Cryptocurrency is the future of money, and it’s time to get on board.
But are cryptocurrencies legal?
It’s not as simple a question as you might think. In this article, we’ll delve into whether cryptocurrency is legal or illegal, what makes it so confusing, and offer some advice for how to stay safe.
We’ll also take a look at how different countries have treated cryptocurrency and what that means for people who live in those areas.
The thing is, It’s a complicated question with many different answers depending on who you ask, but there are some facts that can help guide your decision.
What is Cryptocurrency and how does it work?
Cryptocurrency is an encrypted and decentralized digital currency created by the exchange of “digital signatures.” It operates independently from a central bank or government.
Units of cryptocurrency are transferred between people, organizations, and companies without involving any financial institution.
Cryptocurrencies can be purchased on exchanges (like Coinbase) where you can buy Bitcoin (BTC) with traditional currencies like U.S Dollars (USD).
You can also purchase them through mining – a process in which miners solve complicated math problems to create new coins for themselves (or their company/organization).
The problem is that all this excitement around cryptocurrencies has obscured some very important information about how these assets actually work.
Founded in 2009, Bitcoin is a cryptocurrency and the world’s first fully decentralized digital currency.
There are now over 4,000 cryptocurrencies in the world right now.
And the number keeps increasing.
Cryptocurrencies use cryptography to secure transactions – making them extremely difficult to counterfeit – and control the creation of new coins or tokens through mining operations that take place on servers all over the world (a process called “mining”).
Transactions involving this crypto-currency are recorded into blocks of data known as “blockchains.”
What is Blockchain?
Blockchain is the underlying technology that powers Bitcoin and crypto a digital currency.
Blockchain can be used to store and send money without going through an intermediary like a bank or service company.
The transactions are recorded onto data blocks on a ledger which is distributed across many nodes or computers in order to avoid any single point of failure.
A blockchain is not owned by anyone but instead belongs to everyone who uses it because their consensus rules its state changes over time.
Transactions made with Bitcoin or any Cryptocurrency cannot be reversed unless there’s enough support for doing so from the public network (e.g., miners).
Blockchain is what enables bitcoins/cryptocurrency while also being something that isn’t centralized; it makes peer-to-peer transactions possible without needing a middleman (e.g., bank)
The entire security, privacy and ownership of the digital currency are guaranteed by a cryptographic protection system that is unbreakable in principle but can be broken with enough time and effort.
Blockchains could help reshape online interactions to make them more transparent while still retaining anonymity for private transactions.
Is Cryptocurrency Legal?
There are many different opinions on the legality of cryptocurrency, and some countries have barely formulated a response.
In addition to this, there is not one singular legal framework for cryptocurrencies in place across all jurisdictions at present.
In order to explore the question: “Is Cryptocurrency Legal?”
We will investigate three separate approaches which may help answer that question.
Firstly let’s consider if it can be classed as money or an asset; secondly, does it meet the criteria of being secured, and thirdly what constitutes ‘legal tender’.
Is Cryptocurrency Money or Asset?
Cryptocurrencies do possess features similar to those defining money such as having intrinsic value, acting socially acceptable when exchanged with goods & services, giving individuals freedom to use it, acting as a store of value, and being durable. However, each one differs in the degree to which they fit these criteria.
Is Cryptocurrency Secured?
A cryptocurrency may not meet the first condition for security status because there is no guarantee that it will be able to provide an expected return or having any intrinsic value at all.
An investment by buying cryptocurrencies would seem more like speculation on future price rises than a legitimate bid for potential profit from trading such assets – this also means you do not have ownership rights over them; moreover, if losses are incurred then you cannot claim compensation through the courts
Is Cryptocurrency Legal Tender?
The final consideration we need to take into account when addressing “Is Cryptocurrency Legal” is the status of cryptocurrencies as legal tender.
This issue has been debated for some time and it seems that legislation will continue to be updated when necessary.
But the answer to this question is an unequivocal YES!
