The legality of cryptocurrency is not the same globally, and many individuals need clarification on its status in their respective countries.
From our observation, we discovered that the question, “Is cryptocurrency illegal?” is often on the minds of those considering entering the cryptocurrency market, from seasoned investors to curious newcomers.
We understand the importance of being fully aware of cryptocurrencies' legal position, as that will help us make informed decisions and go about the complex world when it comes to dealing with digital assets.
In this blog post, we will discuss the legal status of cryptocurrencies in different countries, where some have accepted them and others are still considering them. We do so by bringing you information transparently and directly to ease your mind and give you the option of deciding willfully.
Related Article: What is the Impact of Cryptocurrency on Indian Economy?
Key Takeaways
- The illegality of cryptocurrency depends on various countries' beliefs.
- Countries like Nepal, Bangladesh, China, and Algeria prohibited the use of cryptocurrency.
- Countries like India, Russia, Nigeria, Turkey, Egypt, Iraq, and Morocco have restrictive regulations regarding cryptocurrency.
- Countries like the United States, Singapore, Japan, Indonesia, Switzerland, Malta, and Bolivia allow crypto-currency
Cryptocurrency-Friendly Countries
As we have said above, the attitudes of various countries toward cryptocurrency adoption differ, with some countries being far more friendly toward cryptocurrencies than others.
Some of the factors that influence their beliefs about adoption are the following.
- The regulatory environment that surrounds cryptocurrency
- The economic conditions of the country
- The socio-economic characteristics of the country.
These have been the major concerns for the government in welcoming the use of cryptocurrency. Despite the above factors, we have seen some countries that are very positive about the adoption of cryptocurrencies, while others have become deeply skeptical about this technology and tend to tread lightly!
This resulted in issues and shifts throughout, primarily due to the uncertain regulatory landscape and worries over market volatility.
"The legality of cryptocurrency is a complex landscape that varies significantly from country to country. While some nations have embraced digital assets with open arms, others have imposed strict regulations or outright bans."
Countries Where Cryptocurrency is Illegal
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Although cryptocurrency is now used as a transaction, some countries prohibit it. The following are the countries that illegalize cryptocurrency.
| Country | Official Stance on Cryptocurrency | Penalties for Violation |
| China | Banned all cryptocurrency transactions, citing financial risks and fraud | Severe penalties, including 500,000 Yuan fines and up to imprisonment |
| Bangladesh | Outlawed Bitcoin, stating concerns over money laundering and terrorist funding | Imprisonment |
| Algeria | Prohibited buying, selling, and holding cryptocurrencies | Fines and imprisonment of up to 10 years |
| Nepal | Banned all cryptocurrency activities, citing the potential for financial crime | Arrests and Legal Prosecution |
Let's briefly explain further about the countries that choose not to allow cryptocurrency as a means of transaction and also ban holding coins.
China
China has maintained a complex relationship with cryptocurrency. In recent years, the Chinese government has taken a firm stance against digital currencies like Bitcoin, citing concerns over financial stability, fraud, and money laundering.
In 2021, China intensified its crackdown, declaring all cryptocurrency transactions illegal and shutting down domestic crypto mining operations, which once accounted for the majority of Bitcoin's global hash partly driven by the government's desire to promote its digital currency, the Digital Yuan, which it views as a more controllable and stable alternative.
Bangladesh
Bangladesh is among the countries that have taken a stringent stance on cryptocurrency, deeming it illegal under the Money Laundering Prevention Act.
According to National Blockchain, Bangladesh Bank has warned against transactions involving Bitcoin and other digital currencies, highlighting risks of fraud, illicit activities, and its ability to unstable the financial control of the country.
There have been severe punishments for anyone trading crypto in Bangladesh, and the government authorities are on the hunt for those transacting with crypto; according to the Bangladesh Financial Intelligence Unit (B, anyone trading crypto in Bangladesh has been punished severely, and the government authorities are on the hunt for those transacting with crypto FIU).
"Understanding the legal status of cryptocurrency in your jurisdiction is crucial before investing. Failure to comply with local laws can result in severe penalties."
