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TABLE OF CONTENTS

Countries Where Cryptocurrency Is Legal vs Illegal

4.4 | by Winifred Amase

Cryptocurrency is currently legal in 119 countries and four British Overseas Territories. This means more than half of the world's countries have legalized cryptocurrency. 64.7% of countries that have legalized crypto are emerging and developing countries from the Asian and African continents. 

However, out of the 119 countries that legalized cryptocurrency, 20 (16.8%) have imposed bank bans. These bans restrict financial institutions from interacting with cryptocurrency exchanges or users.

Europe Leads With 39 Countries Recognizing Crypto’s Legitimacy

Europe is at the forefront of global cryptocurrency legalization, with 39 (95.1%) out of 41 analyzed countries acknowledging its legitimacy. North Macedonia is the only European country where cryptocurrency is illegal, while Moldova's status remains unclear.

Out of 31 countries in the Americas, 24 (77.4%) countries recognize cryptocurrency as legal. Bolivia stands as the sole exception, deeming cryptocurrency illegal. Six American countries - Guatemala, Guyana, Haiti, Nicaragua, Paraguay, and Uruguay - have yet to establish their official stance on cryptocurrency.

In Africa, only 17 out of 44 (38.6%) countries have legalized cryptocurrency, while 35 (77.7%) out of 45 countries in Asia recognize cryptocurrency as legal.

How Many Countries Have Defined Crypto Laws?

Only 62 (52.1%) of the 119 countries where cryptocurrency is legal have comprehensive regulations. This number has gone up by 53.2% since 2018 when only 33 jurisdictions had cryptocurrency regulations. 

Among the 62 countries with established regulations, 36 (58.0%) are individual countries, 22 (35.5%) are part of the European Union (EU), and 4 (6.5%) are British Overseas Territories. Notably, half of these countries are advanced economies, while the remaining half are emerging and developing economies.

Half of the countries that have legalized cryptocurrency have yet to implement robust regulatory frameworks. This gap between legalization and full regulation raises potential concerns about investor protection and clarity for businesses operating in the cryptocurrency space in those countries. 

Instead, several countries have taken the approach of adapting existing regulatory frameworks to encompass cryptocurrencies, rather than establishing entirely new regulations. This approach often involves applying established tax laws and anti-money laundering and counter-financing of terrorism (AML/CFT) laws to cryptocurrency transactions and activities.

Major advanced economies, including France, Japan, and Germany, have successfully established regulatory frameworks for cryptocurrencies. 

In contrast, other major advanced economies, such as Italy, the United States, Canada, and the United Kingdom, face challenges in implementing comprehensive cryptocurrency regulations. Multiple governments and financial regulatory bodies in these countries contribute to the complexity of the regulatory process.

EU member states, on the other hand, adhere to EU-wide regulations regarding crypto assets. These regulations provide a more harmonized approach to cryptocurrency regulation within the bloc.

Only two countries, El Salvador and the Central African Republic (CAR), have adopted cryptocurrency as legal tender. Of which, El Salvador remains the only country actively using cryptocurrency as legal tender today.

El Salvador made history in August 2021 by legalizing Bitcoin through the Bitcoin Law. This landmark legislation cemented Bitcoin's acceptance as legal tender with automatic conversion to US dollars. In January 2023, El Salvador took another step towards embracing Bitcoin by passing the Digital Securities Law. This law classifies Bitcoin as a "digital commodity" and all other crypto assets as "securities."

Despite these progressive measures, Bitcoin adoption in El Salvador remains relatively low. According to a cryptocurrency ownership study by Triple-A, only 1.72% of the country's population owns crypto assets. Additionally, El Salvador ranks 55th on the Crypto Adoption Index.

The Central African Republic (CAR) became the first African country, and the second globally, to adopt Bitcoin as legal tender in April 2022. This decision was met with mixed reactions, with some praising it as a step towards financial inclusion and others expressing concerns about its potential impact on the country's already fragile economy.

However, the CAR's Bitcoin experiment proved to be short-lived. In March 2023, the government reversed its decision to legalize Bitcoin. A culmination of economic challenges has been cited as the cause of this failure. These challenges included a high poverty index, low internet penetration, and limited access to electricity, all of which made the widespread adoption of Bitcoin as legal tender difficult to achieve.

Which Countries Are Crypto Neutral?

25 of the 166 analyzed countries are deemed ‘crypto neutral’, as they have refrained from assigning a definitive legal status to cryptocurrency usage. In 24 of these countries, central banks and governments have implicitly banned or shown significant concerns and restrictions about the use of cryptocurrencies. On the other hand, Uruguay stands as an exception, exhibiting a more cautiously optimistic approach.

While cryptocurrency remains unregulated in Uruguay, the Central Bank has proactively assessed cryptocurrency pilot projects with a focus on developing risk-based regulations. Additionally, the country has proposed a crypto bill that, if approved, would introduce the first regulatory framework for crypto exchanges and services in Uruguay.

Countries Where Cryptocurrency Is Illegal

22 countries have adopted a more restrictive approach, outrightly banning cryptocurrency use and transactions within their borders. This represents a significant increase of 13 countries compared to the nine countries with cryptocurrency bans in 2021.

