15 Countries Where Bitcoin is Legal and Illegal

Published on January 13, 2023 at 8:51 am by Ramish Cheema in Bitcoin, Lists, News

In this piece, we will take a look at 15 countries where bitcoin is legal and illegal. For more countries, head on over to 5 Countries Where Bitcoin is Legal and Illegal.

2022 has been a rough year for businesses, hedge funds, and the stock market but all these have not suffered as much as the cryptocurrency sector. Heralded at one time as the end of traditional fiat money, cryptocurrencies have taken a beating this year as rising interest rates and a souring economic sentiment led investors to flee from the highly speculative market to safe haven investments such as the U.S. dollar and bonds. As an example, Bitcoin, which is the world’s leading cryptocurrency, is down by a studding 65% year to date as it nears levels before the pandemic crypto rush that saw capital flow to it from falling stock markets and stimulus checks.

At the same time, as cryptocurrencies surged, global momentum to make government let businesses accept them as a mode of payment and even as a legal tender grew alongside. However, government warnings about the risk of cryptocurrencies were also proven right just last month when the collapse of the cryptocurrency exchange FTX Trading Ltd. led to billions of dollars in losses for its customers. While initially portrayed as an ‘honest mistake’, charges filed by the Securities and Exchange Commission (SEC) against the firm’s founder and former chief executive officer Sam Bankman-Fried claim otherwise. According to a Reuters report, the main reason FTX collapsed was that, allegedly, Bankman-Fried and associates made changes to its algorithm which allowed the exchange’s partner hedge fund Alameda Research to continue borrowing from it to make speculative investments even if Alameda’s investments and its collateral dropped in value. The vicious cycle that bankrupted the firm started when Alameda’s FTT tokens, issued by FTX, collapsed in value after Coinbase sold its holdings. This shattered consumer confidence in FTX and led to a massive withdrawal of consumer funds. However, since FTX had lent this money to Alameda for the investments, it was unable to cough up the cash, which then led to its demise.

The collapse of FTX also knocked the wind out of Bitcoin. After dropping from this year’s peak of ~$47,000 to a ~$20,000 level that most analysts thought was the proverbial floor since it cost roughly the same to mine a Bitcoin, the currency would take another beating soon. The drama erupted on November 6th, when Coinbase announced its decision to sell the FTT holdings. Within the next three days as FTX’s customers fled, Bitcoin also dropped from $20,905 to $15,757 – a level it was at during November 2022 – effectively wiping out two years of gains and profits for anyone who had entered trading during this time period. Since that fateful day, the currency is up by less than a thousand dollars, with Bitcoin currently worth $16,456 at the time of writing (see best bitcoin stocks to buy).

Bitcoins

Our Methodology

For this piece, we have divided the countries into two groups – where Bitcoin is implicitly legal and sometimes also a legal tender, and where it is absolutely banned. The countries where it is banned are listed first. Additionally, the legal frameworks of all countries analyzed for the piece do not differentiate between Bitcoin and other cryptocurrencies, except for those countries that have made Bitcoin a legal tender.

15 Countries Where Bitcoin is Legal and Illegal

15. People’s Republic of China

Bitcoin Legal or Illegal: Illegal

The People’s Republic of China is the world’s largest economy by one measure and was one of the most popular regions for Bitcoin mining companies this decade due to the widespread adoption of technology. However, spurred into action due to the high environmental costs of mining and illicit activity, the Chinese government banned all cryptocurrency transactions in the country in 2021 when it forbade banks and other institutions from providing services such as clearing and exchange and made mining in the country illegal. However, such was the Bitcoin craze back then that the market simply shrugged off the announcement, and Bitcoin price continued to rise. Yet even though cryptocurrency trading is banned, the holding of it as an asset is protected by Chinese law according to a lawyer.

14. State of Qatar

Bitcoin Legal or Illegal: Illegal

The state of Qatar is a Western Asian country located in the Middle East. Bitcoin and other cryptocurrencies are completely banned in the country’s Qatar Financial Center (QFC). Qatar states that the reason behind the ban is weak compliance with know your customer (KYC) and anti money laundering (AML) regulations. These regulations are enforced globally by the Financial Action Task Force (FATF) and they require banks and other financial services providers to verify their customer profiles and determine the source of funds that they are transferring inside and outside the country. In fact, the Qatari Central Bank was quick to warn citizens in May 2022 about dealing with any unregulated financial firm after CoinMENA, a Muslim law compliant exchange launched in the country. Qatar is a Muslim country and follows the Sharia Law.