Bitcoin has been controversial since its inception in 2009, as have subsequent cryptocurrencies that followed in its wake.
While widely criticized for its volatility, use in nefarious transactions, and exorbitant use of electricity to mine it, cryptocurrencies, particularly in the developing world, are seen by some as a safe haven during economic storms.
El Salvador became the first country to make it legal tender in September 2021, now followed by the Central African Republic in April this year.
But as more people turn to crypto as an investment or as a lifeline, criticism of crypto continues to manifest itself in a series of restrictions on its use.
The legal status of Bitcoin and other altcoins (alternative currencies to Bitcoin) varies substantially from country to country, while in some, the relationship has not yet been properly defined or is constantly changing.
While most countries do not make the use of Bitcoin illegal, its status as a means of payment or as a commodity varies depending on different regulatory implications.
Some countries have placed limitations on how Bitcoin can be used, with banks prohibiting their customers from transacting with cryptocurrencies. Other countries have banned the use of Bitcoin and cryptocurrencies altogether with heavy penalties for anyone transacting with cryptocurrencies.
These are the countries that have a particularly strained relationship with Bitcoin and other altcoins.
Algeria currently bans the use of cryptocurrencies following the passage of a financial law in 2018 that made it illegal to buy, sell, use or hold virtual currencies.
There is a total ban on the use of Bitcoin in Bolivia since 2014. The Central Bank of Bolivia issued a resolution banning it and any other currency not regulated by a country or economic zone.
China has cracked down on cryptocurrencies with increasing intensity throughout 2021. Chinese officials have repeatedly issued warnings to their people to stay away from the digital asset market and have clamped down on mining in the country, as well as against currency exchanges in China and abroad.
On Aug. 27, Yin Youping, deputy director of the People’s Bank of China (PBoC) Financial Consumer Rights Protection Office, referred to cryptocurrencies as speculative assets and warned people to “protect your pockets.”
Efforts to undermine Bitcoin, a decentralized currency outside the control of governments and institutions, are largely seen as an attempt by Chinese authorities to float their own electronic currency.
The PBoC is seeking to be one of the first major central banks in the world to launch its own digital currency, and in doing so could more closely monitor the transactions of its people.
On September 24, the PBoC went further and totally prohibited cryptocurrency transactions in the country.
In Colombia, financial institutions cannot facilitate Bitcoin transactions. The Financial Superintendency warned financial institutions in 2014 that they cannot “protect, invest, intermediate or manage virtual money operations.”
Egypt’s Dar al-Ifta, the country’s top Islamic advisory body, issued a religious decree in 2018, classifying Bitcoin transactions as “haram,” something prohibited by Islamic law. While not binding, Egypt’s banking laws were tightened in September 2020 to prevent the trading or promotion of cryptocurrencies without a license from the Central Bank.
Bank Indonesia, the country’s central bank, issued new regulations banning the use of cryptocurrencies, including Bitcoin, as a means of payment from January 1, 2018.
Bitcoin has a complex relationship with the Iranian regime. To evade the worst impact of crippling economic sanctions, Iran turned to the lucrative practice of Bitcoin mining to finance imports.
While the Central Bank prohibits the trading of cryptocurrencies mined abroad, it has encouraged Bitcoin mining in the country with incentives.
Some 4.5 percent of the world’s Bitcoin mining takes place in Iran, which, according to blockchain analytics firm Elliptic, could generate revenue of more than $1 billion.
For the cryptocurrency industry to flourish, Iran has offered cheap energy to licensed miners, but requires that all mined cryptocurrencies be sold to the Central Bank.
However, unlicensed mining consumes more than 2 GW from the national grid every day, causing power outages.
To this end, the Iranian authorities banned Bitcoin mining for four months until September 22.
India is becoming increasingly hostile towards cryptocurrencies. On November 23, the government announced its intention to submit a new bill to the Indian parliament that would establish a new central bank-backed digital currency, as well as ban almost all cryptocurrencies.
Earlier this year, it had considered criminalizing the possession, issuance, mining, trading, and transfer of crypto assets. Prime Minister Narendra Modi said that he wanted to make sure that crypto “does not end up in the wrong hands, which can spoil our youth.”
Despite sustained efforts by the authorities to block their use, cryptocurrencies are becoming increasingly popular in Iraq. The Iraqi Central Bank has been particularly hostile, issuing a statement in 2017 banning its use that is still in place to this day. In early 2021, the Interior Ministry of the Kurdistan Regional Government issued similar guidance to prevent brokerage houses and money brokers from handling cryptocurrencies.
While holding or trading cryptocurrency assets is not yet banned in Kosovo, the government announced a ban on crypto mining in early January, blaming a growing energy crisis. The country, which unilaterally declared independence in 2008, is facing a historic power shortage with scheduled power cuts now being implemented to conserve energy. In another bid to curb energy waste, Economy Minister Atrane Rizvanolli announced a long-term ban on crypto mining in the country. Police have been tasked with enforcing the ban, as well as flagging mining locations across the country.
The Nepal Rastra Bank declared Bitcoin illegal as of August 2017.
North Macedonia is the only European country so far that has an official ban on cryptocurrencies, such as Bitcoin, Ethereum and others.
Russia has a checkered association with cryptocurrency, made even more complicated by its current invasion of Ukraine.
While cryptocurrencies are not banned in Russia, until recently there was a conflict against their use. Now, some see him as a savior to help the country evade heavy financial sanctions imposed by the West.
Russia passed its first laws to regulate cryptocurrencies in July 2020, which for the first time designated cryptocurrencies as taxable property.
The law, which came into force in January this year, also prohibits Russian officials from owning crypto assets.
Russian President Vladimir Putin has repeatedly linked cryptocurrencies to criminal activity, calling for greater attention to cross-border crypto transactions in particular.
In July, the attorney general announced proposed new legislation that would allow police to seize cryptocurrency deemed illegally obtained citing its use in bribes.
However, as the third largest mining hub in the world according to Cambridge University data, there are fears that Russia may now embrace cryptocurrencies and harness its natural resources to exploit Bitcoin mining rather than undermine it.
Many in Turkey turned to cryptocurrencies when the value of the Turkish lira plummeted. With some of the highest usage levels in the world, the regulations came swiftly this year as inflation peaked in April.
On April 16, 2021, the Central Bank of the Republic of Turkey issued a regulation prohibiting the use of cryptocurrencies, including Bitcoin, directly or indirectly, to pay for goods and services. The next day, Turkish President Recep Tayyip Erdoğan went further and issued a decree that crypto exchanges to a list of companies subject to anti-money laundering and anti-terrorist financing regulations.
The State Bank of Vietnam has declared that the issuance, supply and use of Bitcoin and other cryptocurrencies are illegal as a means of payment and are subject to fines ranging from VND 150 million (€5,600) to VND 200 million. (€7,445). ).
However, the government does not prohibit the trading of Bitcoin or hold them as assets.