The term “legal tender” is often misunderstood to mean that a certain currency has to be accepted as payment for goods and services in the country it was issued, but this isn’t true – instead, legal tender status means that you can use this form of money to pay your taxes in particular circumstances (such as when you’re unable).
Cryptocurrencies are usually not recognized as legal tender by any national government which automatically makes them illegal if they have been created with an intention of being used on their landmass.
However most countries only regulate cryptocurrency markets during trading activities and do not prohibit holding or exchanging cryptocurrencies even though these currencies may not be considered valid within those territories.
As such there’s no one answer to the question of whether or not cryptocurrency is legal.
But in my opinion, whatever means of value that is acceptable and adoptable by the masses can be called serve as a legal tender regardless of what those in powers do or says.
FAQs and Other things to know about Cryptocurrency
Is Cryptocurrency legal in USA?
As of February 2020 Bitcoin was made legal within the US.
It can be exchanged for goods or services just like any other currency but it still suffers some drawbacks due to its volatility as well not being backed by anything tangible such as gold or silver.
Can Cryptocurrency be converted to cash?
Yes, Cryptocurrency can be converted into cash or other currencies.
There are several ways to convert bitcoin into cash and ultimately move it to your bank account.
You can sell your bitcoins on an exchange, such as Coinbase, Binance, or KuCoin – this is the easiest way if you want to get paid directly in dollars and withdraw them right away from your digital wallet.
Can the government stop Cryptocurrency?
The government can NOT stop Cryptocurrency.
They can, however, control its use with a few regulatory guidelines.
You know, Governments regulate the trade of goods and services to prevent abuse or exploitation from using it in unlawful ways such as money laundering.
The United States has recently taken steps toward regulating cryptocurrency exchanges by imposing taxes on the trade of cryptocurrencies, establishing anti-money laundering guidelines for exchanges as well.
Cryptocurrency regulations are still in their infancy and with new developments happening so quickly every day it’s difficult to predict what the future holds.
However, some experts believe that government intervention will increase in favor of cryptocurrency use cases, such as improving financial inclusion in developing countries.
Which Cryptocurrency should I invest in now?
Right now, I’m heavily invested on just a few solid coins like:
- Stellar Lumens
- Trust Wallet tokens
While I’m also holding some meme coins and tokens which at the moment have no actual use cases.
Which Crypto coins or tokens you should invest in all depends on your exposition and experience in the Crypto space.
But my advice for anyone looking to invest in Cryptocurrency is to do your research and take a look at the coins or tokens that are being accepted by various merchants.
And also take a look at the people behind it.
You should also be careful about where you store your coins and tokens because many exchanges have been hacked, so storing them on an exchange is not recommended.
Get them on a Crypto wallet instead. Especially if you plan on investing and holding over $50k worth of Crypto for a long time.
Will Cryptocurrency replace traditional money?
Well, I doubt that Cryptocurrency will ever replace traditional or fiat money.
I compared both Crypto vs Fiat currencies here which dives deep into the matter.
But the question is not whether Crypto will replace Fiat, but rather how it might affect the world.
We are already seeing a number of countries experimenting with cryptocurrencies instead of using their own fiat currency and they seem to be doing well so far.
Crypto adoption will help immensely in creating decentralized societies that are not dependent on governments.
So the answer to this question is a definite no, but it might change how we use money in the future and create new currencies.
Is Cryptocurrency Legal in India?
Cryptocurrency is not a form of legal tender in India. However, it is not illegal to buy and trade Cryptos in India.
As there are millions of Indian Crypto-savvies already buying, trading, investing and making a killing through digital currencies.
However, as at when writing this, the Indian government is exploring crypto regulation.
Is Cryptocurrency Legal in Australia?
The good is that cryptocurrency is legal in Australia.
Reports has it that Cryptos, digital currencies, and cryptocurrency exchanges are legal in Australia, and the country has been progressive in its implementation of cryptocurrency regulations.
Is Cryptocurrency Legal in Hawaii?
Unfortunately, cryptocurrency is not a legal form of currency in Hawaii.