The majority of these countries, 13, are located in Africa, while seven are situated in Asia. North Macedonia in Europe and Bolivia in America are the sole outliers, representing the only countries within their respective regions to have imposed explicit cryptocurrency bans. 

Despite Its Illegal Status, Crypto Ownership Persists in China, Egypt and Others

An estimated 4.08% of the total population in China (or 58 million people) currently owns cryptocurrency. With that, China boasts the second-largest cryptocurrency ownership base globally, in spite of its comprehensive ban on cryptocurrency activities since 2017.

Data from Triple-A’s cryptocurrency ownership report further suggests that ownership of digital assets remains prevalent in the following regions:

  • In Egypt, cryptocurrency transactions have been declared haram or prohibited under Islamic law. An estimated 2.95% of the total population (3.3 million people) currently own cryptocurrency.
  • In Bangladesh, cryptocurrency has been prohibited since 2014. An estimated 2.43% of the total population (4.2 million people) currently own cryptocurrency.
  • In Bolivia, the government has labelled Bitcoin a "pyramid scheme,". An estimated 1.98% of the total population (246 thousand people) currently own cryptocurrency.
  • In Iraq, dealing in cryptocurrencies is punishable under money laundering-related charges. An estimated 1.81% of the total population (822 thousand people) currently own cryptocurrency.
  • In Myanmar, owning or trading crypto assets can lead to imprisonment or fines. An estimated 1.44% of the total population (785 thousand people) currently own cryptocurrency.

This is in spite of strict rules and penalties for cryptocurrency usage.

Four Banned Countries Rank High in Global Crypto Adoption

Despite having outright cryptocurrency bans, Egypt, Nepal, Morocco, and China rank among the top 30 countries in Chainalysis' 2022 Global Crypto Adoption Index. This index goes beyond mere ownership to assess the relative level of crypto engagement across countries. It highlights that these countries exhibit significant levels of cryptocurrency usage despite the legal restrictions.

The table below categorizes countries according to their cryptocurrency legal status:

Crypto Legal Status No of Countries Countries
Legal 119 Albania, Andorra, Angola, Antigua and Barbuda, Argentina, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Belarus, Belgium, Belize, Benin, Bhutan, Bosnia and Herzegovina, Botswana, Brazil, Brunei Darussalam, Bulgaria, Burkina Faso, Cambodia, Canada, Central African Republic, Chile, Colombia, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Dominican Republic, Ecuador, El Salvador, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Greenland, Honduras, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Iran, Israel, Italy, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macao, Malaysia, Malta, Mauritius, Mexico, Mongolia, Montenegro, Mozambique, Namibia, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Palau, Panama, Peru, Philippines, Poland, Portugal, Venezuela, South Korea, Romania, Russia, Rwanda, Saint Kitts and Nevis, Saint Lucia, Samoa, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Venezuela, Vietnam
Illegal 22 Afghanistan, Algeria, Egypt, Bangladesh, Bolivia, Burundi, Cameroon, Chad, China, Republic of Congo, Ethiopia, Gabon, Iraq, Lesotho, Libya, Macedonia, Morocco, Myanmar, Nepal, Qatar, Sierra Leone, Tunisia
Neutral 25 Côte d'Ivoire, Democratic Republic of the Congo, Equatorial Guinea, Eritrea, Eswatini, Guatemala, Guinea, Guniea-Bissau, Guyana, Haiti, Liberia, Malawi, Mali, Moldova, Nicaragua, Niger, Paraguay, South Sudan, Tajikistan, Togo, Turkmenistan, Uruguay, Yemen, Zambia, Zimbabwe
Regulated

*Not mutually exclusive with countries where crypto is legal
62 Albania, Andorra, Austria, Bahamas, Bahrain, Belarus, Belgium, Botswana, Bulgaria, Central African Republic, Croatia, Cyprus, Czech Republic, Denmark, El Salvador, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Kazakhstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Netherlands, Norway, Peru, Philippines, Poland, Portugal, South Korea, Romania, Russia, Serbia, Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Ukraine, United Arab Emirates, Venezuela, Bermuda, Gibraltar, Anguilla, British Virgin Islands
Used as Legal Tender
(currently in force)
1 El Salvador

 

Methodology

This study assesses the legal status of cryptocurrency in 2023 across 166 countries. The remaining 29 countries had inconclusive data. The data was collected from the Library of Congress, Atlantic Council, Techopedia, Finder, Triple-A, Chainalysis and Wikipedia. The IMF World Economic Outlook Database was used to classify a country as advanced or emerging (developing).


If you use these insights, we would appreciate a link credit to this article on CoinGecko. A link credit allows us to keep supplying you with data-led content that you may find useful.

Curious to learn more the cryptocurrency regulatory landscape? Check out this analysis we did on regulatory settlements in the United States.

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Winifred Amase
Winifred Amase

Winifred is a freelance data journalist passionate about using data to answer the world's questions. Leveraging her expertise, she is now uncovering insights in the crypto verse through data-driven exploration. Follow the author on Twitter @missamase

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