While Bitcoin is “legal,” the truth is that in most places in the world, Bitcoin and other cryptocurrencies exist in a sort of “grey area.” Cryptocurrency is such a new technology that most governments haven’t had a chance to understand what they are, let alone how to regulate them appropriately.
However, there are a few places that we can say for sure are crypto-unfriendly. Currently, the countries that have been the most hostile toward crypto and Bitcoin (China and Russia, for example) seem to be the same countries that are quick and thorough with internet censorship and the general banning of anything that could support some “proletarian” revolution or unrest.
Countries in South America, Africa, and parts of Asia have seen a recent uptick in the use of Bitcoin and other kinds of cryptocurrency as a digital asset and as a method of international money transfer. For some underbanked regions of these continents, mobile cryptocurrency wallets act as a method of storing and investing money that was previously unavailable to inhabitants of these areas, simply because of the lack of infrastructure.
In addition to the United States, Canada, South Korea, and Australia, most of the world’s most Bitcoin-friendly countries exist within the European Union. The most Bitcoin-friendly European nations:
- The Netherlands
The United States, Australia, Canada, and the European Union seem to be taking a more balanced approach toward regulating Bitcoin and cryptocurrency in general. Cryptocurrency is certainly not illegal in any of these places, and it is unlikely to be; however, there are not very many (if any) laws that are specifically designed to protect cryptocurrency users.
These five entities appear to have an understanding that cryptocurrency cannot be banned or stopped, and that it should ultimately be legitimized and integrated into existing financial systems.
All of this being said, the attitude regarding cryptocurrency does vary from country to country or state to state. To check the legal status of Bitcoin and cryptocurrency in your country, click here.
Should Cryptocurrency Be Regulated?
Many of the early adopters and investors of Bitcoin and cryptocurrency were so-called “anarcho-capitalists” who were drawn to the idea of a blockchain-based currency because of the pathway it provided away from big banks, government institutions, and credit card companies. These people argued (and argue) that cryptocurrency should not (and can not) be regulated because of its nature as a decentralized, anonymous platform for transacting and investing.
However, there are some benefits associated with the push to regulate Bitcoin and other kinds of cryptocurrency. For one thing, crypto traders and investors may be safer under regulatory measures, and more likely to be legally entitled to some remuneration should an ICO or exchange be hacked.
The other result of cryptocurrency regulation is that more users, investors, and traders are more likely to join the party once regulations have been put in place. For many, regulating cryptocurrency is the thing that legitimizes it as an asset or means-of-payment.
In a sense, this is a case when “what’s good for one is what’s good for all”; the more people that use crypto, the higher its value as an asset. For example, Japan’s Virtual Currency Act, which was passed in 2017, is often cited as the most significant attributing factor to the astronomical rise in the value of Bitcoin and Ethereum.
Crypto industry heads in countries like India recognize the positive aspects of crypto legislation that make regulation so appealing. A draft of crypto-related laws is currently being passed through the Indian legal system. Even before the Indian government began the process of legislating crypto, however, Indian crypto industry leaders independently formed DABFI (the Digital Asset and Blockchain Foundation of India), which acted as an independent cryptocurrency regulatory committee.
Harsh Legal Trends Rising in China, Russia, South Korea
There has been a recent push in some eastern countries to crack down hard on all things crypto. At the beginning of September, China announced a sudden ban on ICOs; within weeks, the ban had expanded. All domestic Chinese cryptocurrency exchanges were demanded to close down all operations. While rumors are circulating that China may lift the ban, the legal drama is likely to continue (at least for a while).
A similar ban was announced in South Korea at the end of September when the South Korean financial regulator said that “stern penalties” would be allocated to companies issuing ICOs.
Russia has also been sending a lot of mixed messages about its stance on cryptocurrency; it seems that the Russian government is either for or against it depending on the weather and the time of day. However, it does seem that the government is leaning towards tighter regulations on crypto trading for “ordinary people.” Meanwhile, the Russian government has unveiled the so-called “CryptoRuble,” which will be Russia’s national cryptocurrency.
Share Your Experiences
What do you think the legal future of cryptocurrency will be? Should it be regulated and legitimized? Should it be banned? Should the governments of the world keep their hands off? We would love to hear what you think.
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