Bitcoin and other cryptocurrencies have been making big waves in the headlines over the past few years. Ever since their inception about a decade ago, people have been intrigued about how they work, and what benefits they can offer. However, a large number of people still do not understand what cryptocurrency exactly is and how it functions as a financial instrument.
This is understandable, as there is still a lot of confusion about its validity as legal tender and its legitimacy in various countries across the world. It is not something you pay for and gets service in return, like Charter cable or online streaming services. Essentially, cryptocurrency is a digital currency controlled in a decentralized manner rather than by central financial authorities.
This decentralized nature has made numerous governments skeptical about cryptocurrency. This is because its transactions cannot be traced easily and might be used for nefarious purposes like money laundering or terrorist financing.
Furthermore, its prices fluctuate constantly, with no control mechanism, so its validity as legal tender is also in the air.
Another aspect that is still coming to light is the heavy environmental impact cryptocurrency mining has. These factors have led many countries to either outright ban Bitcoin and other cryptocurrencies, or legislate it in order to control mining and transactions. Here are a few countries which have deemed it illegal in their systems.
Algeria prohibited the use of cryptocurrencies in legislation passed back in 2018. This prohibition covers the sale, purchase, use, and possession of all cryptocurrencies. Algeria attributed this ban to the lack of physical support cryptocurrency has. Resultantly, any violators will be prosecuted.
The Central Bank of Iran officially banned the use and even handling of all cryptocurrencies by financial institutions and currency exchanges in 2018. It made this decision in order to curb the menaces of money laundering and terrorist financing.
As per Iraq’s anti-money laundering laws, any currency traders dealing with cryptocurrency will be prosecuted with full force. Iraq’s central bank proposed and implemented this ban, and emphasized the penalties involved.
Kuwait’s central bank and Ministry of Finance do not recognize cryptocurrency as a legal financial instrument. The central bank forbids banking sectors and companies from dealing with cryptocurrency and the ministry does not recognize commercial transactions made using it.
While there aren’t strict penalties, cryptocurrency trading and conversion are not officially recognized in the country, so transactions are not secure or official.
Qatar’s central bank issued a notice prohibiting all financial institutions in the country from using or dealing with cryptocurrency, subject to penalties. This notice categorizes Bitcoin as illegal and states its potential for being used in financial crimes. It also takes into account the volatility of cryptocurrency and firmly warns against its use.
Zimbabwe does not recognize Bitcoin as legal tender and advises against its use due to the dangers of financial crime, terrorist financing, and money laundering. The Reserve Bank of Zimbabwe issued a notice stating that due to the lack of regulation in cryptocurrency, anyone conducting transactions with it will not be protected by any financial laws in the country. They will be doing so at their own risk.
Bangladesh has had a historically hostile stance towards Bitcoin and other cryptocurrencies. Its authorities have even held meetings to crack down on people trading with Bitcoin and taking action against them. It states that Bitcoin usage violates its strict money laundering and terrorism financing laws, and is not a valid financial instrument.
Since 2017, Bitcoin has been declared illegal in Nepal. Its authorities even arrested people who were allegedly running Bitcoin currency exchanges. The country takes police action against cryptocurrency trading and does not recognize it as legal tender.
China banned cryptocurrency trading in 2019 to curb money laundering and other financial crimes. It has firm control of its financial systems and does not take a positive view towards the decentralized nature of Bitcoin. Therefore, its banking systems do not recognize Bitcoin or other cryptocurrencies.
In Vietnam, cryptocurrency trading is heavily penalized with fines of up to USD 8,700 and even imprisonment. It outlaws the issuance, supply, and trade of Bitcoin. It issued this decree in 2017 and attributed it to the lack of transparency and regulation in cryptocurrency.
However, it plans to establish a group to study the legal framework of cryptocurrency, and explore its financial potential.
Please note that these regulations and rules may change over time, as more countries look into cryptocurrency and try to incorporate them into their financial systems.
In addition, in some of these countries, individuals can still invest in cryptocurrency, as their country doesn’t recognize it officially, but won’t take action against citizens.
Look into your country’s laws before you make the leap, and see to what extent Bitcoin is legal or recognized there.