Is Bitcoin Legal?

Last updated on 11/29/2018

The short answer to the question of Bitcoin’s legality is that, yes, Bitcoin is legal in most countries and for most purposes.

There are some countries that have banned Bitcoin, as well as restrictions that have been placed on Bitcoin use in countries where Bitcoin is generally legal but is subject to certain rules.

Bitcoin has been banned several times by different governments, but these bans are often short-lived as governments tend to realize that they cannot stop Bitcoin adoption and use. Still, some countries maintain outright Bitcoin bans, and some even institute serious consequences for using the digital currency.

Bitcoin Legal Regulations

Other countries have imposed regulations on the ways in which Bitcoin can be used. Although the regulations do not directly affect Bitcoin’s legal status, failure to adhere to them can have legal consequences.

For example, in 2017, the Internal Revenue Service in the United States issued guidance stating that users of bitcoin and other cryptocurrencies are responsible for paying applicable taxes on cryptocurrency assets. Failure to pay such taxes could have legal repercussions.

As another example, Bitcoin is legal in China, but the Chinese government has banned cryptocurrency exchanges and initial coin offerings (ICOs). Attempts to buy and sell bitcoin on an exchange, or participate in an ICO, may therefore lead to legal trouble for individuals based in China even though it is legal to use Bitcoin in other ways.

Bitcoin as Legal Tender

Although it is legal to use Bitcoin in most countries, that does not mean that bitcoin holds the status of legal tender in all of these countries. Legal tender is any currency that a government officially recognizes as an acceptable form of payment within its jurisdiction.

Most countries do not recognize bitcoin as legal tender. The major exceptions are Japan, Germany and Australia, which, as of 2018, have announced that they will treat bitcoin as legal tender.