15 countries where Bitcoin is legal and illegal

by James · February 10, 2023

In this piece, we’ll take a look at 15 countries where bitcoin is legal and illegal. For more countries, go to 5 countries where Bitcoin is legal and illegal.

2022 has been a tough year for corporates, hedge funds and the stock market, but all of these have not suffered as much as the cryptocurrency sector. Once heralded as the end of traditional fiat money, cryptocurrencies have taken a beating this year as rising interest rates and sour economic sentiment sent investors fleeing the highly speculative market to safe-haven investments such as the US dollar and bonds. As an example, Bitcoin, the world’s leading cryptocurrency, is down 65% so far this year as it nears levels before the pandemic crypto rush that saw capital pour into it from falling stock markets and stimulus checks.

At the same time, as cryptocurrencies rose, global momentum grew to get governments to allow businesses to accept them as a form of payment and even as legal tender. However, the government’s warnings about the risks of cryptocurrencies were also proved right last month when the collapse of cryptocurrency exchange FTX Trading Ltd. led to billions of dollars in losses for customers. Although initially portrayed as an “honest mistake,” charges filed by the Securities and Exchange Commission (SEC) against the firm’s founder and former CEO Sam Bankman-Fried claim otherwise. According to a Reuters report, the main reason FTX collapsed was that Bankman-Fried and associates allegedly made changes to the algorithm that allowed the exchange’s partner hedge fund Alameda Research to continue borrowing from it to make speculative investments even as Alameda’s investments and securities fell in value. The vicious circle that bankrupted the firm started when Alameda’s FTT tokens, issued by FTX, collapsed in value after Coinbase sold its holdings. This shattered consumer confidence in FTX and led to a massive withdrawal of consumer funds. However, since FTX had loaned this money to Alameda for the investments, it was unable to cough up the cash, causing it to go bankrupt.

The collapse of FTX also knocked the wind out of Bitcoin. After falling from this year’s peak of ~$47,000 to a ~$20,000 level that most analysts believed to be the proverbial floor since it cost about the same to mine a Bitcoin, the currency would soon take another beating. The drama erupted on November 6, when Coinbase announced its decision to sell its FTT holdings. Over the next three days as FTX’s clients fled, Bitcoin also fell from $20,905 to $15,757 – a level it was at during November 2022 – effectively wiping out two years of gains and profits for anyone who had entered the trade during this time period. Since that fateful day, the currency has gained less than a thousand dollars, with Bitcoin worth $16,456 at the time of writing (see the best bitcoin stocks to buy).

15 countries where Bitcoin is legal and illegal

Bitcoins

Our methodology

For this piece, we have divided the countries into two groups – where Bitcoin is implicitly legal and sometimes legal tender, and where it is absolutely prohibited. The countries where it is prohibited are listed first. In addition, the legal frameworks for all the countries analyzed for the piece do not distinguish between Bitcoin and other cryptocurrencies, except for those countries that have made Bitcoin a legal tender.

15 countries where Bitcoin is legal and illegal

15. People’s Republic of China

Bitcoin legal or illegal: illegal

The People’s Republic of China is the world’s largest economy by one measure and was one of the most popular regions for Bitcoin mining companies this decade due to the widespread adoption of the technology. But spurred into action by the high environmental costs of mining and illegal activity, the Chinese government banned all cryptocurrency transactions in the country in 2021 when it banned banks and other institutions from providing services such as clearing and exchanges and made mining in the country illegal. However, the Bitcoin craze at the time was such that the market just shrugged off the announcement and the Bitcoin price continued to rise. But while trading in cryptocurrency is prohibited, holding it as an asset is protected by Chinese law, according to a lawyer.

14. State of Qatar

Bitcoin legal or illegal: illegal

The state of Qatar is a West Asian country located in the Middle East. Bitcoin and other cryptocurrencies are completely banned in the country’s Qatar Financial Center (QFC). Qatar states that the reason behind the ban is weak compliance with know your customer (KYC) and anti-money laundering (AML) regulations. These regulations are enforced globally by the Financial Action Task Force (FATF) and require banks and other financial service providers to verify their customer profiles and determine the source of funds that they transfer in and out of the country. In fact, the Qatari central bank was quick to warn citizens in May 2022 about dealing with an unregulated financial firm after CoinMENA, an exchange compliant with Islamic law launched in the country. Qatar is a Muslim country and follows Sharia law.