Bitcoin is synonymous with the overall concept of cryptocurrency. Most people understand that it represents a digitalised version of cash, but there’s still a lot that remains unclear about how it works.
One frequent question always pops up – is Bitcoin legal? Some countries have embraced Bitcoin and created Bitcoin law and regulations.
Others don’t have any clear guidelines regarding cryptocurrency. Whilst there are those that have banned it entirely and have a negative stance on cryptocurrency in general. In this entry, we’ll dive a little deeper into the legality and illegality of Bitcoin.
A Brief Overview of Bitcoin
The origin of Bitcoin is still somewhat mysterious. Perhaps that’s why so many people who are interested in the subject wonder is Bitcoin safe and legal. While the identity of the Bitcoin creator leads to a pseudonym, Satoshi Nakamoto, no one knows who they really are.
Also, Bitcoin doesn’t exist as a physical currency. A Bitcoin is a computer file stored in a digital wallet. It’s also imperative to understand that it’s virtually impossible to forge a Bitcoin.
Every transaction is recorded, and there is no un-doing of transactions to repeat them. Furthermore, the records of transactions are a part of public lists called blockchains.
Another reason why someone might be concerned about Bitcoin law is that cryptocurrency provides anonymity. That might lead one to believe that it’s mostly used by people committing crimes. But Bitcoin is so much more than that.
Where Is Bitcoin Legal?
Is Bitcoin safe and legal everywhere? The answer is no. But in most developed countries, Bitcoin is legal. However, Bitcoin as legal currency doesn’t exist anywhere because it’s not legal tender, meaning it’s not a national currency. Instead, it’s treated as property or “private money”.
Countries like the US, UK, Canada, Australia, EU member states, Israel, Japan, and many others recognise Bitcoin as legal. However, specific regulations and the full interpretation of Bitcoin law is going to be a little different for every country.
That is why it’s essential to familiarise yourself with the regulations of where you plan to use Bitcoin. In the UK, cryptocurrency regulations are somewhat fragmented. The Financial Conduct Authority (FCA) only recently took over the jurisdiction of cryptocurrency and its powers are still limited.
They did ban amateur investors using Bitcoin in the UK. But that doesn’t include hedge funds, institutional financial firms, and professional traders who are better equipped to handle riskier financial products. This ban has a goal to protect individuals who have a somewhat naïve view of cryptocurrency.
Where Is Bitcoin Illegal?
Many Bitcoin users would love to see Bitcoin as legal money, but that is yet to happen anywhere in the world. In some countries, this idea is even further away because cryptocurrency is completely banned.
Places like Saudi Arabia, Pakistan, Bolivia, Vietnam, and several others don’t appreciate the decentralised nature of Bitcoin. Perhaps they see it as a threat to their national currency, but it could be that they’ve held off any access to Bitcoin until they write proper regulations.
On the other hand, some countries haven’t officially banned Bitcoin, but have severely restricted what you can do with it and don’t allow its use for trade or making payments. China hasn’t criminalised the use of Bitcoin, for example, but has banned crypto exchanges.
Other countries that have restrictive regulations on Bitcoin include India, Egypt, Indonesia, Zambia, Nepal, American Samoa, Ecuador, and Morocco.
Bitcoin as a Payment Method
We’re still far from using Bitcoin as legal currency, but that that doesn’t change the fact that its popularity is increasing. Cryptocurrency gives people the freedom to buy and do transactions on their own terms.
And unlike cash or other types of payment methods, Bitcoin always leaves a trail confirming that a transaction happened. So, you could argue that Bitcoin as legal money provides less opportunity for fraud. But the fact remains that even in places where Bitcoin is legal and regulated, not all shops accept it as a payment method. In fact, only a very few do.
Online businesses can add a “Pay With Bitcoin” button”, a public key as their payment method. This is equivalent to a bank account. But they also need to use a service that can produce an invoice for such purchases.
Offline, paying with Bitcoin means asking your customers in person to directly transfer funds to your digital wallet. You would have to place a notice on your shop that you accept Bitcoin payments. But keep in mind that you should only do this if you verify that Bitcoin is legal in your country of residence.
How to Acquire Bitcoin Legally?
The first step is to open a digital wallet that supports cryptocurrency, and specifically Bitcoin. There are many options out there, and not all of them will provide the same level of storage, access, and even security.
But buying Bitcoin isn’t as simple as tapping the screen a few times. Even though new options are continuously popping up, still the most common way is to choose Bitcoin Exchanges. These are platforms that allow users to trade from anywhere. But you can also use a Bitcoin ATM.
It might be a relatively new concept, but cities all over the world have implemented them, and their number is continually growing. All you really need to do is insert cash, scan your digital wallet QR code, and you’ll receive a paper receipt with the instructions on how to transfer Bitcoin funds to your wallet.
In the UK, many Bitcoin ATM operators have Bitcoin ATMs all over the country. It’s essential to keep in mind that there are certain difficulties when it comes to buying Bitcoin. How is Bitcoin legal if you can’t buy it with a credit card or PayPal?
Well, unfortunately, most Bitcoin exchanges don’t allow these payment methods. The main reason being that Bitcoin transactions are not reversible, which means it can be almost impossible to prove that any services or any products have changed hands.
Despite Its Legal Complexities, Bitcoin Is on the Rise
There is so much that is yet to be regulated when it comes to cryptocurrency. The push-back and apprehension of some governments are understandable. The instinct to protect national currency comes first. But why is Bitcoin legal in other places, then?
Countries with more stable currencies don’t see issues with allowing Bitcoin to carve a place for itself, especially when talking about professional institutions.
Still, designated organisations are yet to come up with sufficient regulations of Bitcoin, but it’s safe to say that they are coming.