Cryptocurrency countries: In which countries is crypto legal?
While some countries welcome it, others do not. Our global guide covers it all
- Changing patterns
- Jamaica’s response
- China’s strategy
- Crypto unfriendly countries
- Crypto friendly countries
As trading in cryptocurrencies increases and they become more widely understood, some regimes around the world have become more hostile to crypto. There is, however, also a growing number of crypto-friendly countries.
First, though, it is worth reviewing some of the countries where the authorities are slowly trying to change their relationship with crypto.
In July 2021, Vietnam’s prime minister, Pham Minh Chinh, asked the country’s central bank to test out its own decentralised blockchain-based currency. The pilot scheme is due to run for close to two years and coincides with the Communist country’s plans to digitise much of the government’s infrastructure and study and develop artificial intelligence, virtual and augmented reality, and big data. The announcement, which was reported by Vietnam News, was made after a finance ministry research group reviewed virtual assets and cryptocurrencies, and Vietnam’s legal position towards them.
This move marks something of an about-turn in Vietnam’s relationship with cryptocurrency. In 2018, the country banned the use, trade, and supply of crypto in a move which, the government said, would crack down on money laundering. The law still allowed people to own, trade, and invest in cryptocurrencies, however, meaning its crypto investors have been operating in a grey area since the clampdown. With the Vietnamese government also now pushing to make more of its citizens use non-cash payment methods, it will be interesting to see how these new developments pan out and affect the law.
Meanwhile, in the Caribbean, Jamaica looks set to take its first steps into the world of cryptocurrency. Earlier in July, the governor of the Bank of Jamaica (BOJ), Richard Byles, revealed that in August the bank will start the roll-out of a new digital currency, the central bank digital currency, or CBDC.
According to a report in the Jamaica Observer, he said:
“We’re currently looking at all the technical sides of the system and we have a sandbox in the bank that we have the whole infrastructure in. As we work through the technical minting of the currency, we have to test it rigorously as a pilot and that we’ll do in August."
“In September to December, we’ll be recruiting more of the [local commercial] banks to come on board and then we’ll gradually expand the pilot out into a full-fledged launch of the CBDC.”
Byles said that the central bank digital currency would be only made available to licensed banks, deposit takers and authorised payment service providers. He said:
“The financial institutions will mint and sell CBDC to businesses and individuals at a rate of $1:1 CBDC. However, the financial institutions will hold the CBDC in digital wallet accounts at their respective banks for customers to access in order to make purchases or receive payments from mobile phone to mobile phone.”
The BOJ’s move has been some time in the making, with the bank announcing in March that it would be working with the Irish company eCurrency Mint to set up the scheme. This came after a bank-backed campaign in 2017 to raise awareness of cryptocurrencies.
Another country working on its own CBDC is China. This may seem odd to anyone who has been following recent cryptocurrency developments. The Beijing government has been cracking down on crypto operations in the country, including trading and mining. As around 65% of bitcoin mining takes place in China, the move exacerbated the crypto crashes of late May 2021. Look closely, however, and the picture changes.
In June 2021, six of China’s leading banks, including the Industrial and Commercial Bank of China and the Bank of Communications, were instructed to begin promoting digital yuan wallets to as many as 300 people per year. In return for signing up, customers were offered an odd assortment of incentives, which according to a CoinTelegraph report included “laundry detergent, data cables, cardholders, Chinese knots, umbrellas and tissues.”
The move to introduce a Chinese CBDC comes as the Beijing authorities attempt to take control of the country’s digital payments. At present, around 98% of all mobile transactions involve private companies, including AliPay and WeChat.
Crypto unfriendly countries
Other countries have blocked the use of crypto altogether. These include Bolivia, which became the first country to issue an absolute ban on crypto when its central bank ruled against holding any currencies not regulated or issued by the country’s government; Nepal, which banned all transactions relating to bitcoin in 2017; and the North African states of Algeria and Morocco. In Egypt, the country’s leading Islamic legal advisory body, Dar al-Ifta, initially decreed that dealing in crypto was haram, or forbidden under Islamic law. This law was changed slightly in 2020 to say that issuing, dealing or promoting cryptocurrencies was illegal without a license from the central bank of Egypt.
There are places where the rules are ambiguous about cryptocurrency. Countries such as Pakistan and the United Arab Emirates (UAE) fall into this category. In December 2020, the State Bank of Pakistan (SBP) said that, while there was no regulation of cryptocurrency in the country, it was not illegal. In the same month, however, the state government of Khyber Pakhtunkhwa, in north-west Pakistan, explicitly voted to make crypto legal.
In the UAE, the legislation appears to contradict itself. On the one hand, the country’s Securities and Commodities Authority published a framework for people who wanted to trade and use crypto but, on the other hand, the central bank has prohibited transactions in what it calls virtual currencies.
There are also places where there are heavy restrictions, but not outright bans on cryptocurrency. Countries such as Bangladesh, Cambodia, Canada, China, Colombia, Ecuador, Iran, Jordan, Nigeria , Qatar, Russia and Taiwan, have rules where possession of crypto is not illegal as such, but there are bans on banks facilitating transactions in crypto. In Vietnam, cryptocurrency falls within a grey area, while in Indonesia the country’s central bank instituted a ban on crypto as a payment tool. In April 2021, Turkey’s central bank banned people from using cryptocurrency or crypto assets to pay for goods and services.
In a nutshell, it’s like this:
Crypto friendly countries
On the other hand, some crypto-friendly countries have taken a proactive approach to the subject. Some even offer tax exemptions for cryptocurrency. These include:
The nations shown above may be the most crypto-friendly countries.
Most other nations do allow their citizens to trade, mine, and invest in cryptocurrency although these dealings are subject to tax, so if you want to know in which countries is cryptocurrency legal, the answer is most of them.
The official line used by most countries banning cryptocurrencies is because they are unregulated, leading to concerns about fraud, money laundering and the potential destabilization of fiat currencies.
Crypto is banned outright in Bolivia, Nepal, Algeria and Morocco. There are significant legal restrictions in Bangladesh, Cambodia, Canada, China, Colombia, Ecuador, Egypt, Indonesia, Iran, Jordan, Nigeria, Qatar, Russia, Taiwan, Turkey and Vietnam. The law in Pakistan and the UAE is unclear and ambiguous.