Without a doubt, the cryptocurrency industry has flourished in recent years. The world is full of cryptocurrency enthusiasts who love to invest in cryptocurrency and discover new altcoins that are worth their time and money. However, did you know that there are countries where crypto is illegal?
Although at first glance, such a thing seems to make no sense, indeed, there are countries where cryptocurrencies are prohibited. However, the question arises: why would someone ban them? Why do cryptocurrencies seem bothersome when they are very profitable and safe?
First of all, we are going to give a brief and clear explanation of what cryptocurrencies are and then we will proceed to explain why cryptocurrencies are illegal in some countries and what a ban means in this case.
A brief introduction to cryptocurrencies: When did they originate and why?
A cryptocurrency, or simply crypto, represents a specific collection of binary data created to function as a medium of exchange. Records of ownership of individual coins are stored in a ledger, a group of numerous accounts in which transactions are recorded.
Central authorities do not issue cryptocurrencies.
Another crucial thing to remember is that cryptocurrencies are not issued by central authorities nor do they exist in physical forms, such as paper money. Typically, cryptocurrencies use decentralized control that is opposed to CBDC, a central bank digital currency.
Therefore, once a particular cryptocurrency is issued by an issuer or is created or minted prior to issuance, it is commonly considered centralized. On the other hand, when implemented with decentralized control, each crypto works through distributed ledger technology, most commonly a blockchain that serves as a database of public financial transactions.
So once you have understood everything there is to know about cryptocurrencies, you are probably wondering why do some countries ban cryptocurrencies? What are those countries where crypto is illegal and why?
The controversy behind Bitcoin and Altcoins
It is well known that since its inception in 2009, Bitcoin has been considered controversial. Criticized mostly for its volatility, its use in nefarious transactions, and the enormous use of electricity to mine it, it is generally seen by tech enthusiasts and developers as a great thing to do during an economic downturn.
However, as more and more people tend to invest in cryptocurrencies, these problems have manifested in a series of restrictions on use. The question is this. The illegal status of Bitcoin and altcoins, which refers to alternative currencies to Bitcoin, varies from country to country. It is something that will be constantly changing or is adequately defined.
Although a significant number of countries around the world do not consider Bitcoin to be illegal, its status as a commodity or means of payment varies with many different regulatory implications.
It is essential to know that some countries have put limitations on how people can use Bitcoin. These limitations are usually banks that prohibit their clients from carrying out cryptocurrency transactions. In some countries, they have banned the use of Bitcoin and cryptocurrency outright, with severe penalties for every person who is transacting cryptocurrency.
In which countries is crypto illegal?
Since the ban applies from one country to another, we would like to present the countries with a specifically strained relationship with cryptocurrencies. Here is the list of some of the most significant countries where crypto is illegal:
Algeria
Algeria currently prohibits people from using cryptocurrencies due to a 2018 financial law that made cryptocurrencies illegal to use, hold, buy, or sell virtual currencies.
Bolivian.
Since 2014, there has been a total ban in Bolivia on the use of Bitcoin and other unregulated altcoins. The Central Bank of Bolivia has issued a resolution that prohibits it.
China.
In China, the deputy director of the PBoC Financial Consumer Rights Protection Bureau stated that cryptocurrencies are speculative assets. He also warned people to “protect your pockets.”
On September 24, the PBoC outright banned cryptocurrency transactions in the country. However, it will be one of the first central banks in the world to issue its digital currency and have full control over its transactions.
Colombia.
Financial institutions in Colombia cannot facilitate Bitcoin transactions. In 2014 the Financial Superintendence stated that they would not “protect, invest, intermediate or also manage virtual money operations at all.”
Egypt.
In 2018, Dar al-Ifta, Egypt’s main Islamic advisory body, issued a religious decree classifying Bitcoin transactions as “haram.” That is, something that Islamic law prohibits.
Indonesia.
Among other countries where cryptocurrencies are illegal is also Indonesia. Since January 1, 2018, the Indonesian central bank issued a regulation that prohibits the use of cryptocurrencies in general as a means of payment.
India.
India’s Prime Minister Narendra Modi stated that he wanted to make sure that cryptocurrencies “do not end up in the wrong hands that can ruin our youth.” That is why he criminalized the possession, issuance, mining, trade and transfer of crypto assets.
On November 23, 2021, the Indian government announced its mission to introduce a new bill in the Indian Parliament that will establish a new centrally backed digital currency and ban almost all cryptocurrencies.
Iraq.
Although the Iraqi authorities have tried to ban cryptocurrencies and block their exclusive use, it is no secret that cryptocurrencies are becoming incredibly popular in Iraq. In 2017, the Iraqi central bank issued a statement banning its use.
The Kurdistan Regional Government Ministry of Interior, in early 2021, issued a guideline to prevent exchanges and stockbrokers from handling cryptocurrencies.
Nepal.
In August 2017, Rastra Bank declared Bitcoin illegal in Nepal. That statement put Nepal on the list of countries where cryptocurrencies became generally banned.
North Macedonia
It turns out that North Macedonia is the only European country at the moment that has an official ban on cryptocurrencies like Ethereum, Bitcoin, etc.
Russia.
In Russia, cryptocurrencies are legal. However, there is an ongoing conflict against its use. The country passed its first laws to regulate cryptocurrency in July 2020, designating cryptocurrencies as taxable goods for the first time.
The law went into effect in January 2021 and also prohibits Russian officials from owning cryptocurrency in general. Vladimir Putin, the president of Russia, has often linked cryptocurrencies to criminal activity , calling for increased attention to cross-border cryptocurrency transactions.
The attorney general announced a new piece of legislation in July. This particular legislation will allow Russian police to seize cryptocurrencies that are deemed to be obtained illegally, deducting their use in corruption.
Turkey.
A lot of people have switched to cryptocurrencies since the Turkish lira crashed. On April 16, 2021, the Central Bank of Turkey issued a rule that prohibited the use of cryptocurrencies to purchase goods and services, directly or indirectly.
A day later, Recep Tayyip Erdogan, the Turkish president, issued a decree making cryptocurrency exchanges part of a list of activities subject to terrorist financing and anti-money laundering regulations.
Vietnam.
In Vietnam, its State Bank has declared the supply, use and issuance of Bitcoin and other altcoins illegal as a means of payment. They are subject to fines of between 5,600 euros (150 million VND) and 7,445 euros (200 million VND).
However, the Vietnamese government does not ban Bitcoin trading or hold them as assets.
Conclusion: Why are cryptocurrencies illegal in some countries?
As we have had the opportunity to verify, these countries belong to countries in which cryptocurrencies are illegal due to their decentralized nature and are suspicious of their volatility. Some countries go further and accuse cryptocurrencies of being a threat to their current monetary systems, while others are concerned about their use to support the following activities:
- money laundering
- Traffic
- Terrorism
Despite this, Bitcoin and other cryptocurrencies are well received in many other countries of the European Union, and in Australia.
