Bitcoin as a Legal Currency

Bitcoin as a Legal Currency?

Bitcoin is a peer-to-peer digital currency that launched over a decade ago in 2009. It is said to define a new age of cryptocurrency. This currency is established by a process generated by computer that referred as mining. As it is a digital based payment system, there is no physical form of Bitcoin or a relation to any government across the world. At best, the practices are still debatable considering the global regulators, tax governmental authority, and law enforcement agency. It raises one question since then: which country seen Bitcoin as a legal currency?

Which Countries Consider Bitcoin as a Legal Currency and Not?

As mentioned in prior, Bitcoin is a digital currency that invented in the year of 2009 by an entity that chose to be referred as Satoshi Nakamoto – whose original identity has never been revealed until now. Bitcoins only exist on Internet, typically through digital form of wallet, thus there is no physical form that correspond with any currency such a dollar or euro bills. Bitcoin’s existence is tracked by ledgers that called blockchains. Blockchains are received or given through peer-to-peer transactions to person who owns bitcoin address. The price of this currency is established by numerous trades and exchange on global level.

There is no limitation over Bitcoin transactions regardless of the country. That being said, it carries extremely unstable exchange rate to officially recognized currencies by a country. Part of the reason is because the price is often based on the speculation, and the fact it currently holds a relatively minor market in the world of currencies.

It is possible to use Bitcoin to perform transactions anonymously amongst account owners, anytime and anywhere you are. That’s why it opens an interesting opportunity for illegal and shady organizations, which may abuse the currency to conduct transactions upon illegal goods. Majority of countries are yet to have clear determination over its legality status, feeling inclined to just wait and see, while some others have put out regulatory oversight. Still, there is no country that determines Bitcoin as legal tender for its currency substitute.

Here is the list of countries that deemed Bitcoin as a legal currency:

  1. USA (United States of America)

The general stance upon Bitcoin in United State is positive, however there are some government agencies that work to minimize or prevent its use for unlawful transactions. Internal Revenue Service (IRS) classifies Bitcoin as property regarding the taxation matter.

 

  1. Canada

Similar to its neighbor, this country also puts out positive stand upon Bitcoin while works to ensure that it’s not misused for money laundering purpose as well. Canada Revenue Agency (CRA) considers it as commodity so the taxation will depend on whether the owner sees it as investment or business goods.

 

  1. EU (European Union)

European Court of Justice (ECJ) has determined Bitcoin as service transactions per October 2015. It gains exempt status from all participating members in EU from value-added tax (VAT). However, some country members of EU also build their own stances over this digital cryptocurrency subject.

 

  1. Australia

Just like the countries above, Australia mostly sees Bitcoin not as currency or money. Australian Taxation Office (ATO) regulates it as capital asset in regard of taxation.

Meanwhile, here are some countries that restrict the use of Bitcoin as a currency:

  1. China

China is essentially banning Bitcoin. There is no financial institution, including bank that allowed to process transactions or practices using Bitcoin. The exchange and mining actions are illegal in China.

 

  1. Russia

There is no regulation regarding Bitcoin but it’s illegal to use it as form of payment in Russia.

 

  1. Bolivarian countries (Bolivia, Columbia, and Ecuador)

Any type of cryptocurrencies including Bitcoin is banned in Bolivarian Countries. It is illegal to use as investment in Columbia and it gained banned status through national assembly’s vote in Ecuador.

 

  1. Vietnam

As an investment, there is no any regulation yet about Bitcoin, but the government has ruled that it is not a legitimate method of payment.

Despite having been existed for over 10 years now, most countries still yet to state whether they see Bitcoin as a legal currency or not – at least not explicitly. The system has challenged government in many countries to grant legality while working to prevent unwanted use. In conclusion, this digital cryptocurrency remains to sit at grey area in terms of legality in various places across the world.

Author: Amreza Bagas
An Extraordinary businessman who loves to share business experience in some words.