Lhe regulations that many countries have adopted around the Bitcoin, have led us to ask ourselves a great question: Is Bitcoin legal? Well, to answer this and clear all doubts, it is necessary to study several aspects. Since, although it may not seem like it, this is not such a simple question to answer.
Bitcoin, in a broad sense, is a system, a software, and a protocol. This cryptocurrency was created in 2009 by an unknown person under the pseudonym of Satoshi Nakamoto. A name that, to date, no one knows with certainty who is behind it. Still, Bitcoin has evolved over time and its popularity and adoption have grown exponentially. In fact, it has managed to become the cryptocurrency most popular and largest cap on the market so far.
But at this point the question arisesIs it legal to trade Bitcoin? What regulations are there? Can we use bitcoin payments anywhere in the world? Although there are very few countries that prohibit the use of Bitcoin, this does not mean that "Be legal" in the rest.
Of course Bitcoin is a P2P digital currency, one that takes care of the privacy of the individual to a great extent, so it is logical to think: "What difference does it make if it's legal or illegal, if I use it and no one will be able to see that I've used it". However, we must say one thing about this:
Bitcoin is not entirely anonymous.
Bitcoin is a cryptocurrency that was born as an alternative payment system to the traditional model. A completely decentralized currency, which is not issued or controlled by any entity. A coin that is based on a new technology known as blockchain, which eliminates the need for third parties and intermediaries. In addition, it allows Bitcoin to operate in a secure and stable way through thousands of nodes interconnected and distributed throughout the world. All this makes Bitcoin a global cryptocurrency that knows no borders.
But by not being designed, issued or controlled by a central bank or government, Bitcoin does not fit well-known economic standards. Therefore, its legality is complex to define and falls into a gray area. Let us remember that for countries and governments, the legality of their coins and banknotes is that their creation is authorized and supported by them. To later be issued and controlled by a single entity, a central bank. So Bitcoin challenges this model or paradigm by not being in the hands of anyone its creation or control.
But back to the big question: Is Bitcoin legal? Well yes and no, the truth is that it depends on which country you are in due to the laws of that country. But also in what period of time you are. In that case, let's talk about this a bit.
What is a legal tender?
That Bitcoin is not named as a "Legal tender" it does not mean that it cannot be operated on. That is, we can make payments and transfers with this cryptocurrency without problems, but as long as the country from, or where we make them, allows it.
The concept of "Legal tender" what it implies is that it is the means that the government of a country determines as the official currency to make payments. Whether for goods, products, services or taxes. That money is the euro, dollar, yen, ... and many other currencies. Coins that are truly backed by the promise of value on paper and the trust their users have in that country.
So, Bitcoin being not a legal tender in the countries of the world, the only thing that implies is that its users are not protected by a government. And although it can be used in many places, its use is still totally minority. It is currently subject to prudence and the individual criteria of each person.
Is Bitcoin legal in Spain?
The short answer is: It is not illegal to buy, sell, trade, pay or receive payments in Bitcoin. Neither in Spain, nor in the European Union, since the regulation is homogeneous.
However, the long answer goes a little deeper, and gives us nuances. To date there is still no formal regulatory framework on the use of Bitcoin and other cryptocurrencies. So it cannot be said that they are legal, but neither that their use is illegal. However, regulations have been established regarding the issue of taxes. Therefore, Bitcoin users must declare all their income or earnings in this digital asset or another that they use.
For its part, the European Union has taken a cautious and cautious stance on regulation. While other entities, such as the European Central Bank, urge for a much stricter control.
Countries where Bitcoin is illegal
In order to protect their financial systems, Bolivia and Ecuador have declared Bitcoin illegal. Since they estimate that by not being able to control them, they will negatively affect their economic stability. In addition, with this regulation, they will be able to minimize the use of these assets to finance illegal activities.
Ironically, in one of the continents that could benefit the most from this cryptocurrency, they have also banned its use. In Africa, a large percentage of the population does not have access to the traditional banking system. Still, countries such as Algeria, Morocco and Egypt have banned the use and commercialization of this digital asset.
In Vietnam the use of bitcoins within the country is explicitly prohibited. Thus, anyone caught trading the cryptocurrency will face large fines.