Algeria
Algeria has strict regulations against cryptocurrencies. The 2018 Financial Law prohibits using, possessing, purchasing, and selling any virtual currency, defining it as a currency used by internet users without physical support like coins or banknotes.
Violating these regulations can lead to legal penalties. This prohibition aims to curb potential financial crimes and maintain monetary stability. Despite these restrictions, ongoing discussions and global trends might influence future regulatory changes in Algeria.
Nepal
Nepal, a landlocked country with Himalayan ranges, is reluctant to invest in cryptocurrency. Despite having seen merit in blockchain technology, the government of Nepal has continued to ban the trading and mining of cryptocurrencies.
Cryptocurrencies have been banned under Nepali laws since the Nepal Rastra Bank, the country’s central bank, firmly declared them unlawful in 2017. This decision is mainly based on the belief that the market is volatile, fraudulent, and lacking a regulatory body.
The growing concern among the population about crypto currency in 2024 has prompted the country's governing body to investigate and find a way to regulate its handling.
However, the bill, which includes conditions to embrace crypto, such as mandates, broad obligations, licensing, and a lot more, is still waiting and subject to President Recep Tayyip Erdogan’s approval.
So, if you belong to any of the above countries, possession, and transaction of cryptocurrency are illegal, and it is prohibited to deal in it.
"Countries like Switzerland and Malta have emerged as crypto-friendly jurisdictions, offering favorable regulatory environments for blockchain businesses."
Countries with Restrictive or Unclear Regulations
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We have countries that have adopted the use of digital currency created by themselves and countries that buoyantly oppose the use of digital currency.
Also, we still have other countries that do not have their digital currency, but they set limits to how digital currency is used in their country. The following are the countries that fall into this category.
India
India has had a fluctuating relationship with cryptocurrency. In 2018, the Reserve Bank of India (RBI) imposed a ban on banks dealing with crypto transactions, which was later overturned by the Supreme Court in 2020. The government is considering new regulations that could ban or severely restrict cryptocurrencies.
Russia
Russia did not ban cryptocurrencies outright but heavily regulated them in 2020 when Putin signed the law regulating them on digital financial assets (DFA).
The government does not recognize them as legal tender and strict rules govern their use and exchange. However, the country still allows them for global trade. Cryptocurrencies are considered property, and their use in transactions such as buying and selling things is prohibited.
Turkey
Turkey has imposed restrictions on using cryptocurrencies for payments, but trading and holding digital assets are not illegal. The Central Bank of the Republic of Turkey has issued regulations to mitigate cryptocurrency risks.
"The legal status of cryptocurrency can also impact its usability as a means of payment and investment. In some countries, cryptocurrencies may be restricted for certain transactions or considered high-risk investments."
Image Source: Pexels
Nigeria
Cryptocurrency operations in Nigeria have led to many controversies and generated much criticism from CBN. Nigeria's central bank banned financial institutions from dealing with cryptocurrency exchanges on 17 January 2017 but lifted the ban in 2023, saying that individuals can trade cryptocurrencies privately. The country is exploring its central bank digital currency (CBDC), the eNaira.
Egypt
Egypt's stance on cryptocurrency has been cautious and strict. While the Central Bank of Egypt has issued warnings against the risks associated with digital assets, it hasn't outright banned them.
Also, in 2024, Grand Mufti Egypt called the transaction with Bitcoin Haram under Islamic verdict Haram due to its associated risk, while some scholars consider it Halal. This approach reflects the country's desire to balance innovation with financial stability.
The government's primary concern is the potential for cryptocurrencies to be used for illicit activities. To mitigate these risks, Egypt has implemented regulations aimed at preventing money laundering and terrorist financing.
Additionally, the government has expressed interest in exploring the potential benefits of blockchain technology, particularly in sectors like supply chain management and healthcare.
Despite the regulatory challenges, cryptocurrency has gained popularity among Egyptians. Many individuals have turned to digital assets as a means to hedge against inflation and currency devaluation. However, the lack of a clear regulatory framework has created uncertainty for investors and businesses.
