Over the last few years, bitcoin's popularity as an asset with investment value that can also be used for transactions has been on the increase. However, despite the increased adoption of bitcoin, you would find that some people are still sceptical about the currency's legality. Although several people are familiar with and interested in bitcoin, there is still some distrust in their minds, especially regarding the specific laws of certain countries. This begs the question, “is bitcoin legal?”
As bitcoin adoption increases, people are more convinced now more than ever that bitcoin is here to stay. However, what seems to discourage many from pursuing this golden opportunity is trust. There is still a lot of uncertainty about bitcoin's legal status even after a decade of its existence.
Why is this?
Another reason why people may be sceptical about the legality of bitcoin is its anonymity features. Although all transactions are publicly recorded on the blockchain, a bitcoin user's identity can remain completely anonymous. This is because the records displayed on the blockchain contain only the amount transferred and the public keys used.
The legality of Bitcoin varies from country to country. As of September 2021, Bitcoin is not illegal in most countries, but regulations and attitudes towards it differ. Some countries have embraced Bitcoin and cryptocurrencies, providing a clear legal framework and regulations for their use, while others have imposed restrictions or banned them altogether.
For example, countries like the United States, Canada, the United Kingdom, Japan, and many European countries have generally accepted cryptocurrencies like Bitcoin and have implemented regulations to govern their use, including taxation and anti-money laundering measures.
On the other hand, some countries have taken a more cautious approach or have outright banned cryptocurrencies. For instance, countries like China, Algeria, Bolivia, Nepal, and Pakistan have imposed restrictions or bans on cryptocurrencies, making their use illegal.
In Africa, a majority of countries have no firm stance on Bitcoin or Cryptocurrency technology. However, Central African Republic became the first African country to adopt bitcoin as legal tender - thus becoming the second country to do so after El Salvador.
While other African countries do not have a fixed regulation of Bitcoin and other cryptocurrencies, it is important to note that buying, selling and stocking these new currencies is becoming common place on the continent. Cryptocurrency exchange platforms have spread across African countries, educating citizens, offering affordable financial services and making money transfer across African countries easier and faster.
As bitcoin’s popularity increases, central banks, tax regulators, law enforcement agencies strive to fit it within their legal frameworks and existing regulations. However, although several reservations have been expressed over its decentralised nature, bitcoin isn’t illegal. It is only natural for governments to be sceptical about a financial instrument they cannot fully control.
Bitcoin is legal to buy, sell and hold. However, what you choose to use bitcoin for may affect its legality. Bitcoin is characterised by its anonymity feature, which makes it prone to use for fraudulent crimes. Several concerns about this were voiced out after the closure of the black market, Silk Road. The black market operated with bitcoin; in fact, it was the only currency accepted there. This is why the government may be sceptical about the use of bitcoin as it may promote tax evasion, money laundering, among other fraudulent crimes. However, this doesn’t affect bitcoin’s legality.
Bitcoin is legal to use, buy, sell, and hold. You can use bitcoin from just about buying a gadget to paying for your house or car. Bitcoin is now accepted as payment by notable financial institutions like Microsoft, Tesla, PayPal, and Expedia. However, it is vital that you check for bitcoin laws specific to your country.
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