Is bitcoin legal? Cryptocurrency regulations around the world

In Canada, bitcoin and other cryptocurrencies are not classed as legal tender, but Canadians can use digital currencies to buy goods and services on the Internet and in stores. Cryptocurrencies are subject to the country’s Income Tax Act, and entities dealing in digital currencies are regulated under anti-money laundering and counterterrorism financing laws.

Across the border in the United States, the regulatory landscape is quite confusing. Laws surrounding cryptocurrency exchanges differ from state to state, while national-level regulators have differing opinions on exactly how cryptocurrencies should be treated.

For example, while the Securities and Exchange Commission considers cryptocurrencies to be securities and has been cracking down on everything from ICOs to crypto hedge funds, the Commodity Futures Trading Commission classes cryptocurrencies as commodities and allows cryptocurrency derivatives to trade publicly.

However, the 2018 Joint Economic Report from the US Congress was the first ever to include cryptocurrencies, and the next 12 months will hopefully see the US move towards a more streamlined regulatory approach.

For example, the Bolivian government has banned all cryptocurrencies, labelling bitcoin a “pyramid scheme” and has even gone so far as to arrest cryptocurrency advocates.

But things are a little different in Venezuela, where cryptocurrencies have offered a viable alternative to the fiat Venezuelan bolivar, which has been plagued by hyperinflation. The Venezuelan government has even issued its own controversial cryptocurrency, Petro, which has since been banned in the United States.

As for what the future holds, we can find some clues in a July 2018 report from the EU’s Policy Department for Economic, Scientific and Quality of Life Policies entitled “Virtual currencies and central banks monetary policy: challenges ahead”. Referring to cryptocurrencies as virtual currencies (VCs), the report states that:

“Policy makers and regulators should not ignore VCs, nor should they attempt to ban them. Both extreme approaches are incorrect. VCs should be treated by regulators as any other financial instrument, proportionally to their market importance, complexity, and associated risks.”

However, the only country to have deemed cryptocurrencies illegal was Namibia.

Despite bans at institutional and consumer levels, some Middle Eastern states are exploring the use of digital currencies within government ranks. In Saudi Arabia there are plans for a national digital currency to be traded exclusively between banks, and in July 2018, Iran confirmed that it was working on a state-issued cryptocurrency to help combat US trade sanctions. In addition, the government in Bahrain is waking up to the economic benefits of the blockchain industry and developing a "regulatory sandbox", despite locals still being prohibited from trading cryptocurrencies locally.

South Korea, the world’s largest adopter of cryptocurrencies, was initially known for its favourable legislation. However, authorities have made moves to throw cold water on the market in recent times, with new regulations in the works.

Australia quickly moved to integrate cryptocurrencies into existing systems, but several other countries in the region are considerably more cautious.

Cryptocurrency exchanges and trading are legal in countries like Australia, Singapore and New Zealand, but regulatory frameworks are still being developed.