Bitcoin (BTC) was the first cryptocurrency to gain wide success, but soon after, many other altcoins started surfacing on the market, including Ethereum, Litecoin, Dash, Ripple, and many others. There are now thousands of digital coins and tokens, each designed for specific purposes and uses.
The process of legalizing cryptocurrencies has started ever since the success stories of Bitcoin started appearing online. But what are cryptocurrencies, more exactly? Essentially, they represent digital currency that can be used to execute digital transactions and uses cryptography to encrypt and ensure these transactions are secure.
The main issue concerning digital coins is that they do not have a homogenous regulation system. In truth, crypto tokens were not designed to be regulated. Therein lies the difficulty with which governments (or countries) have to face when it comes to legalizing these currencies.
While many countries may have not been very welcoming towards cryptocurrencies, there are several countries which legally accept the trading and use of digital assets. Here is our list which features the top countries where cryptocurrencies have legal recognition.
The United States
The US is home to a wide range of businesses and startups which are related or involve cryptocurrency in some way.
The legal status of cryptocurrencies in the US is rather ambiguous, but they have been classified as MSB (Money Services Business). Also, in 2013, the state accepted Bitcoin as a decentralized virtual currency that can be used for executing transactions, and two years later it was classified as a commodity by CFTC.
Compared to other countries, the US government has been more acceptant towards Bitcoin. A number of government organizations have been instructed to carry out all Bitcoin transactions only in legal terms.
The US Department of Treasury’s Financial Crimes Enforcement Network has also been examining the topic of cryptos for quite some time now. Cryptocurrencies have become over time very prevalent in the US derivatives market. Bitcoin can now be taxed as property. Currently, the use of digital assets is legal in the USA, however, the legal framework is not yet quite clear.
Japan has one of the fastest developing technology markets in the world, so it wasn’t a surprise when they decided to make cryptocurrencies legal. The country’s government implemented a specific PSA (Payment Services Act) based framework which lets some cryptocurrencies and several exchanges to be used for payment and trading matters. Although there are some regulations regarding trading with such assets, they are not as strict as other nations.
Japan is now widely regarded as a center for crypto trading in Asia.
Like its southern neighbor, Canada is also looking into ways of accepting Bitcoins as an alternative form of payments in the future. The country’s government is exploring revolutionary tech which can be further used in their economic system.
The country classifies Bitcoins as a commodity. Legally, this means that all Bitcoin transactions in Canada are legally recognized as a barter trade and all income resulted from the use of Bitcoin represents ‘business income’.
Canada is also a hub for blockchain developments and has begun applying the technology in some government departments. The government of Canada also wants to enforce strict Anti-Money Laundering laws regarding cryptocurrency use.
In August 2017, the country’s government legally accepted its first-ever cryptocurrency, Impak Coin. The Quebec regulation authority had previously approved Bitcoin to be legal for specific business models such as ATMs and exchanges.
Nevertheless, the Bank of Montreal and some other Canadian states forbid their customers from performing cryptocurrency transactions using their bank cards.
The legal status of Bitcoins is kind of murky. While the country is home to millions of Bitcoin investors, the governments are still quite skeptics. The banks have expressed their concern regarding the monetary flow out of traditional systems of investment to the cryptocurrency markets. Despite all this, cryptocurrencies maintain their popularity status in Australia.
Australia’s Brisbane Airport was also the first ever airport to provide full support for cryptocurrency payments for its flights, as well as restaurants and cafés.
South Korea used to be one of the biggest hubs in Asia when it came to crypto trading. But after it started implementing a set of legislative rules regarding crypto trading and ICOs, its position started declining.
However, the country still sees a large volume of cryptos going in and out of its borders.
Minors and all foreigners are not allowed to trade cryptocurrencies, while adults may trade on registered exchanges using real name accounts at a bank where the exchange is also registered.
Malta is the latest addition in a long list of countries that have started accepting Bitcoin and other cryptocurrencies as a legal tender for digital transactions.
The cabinet of Malta recently passed bills which concern the regulation of cryptocurrencies and ICOs in the country, making the island-state one of the few countries to have clear regulations regarding digital coins.
This approval was declared to be part of a national strategy to promote Bitcoin and blockchain technology.
There are more and more countries that are started to see the potential that cryptos have, and have begun adapting their legal infrastructure to them.