Pakistan
In the case of whether cryptocurrency is legal or not in Pakistan is unclear, just like the other countries we have mentioned in this category.
As of 2024, the government of Pakistan has yet to formally legalize the use of this digital currency. Even though, there is new ongoing news that the government is planning to allow the use of crypto formally.
Despite the uncertainty surrounding cryptocurrency, the Pakistani people are still transacting with it. According to Statista, the market of cryptocurrency is said to be US$1,695.0m in 2024, and by the end of 2025, the crypto market should fall to US$1,611.0m.
Iraq
Iraq's position concerning the legality of Cryptocurrency is not identifiable. The authorities of Iraq have been rather ambiguous in their position on the use of cryptocurrencies and have recently changed their position on regulating the related market.
Though the country has not directly prohibited the use of cryptocurrencies, including bitcoins, its central bank has strongly opposed them.
However, the number of people investing in cryptocurrency is increasing significantly. It is estimated that by the end of 2024, the market revenue of cryptocurrency will be US$223.6 million.
Related Article: Is Peer-to-Peer Crypto Trading Legal?
Morocco
Morocco is another country with a restrictive approach to cryptocurrency. Despite that, Morocco is advancing in the cryptocurrency sector and aiming to balance innovation and regulation.
The country's central bank, Bank Al-Maghrib (BAM), is the brain behind this and is set to introduce a comprehensive regulatory framework for cryptocurrencies.
This effort includes collaboration with the International Monetary Fund (IMF) and the World Bank to establish best practices. The upcoming regulations aim to foster innovation while ensuring consumer protection and addressing money laundering and anti-terrorist financing concerns.
Morocco's increasing engagement with cryptocurrency is also reflected in its global position. As of late 2023, it secured the 20th spot in the Crypto Adoption Index, which highlights the growing acceptance and use of digital currencies within the country.
While the central bank remains cautious, it recognizes the potential benefits of decentralized technologies for the Moroccan economy.
"While cryptocurrency offers exciting opportunities, it's essential to approach it with caution and a thorough understanding of the risks involved."
Cryptocurrency Legal Country
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We have carefully examined the countries that illegalize cryptocurrency and those that have yet to legalize it but allow the use of cryptocurrency to a minimal capacity. Now, let us briefly examine the countries that have embraced cryptocurrency.
El Salvador
We will start with El Salvador. El Salvador made waves in 2021 by being the first nation to adopt Bitcoin as legal tender, aiming to increase financial inclusion and attract investments. Since then, El Salvador has introduced several initiatives to boost crypto use in its economy.
President Bukele launched Bitcoin-backed “Volcano Bonds” to raise funds for energy-efficient Bitcoin mining powered by geothermal energy, a project that’s finally moving forward with regulatory approval expected to trigger its issuance on Bitfinex Securities by early 2024. These bonds aim to attract up to $1 billion for mining projects.
The usage of Bitcoin has caused a number of responses both from financial institutions and organizations that gave a cautious approach to it.
United States
The United States maintains a mixed but generally positive stance on cryptocurrency. The Internal Revenue Service (IRS) recognizes cryptocurrency as property.
Also, regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) oversee various aspects of cryptocurrency to ensure that digital assets adhere to existing financial laws.
Different states have their regulations; New York, for instance, requires a BitLicense for crypto businesses before anyone can have the right to trade any virtual coin.
Switzerland
Switzerland has emerged as a crypto-friendly jurisdiction. The country's government has implemented a progressive regulatory framework that fosters a conducive environment for cryptocurrency-related activities.
Zug, a canton in Switzerland, is often referred to as "Crypto Valley" due to its high concentration of blockchain companies and startups.
Singapore
Singapore has adopted a pragmatic approach to cryptocurrency regulation. The Monetary Authority of Singapore (MAS) has established guidelines for cryptocurrency service providers, aiming to balance innovation and risk management.
Singapore's financial hub reputation and supportive regulatory environment have attracted numerous blockchain projects.