But the idea of buying, trading, and investing in crypto in Hawaii is not illegal.
The problem is that it is just very hard for exchanges to operate in Hawaii because of the strict restrictions required by law. Which makes it a bit difficult for Hawaiians to purchase bitcoin.
However, there are a few exchanges Hawaiians can safely buy, trade, store and invest cryptos. Like Gemini, Kraken, Swan Bitcoin, and BlockFi.
Is Cryptocurrency Legal in Pakistan?
Cryptocurrency is currently not legal in Pakistan.
Bitcoin has been in a frenzy of controversy as it faces scrutiny from officials and bans.
Now, Pakistan is joining the rest by banning banks and exchanges to stop any support for Bitcoin within its borders.
Pakistan has recently made a decision to ban the use of cryptocurrencies as it is deemed an illicit activity. All related transactions will be flagged as suspicious.
The State Bank of Pakistan announced this decision in 2018.
However, Crypto enthusiasts who still want to buy, trade, and invest can do that via a few exchanges like LocalBitcoins, Kraken, and Coinmama.
Is Cryptocurrency Legal in Nigeria?
The buying and trading of Cryptocurrency have been declared illegal by the Central Bank of Nigeria.
On 5 February 2021, The Central Bank of Nigeria issued a circular informing financial institutions in Nigeria that sequel to their circular in January 2017, dealing in cryptocurrency or facilitating payment for same remains prohibited and would attract a stiff penalty.
That said, millions of Nigerians are still heavily involved in Crypto.
To safely buy Bitcoin or any type of Crypto in Nigeria, you can do that on Binance.com using the peer-2-peer option.
Is Cryptocurrency Legal in Argentina?
Yes, Cryptocurrency is legal in Argentina.
However, a lot of the regulations around cryptocurrency are still being sorted out and there are restrictions on how it can be used as currency.
Is Cryptocurrency Legal in Canada?
Cryptocurrency is not recognized as legal tender in Canada but can be safely traded.
Canadian merchants who wish to accept cryptocurrency must do so via a third-party service provider which converts the crypto into Canadian dollars at the point of sale.
You can purchase Bitcoin online in Canada using one of the many cryptocurrency exchanges.
- Coinbase and Coinbase PRO
Is Cryptocurrency Legal in China?
China is one of the countries that have banned cryptocurrency trading, meaning it’s illegal to trade Bitcoin or any other form of crypto with yuan (CNY).
However, transactions involving coins and tokens which are not issued by central government authorities remain legal within mainland China.
Is Cryptocurrency Legal in UK?
Yes, Cryptocurrency is legal in the UK. It is not considered a currency, but it does fall under the category of money.
The United Kingdom’s approach to cryptocurrency regulations has been measured, but the post-Brexit financial landscape has led to a noticeable change.
Although the UK confirmed in 2020 that crypto assets are property, it has no specific cryptocurrency laws and cryptocurrencies are not considered legal tender.
Is Cryptocurrency Legal in Dubai?
The UAE Central Bank warns people against using bitcoin and other virtual currencies due to their volatile nature.
Dubai does not consider Bitcoin and Cryptos as legal tender, but there aren’t restrictions on buying, investing, trading, or selling them either.
Is Cryptocurrency Legal in Malaysia?
Yes, Crypto operations are legal in Malaysia.
There is no law that explicitly prohibits or allows cryptocurrencies yet so it is legal to hold them up until now but not as a means of payment.
Final Thoughts: Is Crypto Legal?
The short answer is YES. Why?
Because it can serve as a medium for exchange or value. It has to first become an accepted means of exchange before this question even arises though.
Cryptocurrency is legal, and it’s a viable means of exchange.
There are still some uncertainties regarding the regulation in various countries but as long as there are no guidelines or regulations that forbid cryptocurrencies, then they should be considered an acceptable form of payment.
Hope this post helps answer your question on the legality of Cryptocurrency?
I’d like to know your thoughts below. Invested in Crypto already or considering it?
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