Bitcoin Prohibition: These are the countries where crypto is restricted or illegal
While Bitcoin has been widely criticized for its volatility, its use in nefarious transactions, and the exorbitant consumption of electricity for mining, Bitcoin is viewed by some, especially in developing countries, as a safe haven during economic storms.
However, as more people turn to cryptos as either an investment or a lifeline, these issues have manifested themselves in a number of limitations on their use.
The legal status of Bitcoin and other altcoins (alternative coins to Bitcoin) varies significantly from country to country, while in some cases the relationship does not yet need to be properly defined or is constantly changing.
While the majority of countries do not themselves make the use of Bitcoin illegal, its status as a means of payment or as a commodity varies with different regulatory implications.
Some countries have restricted the use of Bitcoin by having banks forbidding their customers to conduct cryptocurrency transactions. Other countries have banned the use of bitcoin and cryptocurrencies with heavy penalties for anyone making crypto transactions.
These are the countries that have a particularly strained relationship with Bitcoin and other altcoins.
Algeria
Algeria is currently banning the use of cryptocurrency following the passage of a finance law in 2018 that made buying, selling, using or holding virtual currency illegal.
Bolivia
Since 2014, there has been a complete ban on the use of Bitcoin in Bolivia. The Bolivian central bank has passed a resolution banning it and any other currency that is not regulated by a country or economic zone.
China
China took action against cryptocurrencies with increasing intensity in the course of 2021. Chinese officials have repeatedly warned its people to stay out of the digital asset market and cracked down on in-country mining and currency exchanges in China and abroad.
On August 27, Yin Youping, deputy director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China (PBoC), labeled cryptos as speculative assets and warned people to "protect their pockets".
Efforts to undermine Bitcoin - a decentralized currency beyond the control of governments and institutions - are largely viewed by Chinese authorities as an attempt to launch their own e-currency.
The PBoC wants to be one of the first major central banks in the world to launch its own digital currency and thus monitor the transactions of its employees more closely.
On September 24th, the PBoC went further banning cryptocurrency transactions in the country.
Colombia
In Colombia, financial institutions are not allowed to facilitate Bitcoin transactions. The Superintendencia Financiera warned financial institutions in 2014 not to protect, invest, broker or manage virtual money transactions.
Egypt
Egypt's Dar al-Ifta, the country's main Islamic advisory body, issued a religious decree in 2018 classifying Bitcoin transactions as "haram," which is prohibited under Islamic law. Although not binding, Egyptian banking laws were tightened in September 2020 to prevent the trading or promotion of cryptos without a central bank license.
Indonesia
The country's central bank, Bank Indonesia, has enacted new regulations banning the use of cryptocurrencies, including Bitcoin, as a form of payment from January 1, 2018.
Iran
Bitcoin has a complex relationship with the Iranian regime. To circumvent the worst effects of crippling economic sanctions, Iran has instead turned to the lucrative practice of mining bitcoin to fund imports.
While the central bank bans trading in cryptocurrencies mined abroad, it has incentivized bitcoin mining in the country.
Around 4.5 percent of global Bitcoin mining takes place in Iran, which, according to blockchain analysis company Elliptic, could translate into sales of over 1 billion US dollars (843 million euros).
In order for the crypto industry to thrive, Iran has offered licensed miners cheap energy but is demanding that all mined crypto be sold to the central bank.
However, unlicensed mining takes more than 2 GW daily from the national grid, which leads to electricity bottlenecks.
To this end, the Iranian authorities issued a four-month ban on Bitcoin mining until September 22nd.
India
India is becoming increasingly hostile towards cryptocurrencies. On November 23, the government announced its intention to introduce a new bill to the Indian parliament which would establish a new central bank-backed digital currency as well as ban almost all cryptocurrencies.
Earlier this year, it had considered criminalising the possession, issuance, mining, trading, and transference of crypto assets. Prime minister Narendra Modi said he wanted to ensure crypto "does not end up in wrong hands, which can spoil our youth".
Iraq
Despite sustained efforts by authorities to block their use, cryptocurrencies are becoming increasingly popular in Iraq. The Iraqi Central Bank has been particularly hostile, issuing a statement in 2017 prohibiting their use which is still in force to the present day. In early 2021, the Ministry of Interior of the Kurdistan regional government issued similar guidance to stop money brokerages and exchanges handling cryptos.
Nepal
The Nepal Rastra Bank declared Bitcoin illegal as of August 2017.
North Macedonia
North Macedonia is the only European country so far to have an official ban on cryptocurrencies, such as Bitcoin, Ethereum, and others, in place.
Russia
While cryptocurrency isn’t outlawed in Russia, there is an ongoing conflict being waged against its use.
Russia passed its first laws to regulate cryptos in July 2020, which for the first time designated cryptocurrency as property liable to taxation.
The law, which came into force in January this year, also bans Russian civil servants from owning any crypto assets.
Russian President Vladimir Putin has repeatedly linked cryptocurrency with criminal activity, calling for closer attention to cross-border crypto transactions in particular.
In July, the prosecutor general announced new proposed legislation which would allow police to confiscate cryptos deemed to be illegally obtained citing its use in bribery.
Turkey
Many in Turkey turned to cryptocurrency when the Turkish lira fell in value. With one of the highest usage rates in the world, regulations were introduced quickly this year as inflation peaked in April.
On April 16, 2021, the Central Bank of the Republic of Turkey issued an ordinance prohibiting the direct or indirect use of cryptocurrencies including Bitcoin to pay for goods and services. The next day, Turkish President Recep Tayyip Erdoğan went even further and issued a decree that crypto exchanges would be passed on to a list of companies subject to anti-money laundering and terrorist financing regulations.
Vietnam
The State Bank of Vietnam has stated that the issue, delivery and use of Bitcoin and other cryptos as a means of payment is illegal and punishable by fines ranging from VND 150 million (€ 5,600) to VND 200 million (€ 7,445).
However, the government does not prohibit Bitcoin trading or holding Bitcoins as an asset.
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