Countries where Bitcoin is legal
Japan has been one of the first countries to come out in favor of cryptocurrencies. So much so, that in 2017 it recognized the currency as a legal payment method within the country. China, which from the beginning was quite radical against Bitcoin, does approve of the use of blockchain technology. Although the use of Bitcoin and other cryptocurrencies is still somewhat restricted, the truth is that they have not been able to veto it completely.
In South Korea, Bitcoin is also welcome. A large part of the volume of exchange with this cryptocurrency comes from this country.
Although some countries in Africa have banned the use of cryptocurrencies, many others do allow their use legally. Such is the case in Nigeria, where the use of Bitcoin is legal, but there is a ban at the bank level. Other countries such as South Africa, Namibia, Zimbabwe or Angola also legally allow the use of Bitcoin.
The United States, Canada and Mexico have approved Bitcoin as a means of payment. Establishing legislation to regulate the use of these cryptocurrencies to avoid the financing of illicit activities.
For their part, in Latin America, Panama, Argentina and Venezuela, they also have a permissive stance towards Bitcoin. Although there is still no current legal legislation. In these countries we can already find mobile devices and ATMs to operate with this and other cryptocurrencies.
Countries like Estonia, Malta, Slovenia, Switzerland, Finland, France, Germany, Sweden, Belarus, have adopted a favorable stance towards Bitcoin. Although most have established rules for users. Like the need to identify and pay taxes.
A large number of ATMs and companies that operate with Bitcoin are concentrated in Europe.
Countries where Bitcoin has no regulations
all Latin America
Chile, Brazil, Uruguay, Colombia, Costa Rica, Cuba and El Salvador do not have a clear or defined position. None of the governments have announced any prohibition or acceptance measures against cryptocurrencies. However, they alert their society to the risks of using cryptocurrencies.
In the UK, Ukraine, the Netherlands, Lithuania, Greece and Denmark, there are no specific regulations on Bitcoin. It is considered, for the most part, as private money. So it is not subject to the regulations of these countries. Still, they warn users and investors about the risks linked to this coin.
Other countries that maintain an almost neutral stance on Bitcoin are Singapore, Thailand, Malaysia, Lebanon and India. Most of these don't have a clear stance, but they keep an open mind to the possibilities.
New Zealand and Indonesia also do not have regulations or rules in place for the control of Bitcoin.
What do regulators say?
Depending on where they are located, regulators vary in opinion and debate about Bitcoin. Some are of the opinion that cryptocurrencies in general should be treated as high-risk products. While others argue that it is a technology that is worth knowing in depth. So they have dedicated their efforts to get to know it, study it and analyze it.
In the United States, the Federal Reserve has shown significant interest in Bitcoin, cryptocurrencies, and the blockchain. For its part, the Securities and Exchange Commission (SEC) has imposed sanctions and fines targeting several ICOs. Due to the occurrence of some irregularities and frauds around the launch of the new cryptocurrencies. But in reference to Bitcoin, the SEC has maintained a degree of silence. Although it states that any company that uses blockchain must register as an exchange.
Likewise, the European Commission continues with its analysis of a regulatory framework on cryptocurrencies. Since it considers that due to its almost anonymous quality, these can be lent for money laundering. Therefore, it highlights that they should not be legally allowed until all the risks they imply are proven.
Do companies and businesses accept payments in Bitcoin?
Yes. Thanks to the popularity and adoption of Bitcoin today, many companies around the world accept payments in this cryptocurrency. Of course, as long as the regulations of the countries allow them.
But in general, it is already possible to make purchases of almost any type of product or service and pay in Bitcoin. Bitcoin has mostly been recognized as a liquid and easy-to-convert digital currency, with thousands of exchanges where you can exchange bitcoins for legal tender fiat money.
Likewise, in most countries where payments with cryptocurrencies are accepted, companies are subject to declaring their income, having to pay the corresponding taxes.
We hope that this chapter of Bit2Me Academy has helped you to have a complete vision of the legality around Bitcoin through the different countries of the planet earth. Let's see that Bitcoin is everywhere in one way or another. And we encourage you that if you want to operate with it, consider supporting yourself in the advice of a financial manager specialized in cryptocurrencies and the country in question that interests you.
Bitcoin is in an early stage, and the regulation around it is changing every year, being a main topic in the discussion tables of all the governments of the world. We recommend this Wikipedia article which is kept very up to date with the regulation.