated but there is a ban on trading. As a result, there is a lot of OTC (Over the Counter) activity.
A simple analogy, a Bitcoin exchange is to Expedia what an OTC desk is to visiting a travel agent’s office to buy plane tickets. Regulations for buying Bitcoin vary by country and region and these regulations are too numerous to list here. Again, Wikipedia is a great source of information.
Is Mining Bitcoin Legal?
Bitcoin mining is largely overlooked in terms of regulation. In the China example, China has more Bitcoin mining farms than any other country in the world and yet they don’t even allow Bitcoin trading!
Bitcoin mining is even popular in countries like Venezuela which tends to be authoritarian and distrustful of anything that will allow money to leave the country.
Bitcoin mining is perfectly legal throughout the United States and Europe and indeed in most places in the world. Just be careful, an overzealous police force may mistake a Bitcoin mining operation as a marijuana grow op since both require lots of electricity and generate a lot of heat. It’s happened before!
For more information on the legality of Bitcoin mining in your country, you can check here.
Is Bitcoin Trading Legal?
In almost every country where Bitcoin is legal, Bitcoin trading is also legal. With a few exceptions like China, Bitcoin legality means trading legality. That being said, not everyone can have equal access to exchanges. For example, many exchanges now require a KYC verification.
Apart from being annoying, these also limit traders who might not have proper documents to verify their identity. That’s why using something like the exchange (mobile tutorial) built into the Exodus wallet is a great idea if you want to trade crypto to crypto, as you don’t have to go through a KYC verification or even create an account.
Is Bitcoin Gambling Legal?
Generally, there are no specific laws dictating whether Bitcoin gambling is legal or not. Perhaps a better question to ask is: is online gambling in general legal in my area? For example, online poker is illegal in New York State, USA but legal in New Jersey, USA. So if you live in New York and you’re using Bitcoin to play online poker, it’s probably not legal. In New Jersey it probably is.
While there may be crypto gambling companies willing to flirt with the laws it’s important to understand the risk. It’s important to understand that a gambling website can be shut down at any time and recovering your Bitcoin could prove extremely difficult.
Also, it may be worth noting that due to its high transaction fees and slow confirmation times, Bitcoin may not always be the most popular cryptocurrency for gambling. Other currencies like TRON and EOS are very popular for gambling.
Is Bitcoin Legal Tender?
The question of whether or not Bitcoin is legal tender is an interesting one. First off, if Bitcoin is illegal in your country you shouldn’t use it as you’ll be putting yourself at risk. However, for countries where Bitcoin is legal, it doesn’t really matter whether Bitcoin is classified as legal tender or not.
If you can find a merchant who accepts Bitcoin (there are many) then you can use it as a currency. Here’s an example. Some countries call it benzine, others call it petrol and in America, it’s known as gas. The label doesn’t matter, it all does the same thing.
If you can use Bitcoin to pay for stuff then it’s a currency, regardless of whether you slap on the label of legal tender.
That being said, Bitcoin is likely to gain recognition as a true legal tender as jurisdictions begin accepting it for tax payments. This is the ultimate expression of legal tender: can you pay your taxes with it?
Why is Bitcoin Legal?
There are a few reasons why Bitcoin is legal:
- Some countries, like Switzerland and France, truly believe in blockchain technology and have gone out of their way to embrace it. They see it as the next tech revolution, similar to the internet, and don’t want to get in the way of progress.
- Other countries just don’t believe Bitcoin will be anything. Would you make some weeds growing in the sidewalk illegal? Countries have multi-trillion dollar problems, they’re not worried about Bitcoin with its $200 billion market cap (yet).
- In countries that have bothered to study the problem, the regulatory regimes generally don’t classify Bitcoin as a financial asset that needs to be heavily regulated. Generally, the thinking is that Bitcoin is a decentralized network not controlled by any one person. This makes Bitcoin more similar to a commodity like gold than a security like IBM stock.
There are plenty of other reasons why Bitcoin is legal but those are some of the main justifications for its legality. What’s important to understand is that the world doesn’t really take cryptocurrency seriously yet. Most countries are happy to keep Bitcoin legal so they can get some sweet, sweet tax money from capital gains and blockchain company profits.
What we could see is that if Bitcoin takes off in 2020 or 2021, and reaches new all-time highs, governments might start paying a lot more attention and the regulatory hammer may come down.
For example, the great Bitcoin investor Bob Loukas believes that from roughly 2022 to 2026 there will be a large Bitcoin bear market as government regulators crack the whip on the fledgling currency (although Loukas believes Bitcoin will hit $200,000 before this happens).
But governments have not ramped up regulations yet and so, apart from a handful of countries, you can safely trade Bitcoin just about anywhere without worrying about breaking the law.
Bitcoin is Legal Where I Live, But How Can I Buy it?
The easiest way to buy Bitcoin for most is by using a service, such as Cash App, Coinbase, Kraken, or Bitstamp to buy Bitcoin with government currencies like the US dollar or euro.
Where to Store your Bitcoin
Once you’ve bought your Bitcoin it’s important that you store it securely. Cryptocurrencies are designed for self-custody meaning that you take control of the funds yourself. Here’s an example.
- A self-custody Bitcoin wallet is like storing gold in a safe in your house. You can access it at any time and nobody can take the gold from you (I.e. the bank cannot seize it).
- A custodial Bitcoin wallet is like storing your gold at a bank in a deposit box. Anytime you want to access that gold you have to ask the bank’s permission.
While a custodial Bitcoin wallet is alright there’s really no reason to use one when you can self-custody your coin.
In fact, one of the best ways to store your Bitcoin, as well as any other cryptocurrencies that you’re invested in, is with the Exodus Bitcoin wallet. The Exodus wallet is one of the most well-reviewed wallets in the cryptocurrency ecosystem thanks to some important features:
- It supports over 100 crypto assets
- The design team has managed to create a wallet both easy to use as well as visually appealing
- Exodus is the only cryptocurrency wallet that supports desktop, mobile, and hardware wallet (Trezor) integration
- Exodus allows you to exchange your Bitcoin for other cryptos (and vice versa) right from your wallet - without creating an account
- You can sync your wallet balances between desktop and mobile
- There is 24/7, fast human support if you ever need help
Is Bitcoin Legal: Conclusion
So is Bitcoin legal? In most places, it is. From Germany to Canada to Thailand, investing in and trading Bitcoin is no problem.
Just remember, many countries do require that you pay taxes on any gains that you make from trading Bitcoin. Also, regulations are constantly changing and it’s smart to stay on top of the regulatory environment where you live.
Information provided is for informational purposes only and should not be considered financial advice. Investing in crypto assets is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Past performance is not indicative of future results.