Bitcoin and other blockchain-based cryptocurrencies are revolutionary thanks to their decentralized and unregulated nature. Not tied to any central bank or government, these virtual currencies have begun to redefine the fintech sector in a number of ways, but their iconoclastic properties mean they inhabit a murky stretch of legal landscape.
As virtual currencies that permeate naturally across geopolitical borders, cryptocurrencies are relatively unfazed by regulation or jurisdiction. From a crypto enthusiast’s point of view, if you have access to the internet you should have access to blockchain-based currencies. However, this is functionally not the case in specific places around the globe, as there have been governmental efforts to regulate cryptocurrency.
However, these regulations are not comprehensive nor universal. In fact, laws governing cryptocurrencies can and do differ from country to country (or even state to state, such as in the US). Therefore, the best way to provide information regarding the safety and legality of trading cryptocurrency is to provide a comprehensive, geographically-based list.
Below I provide such a list, breaking the world down into rough geographical regions. It would be wise to take steps to ensure that any trading strategies you adopt for cryptocurrencies take its legality in your region into account.
Europe
UK
The Financial Conduct Authority, one of the UK’s many watchdogs, has remarked that it’s keen to classify bitcoin (and probably other cryptocurrencies) as a commodity. While there’s no active regulation at the moment, there’s likely to be some coming down the pike.
European Union
The EU is being rather cautious about cryptocurrencies. The European Central Bank is certainly concerned about individuals using crypto as a money laundering scheme. However, according to Mario Draghi, ECB president, the cryptocurrency landscape is seen as having not matured sufficiently to warrant regulating just yet.
Africa
Morocco
If you’re Moroccan, you’re out of luck. The country’s foreign exchange authority declared in late 2017 that transactions with foreign countries in any cryptocurrency of any kind is a foreign exchange violation. Being caught trading while in Morocco could result in some serious penalties.
Namibia
If you thought the Moroccan government was harsh, you’re in for an unpleasant surprise. Namibia’s government has out-and-out declared that the use of cryptocurrency of any kind is expressly illegal within the country.
Nigeria
There’s no official stance on cryptocurrencies in Nigeria, as the government is still working on a white paper to establish one. This means there’s no regulation of crypto within the country, with the caveat that Nigerian banks are banned from handling any sort of virtual currency.
South Africa
South Africa is in “sandbox” mode at the moment when it comes to cryptocurrency regulation. In late 2017, the South Africa Reserve Bank partnered with Bankymoon, a blockchain services provider based in the country, to begin test-driving a number of different regulations. No overarching regulations will be put into place until these experiments are concluded.
Zimbabwe
Zimbabwe is still exploring its options when it comes to regulating bitcoin and other cryptocurrencies. A central bank official went so far as to say that crypto isn’t “actually legal” within the country. What that means exactly is anyone’s guess, however, since there is a crypto-currency exchange platform (Golix) currently operating in the country.
North America
Canada
Cryptocurrencies like bitcoin are not considered legal tender within Canada, and the government has determined that crypto transactions may be taxable under certain situations. Additionally, any crypto-based businesses operating in Canada are required to comply with anti-money laundering requirements. Other than that, Canadians are welcome to use cryptocurrencies in their daily lives.
United States of America
The approach to cryptocurrency in the US is quite ad hoc. On the federal level, the US Securities and Exchange Commission is concerned with whether bitcoin assets can be considered securities. If so, they’re likely to be regulated within an inch of their lives. In January, the SEC took the unprecedented step of freezing the assets of AriseCoin after it raised more than $600 million through an allegedly fraudulent initial coin offering (ICO).
Most US states don’t have comprehensive crypto laws on the books. A notable exception is New York, which has a regulatory framework, called the BitLicense, that requires crypto companies to comply with some very stringent requirements. Coinbase, one of the largest crypto exchanges in the world, is one of New York’s only BitLicense holders.
Central and South America
Argentina
There are no laws on the books in Argentina that would limit, regulate, or curtail crypto activities. However, the country’s central bank hasn’t been shy in issuing warnings on the dangers of an unregulated currency like bitcoin.
Bolivia
Since 2014 there has been a general ban on any type of currency not expressly approved by the Bolivian government; this includes cryptocurrencies. In mid-2017, the Bolivian Financial System Supervision Authority arrested 60 people for activity relating to cryptocurrency investment.
Ecuador
Ecuador’s National Assembly banned decentralized digital currencies in 2014, going so far as to call out bitcoin in particular.
Mexico
As of early 2018, Mexico is in the process of passing laws to regulate fintech including cryptocurrency. Local crypto services that operate within Mexico will be subject to regulation under the country’s central bank. Cryptocurrencies will be considered commodities, not legal tender. The Mexican government’s approach is similar to Canada in that it requires anti-money laundering protections be put in place at Mexican crypto companies.
Asia
Australia
Cryptocurrency exchanges operating in Australia need to be registered with the government. However, besides this there’s no actionable regulation on using cryptocurrency for payment. Crypto businesses in the country have to comply with anti-money laundering laws passed in December 2017.
China
While it hasn’t banned cryptocurrencies outright, China has taken a strict approach to cryptocurrencies including banning ICOs in late 2017, cracking down on bitcoin miners in early 2018, and freezing the bank accounts of cryptocurrency exchanges located in Hong Kong. It appears that Chinese authorities are moving to “ban all crypto-related commercial business including banning and blocking both domestic and offshore cryptocurrency trading platform websites.” Further regulation is likely.
India
Cryptocurrencies are not considered legal tender in India. However, the government hasn’t taken any action to regulate or ban them. Several government warnings have been issued about the dangers of crypto.
Japan
Japan is the first country to make bitcoin legal tender. After Japan’s largest crypto exchange, Coincheck, had half a billion worth of cryptocurrency stolen in January, there are moves towards increased regulation.
Malaysia
In February 2018, Malaysia passed new crypto regulations that deal with Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT). Malaysian virtual currency exchanges are required to follow “Know Your Customer” rules including collection of ID documentation.
Russia
Russian president Vladimir Putin has gone on record saying that he’s strongly in favor of crypto regulation, and Russia has now issued a draft law for the regulation of cryptocurrencies and ICOs.
South Korea
Anonymous cryptocurrency accounts are illegal inside South Korea in an effort to curb money laundering or tax evasion. A crackdown on local crypto exchanges may also be looming within the country.
Singapore
There’s no plan to regulate cryptocurrencies in Singapore at the moment. The Monetary Authority of Singapore has advised the public to act with extreme caution if they decide to invest in cryptocurrencies. Singapore’s Deputy Prime Minister Tharman Shanmugaratnam has made it clear that “Singapore’s laws do not make any distinction between transactions effected using fiat currency, virtual currency or other novel ways of transmitting value … when it comes to money laundering or terrorism financing [regulation]”.
Thailand
Thailand, as of March 2018, has issued draft legislation to regulate cryptocurrencies and ICOs. The drafts show that Thailand plans to impose a capital gains tax of up to 15% on “digital asset”. Crypto is not considered legal tender, and Thai banks are not allowed to be involved in cryptocurrency transactions.
Catherine Tims is the owner of Ivy League Content, and freelances for business clients who need highly-researched articles. You can follow her on twitter @ivyleaguewriter
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