Cryptocurrency is a digital asset that you can use for investments, trading or just simply purchasing goods and services. Unlike other existing currencies, cryptocurrency is largely unregulated, meaning the government doesn’t regulate its trade and use. That’s why a lot of countries are wary about it. But not all countries are closed-minded when it comes to cryptocurrency. In fact, there are countries who are gradually adapting their financial systems to accommodate cryptocurrency. In this article, we’ll look at five countries that are friendly to cryptocurrency, and five more that are not.
Countries that Allow Cryptocurrency
The Swiss are rich because of their lenient offshore banking laws that lead the country to notoriety, their luxury watch brands, and their chocolates. Now, the Swiss are getting richer because of their openness to cryptocurrency.
The town of Zug is slowly becoming “Crypto Valley” (an obvious homage to California’s startup haven, Silicon Valley), where cryptocurrency startups are growing exponentially. With the rate things are going, one doesn’t need to wonder why so many ICOs are popping up in the market. According to the CoinTelegraph, “Swiss-based ICOs raised about $550 million in funding, which was about 14 percent of the global ICO market, worth around $4 billion” in 2017. The government levies taxes on individuals earning large sums of income from cryptocurrency.
A lot of people believe that Bitcoin was developed by a Japanese individual who goes by the name of Satoshi Nakamoto. That remains to be proven, but there’s one thing that’s clear: Japan is a country that’s very open to the use of Bitcoin and cryptocurrency.
Japan accepted Bitcoin as a legal currency in 2016, making it the first country to do so. In April of 2017, the country enacted its Virtual Currency Act. Thankfully, the finance and tax regulations aren’t too strict and allow for Bitcoin’s value to grow. Japan is also the first country where you can buy anything with Bitcoin almost anywhere.
Australia was the second country to declare Bitcoin and other cryptocurrencies as legal tender. They made this declaration in 2017. In the same year, the government established AUSTRAC (Australian Transaction Reports and Analysis Centre) to license and regulate activity surrounding cryptocurrencies.
In the same year, Australia’s Reserve Bank was rumored to create the country’s own cryptocurrency. The plan didn’t pull through, but such openness is indicative of the bright future that cryptocurrency has in the Land Down Under.
Bitcoin ATMs can be found anywhere in Estonia, which has a government that encourages the use of blockchain for online polling. Like Australia, the Estonian government considered creating EstCoin, the country’s own cryptocurrency, as well as building a sovereign wealth fund using Bitcoin. Such bold moves are significant for a small country that’s under the strict guidance of the European Central Bank.
The premiere economic hub of Southeast Asia is slowly opening up to Bitcoin and cryptocurrency. The country’s finance minister is concerned with the risk involved using Bitcoin and cryptocurrency. On the other hand, the Monetary Authority of Singapore is open to facing that risk and has suggested placing it under its payment services regulation. Interestingly, Singapore categorizes Bitcoin as goods, not as a type of currency.
Countries Prohibiting the Use of Bitcoin and Cryptocurrencies
However, despite the transparent nature of cryptocurrencies, there are still countries that still prohibit its use. One of the main reasons for that is the lack of regulations on cryptocurrency from any central global banking body. They view this lack of regulation as unfettered openness to risk.
Here are some countries that prohibit the use of Bitcoin and cryptocurrencies. This list is as of August 2020. The legal status of Bitcoin in these countries may change anytime, based on their approach to cryptocurrency in the future.
China is one of the first countries with citizens that got into the cryptocurrency craze, and one of the first to prohibit it. As early as 2013, the People’s Bank of China banned financial institutions from handling Bitcoin transactions. A year later, it extended its ban to banks and payment companies by disallowing them from participating in the Bitcoin trade. There was also a Bitcoin mining crackdown in early 2018. Finally, crypto exchanges were closed permanently in July of 2018.
A possible reason for China’s restrictive stance on cryptocurrency is its level of privacy which will make it hard for the government to look at transactions, putting their control over their citizens at risk.
Bangladesh sees cryptocurrency as a dangerous money-laundering tool, which is why authorities actively hunt down Bitcoin traders. Bangladesh is more dangerous for Bitcoin traders because it tracks down and penalizes individuals, instead of companies.
The Ecuadorian ban on cryptocurrencies is an interesting case. In 2015, Ecuador established a national electronic money system to supplement its local currency system. Cryptocurrencies are seen as main competitors to this system that’s why they had to be banned.
Another country that’s currently banning the use of cryptocurrencies is Iran. According to the Central Bank of the Islamic Republic of Iran, cryptocurrencies need to be banned for they pose money laundering and terrorism-related risks. Iran’s cryptocurrency issues stem from deep-seated political issues more than deregulation.
Another country banning cryptocurrency to hedge against the risks of money laundering and terrorist financing is Morocco. One of the heads of Morocco’s banks is calling on the creation of a framework regulating cryptocurrency to protect consumers.
South Asian countries
The use of cryptocurrencies and Bitcoin is strictly prohibited not just in Bangladesh, but also Pakistan, and Nepal. Nepal specifically announced that Bitcoin is strictly banned in the country.
Cryptocurrency can be used in investing, trading and in purchasing certain goods and services. Transactions using cryptocurrencies like Bitcoin are recorded in public ledgers called blockchain, and these transactions are secure and transparent. Yet, there are countries that still ban cryptocurrency. Though there are a few countries that prohibit the use of Bitcoin and other cryptocurrencies, there are more countries that view them as legal. So there’s not much not be worried about.