Malta
This is another country that has positioned itself as a blockchain island, offering a favorable legal framework for cryptocurrency businesses. The country has put in place some specific legislation to regulate blockchain technology and virtual financial assets.
Malta's proactive stance has made it a popular choice for cryptocurrency companies seeking a supportive regulatory environment.
Image Source: Pexels.
Japan
Japan was one of the early adopters of cryptocurrency. The country's Financial Services Agency (FSA) has implemented regulations for cryptocurrency exchanges, requiring them to register and comply with specific standards.
Japan's regulatory framework has contributed to its reputation as a leading market for cryptocurrency trading.
Bolivia
One of the countries that legalized the operation of Cryptocurrency is Bolivia. Bolivia has recently seen a significant surge in cryptocurrency trading following the lifting of its long-standing ban on crypto in June 2024.
The Banco Central de Bolivia reported a 100% increase in monthly trading volumes between July and September 2024, with $48.6 million traded over the past three months. This growth surpasses the total trading volume of the previous six months combined.
The central bank highlighted that most transactions involved stablecoins like USDT, offering users without access to U.S. dollars an alternative for international transfers and e-commerce payments.
Indonesia
Indonesia's cryptocurrency market is expanding rapidly after lifting the ban, with over 18.51 million registered Cryptocurrency users in 2023.
Regulatory bodies like Bank Indonesia and BAPPEBTI oversee this sector, focusing on legal clarity and consumer protection. Cryptocurrencies are classified as commodities rather than legal tender, which allows trading but restricts their use as a medium of exchange.
Recent regulations from the Financial Services Authority (OJK) aim to enhance market structure and safety through pilot testing and sandboxes. Meanwhile, Bappebti is advocating for lower digital asset taxes to boost trading volumes, currently impacted by a 0.11% VAT and 0.1% income tax.
Australia
Another popular country that legalizes crypto is Australia. This means that Australian regulators AISC view cryptocurrency as a legal financial product but regulated.
Specifically, the trading of cryptocurrencies in Australia has reached an impressive level, to the extent that 1 in 4 adults trade. According to research carried out by Roy Morgan in 2022, over 1 million people that is above 18 own at least one crypto.
In 2025, the number of people using the crypto market in Australia is forecasted to be approximately 11.38 million.
To strengthen investors’ safeguards, Australia is in the process of developing a legal framework for “token mapping” to differentiate and govern tokens, guiding the business.
Such an approach seen from the government can not only be seen as an effort to promote a healthy crypto industry but also ensure there is innovation while keeping the industry in check from the bad guys and fraudsters.
Related Article: Notable Cryptocurrency Regulations Around the World
Canada
As of 2024, Canada is ranked among the top 10 most friendly crypto countries. Canada’s regulatory approach to cryptocurrencies is relatively liberal, considering them permitted for trading, investment and use for payments under certain circumstances.
Currently, The Canadian Revenue Agency (CRA) deems every crypto transaction as barter, and every crypto income is subjected to capital gains tax.
Some of the comparable findings about Canadian crypto literacy include: Canada’s crypto adoption rate is among the top 20 countries; 13.36 million Canadians will crypto in 2025, and so on.
The government continues working on regulatory talks with decentralized finance (DeFi) as the country seeks to regulate the crypto market by putting in place controls without hindering the market’s growth.
United Kingdom
The usage of cryptocurrencies in the UK is absolutely legal for trading purposes, yet they do not have the status of money. The country has a mushrooming market of digital assets; roughly 13% of UK adults own cryptocurrency assets, which makes the overall market reach 1,660.0 million dollars by 2024.
The Financial Conduct Authority regulates all activities of crypto exchanges and wallets; businesses are to be registered and adhere strictly to anti-money laundering regulations.
Final Words
Is cryptocurrency illegal? As we have seen above, the legality of cryptocurrency varies globally. With what we have shown you, it will be easy to understand your country's stance, which is crucial for making informed decisions in the complex world of digital assets.
While some countries embrace crypto with supportive regulations, others impose strict bans or unclear rules. To navigate the crypto landscape safely, always stay informed and compliant with local laws.
