Recently, the Japanese authorities decided to admit foreign stablecoins to the local market.. Will digital stablecoins be able to circulate freely within the country? And where in the world can cryptocurrencies be used as a means of payment? Cryptocurrency legalization The task of legalizing and regulating cryptocurrencies is solved in different ways depending on a particular country, but almost always raises many questions from end users and investors: is it possible to pay with cryptocurrencies for goods and services, is it worth paying taxes for operations on the crypto market, and in general, Is it legal to just own bitcoin and transact? Now many countries have taken a course towards the conditional “legalization of the cryptoindustry”. This is partly facilitated by the gradual introduction of central bank digital currency (CBDC). Regulators often draw up “road maps” for development in order to remove cryptocurrencies from the “gray zone”, that is, most often it is not about full legalization, but only about the fact that certain individual operations with cryptocurrencies will be allowed. In this regard, in some countries, the cryptocurrency is legalized in different ways, depending on the directives of the financial regulator.. For example, the European Union is gradually introducing MiCA regulation (Markets in Crypto-Assets), the main provisions of which oblige crypto exchanges to transfer user data and information about transactions to specially authorized government agencies.. Of course, this goes against the concept of anonymous altcoins. Another example is Japan, which was among the first to raise the issue of legalizing the crypto industry, and where, with certain restrictions, bitcoin is currently accepted as a means of payment by certain market players (including licensed banks). And yet, even in Japan, with its relatively free cryptocurrency status, bitcoin and altcoins do not fall into the category of “legal tender”. What is legal tender Legal tender in a broad sense can be translated as “a currency that is in free circulation as a legal tender”. This status can be assigned either by the central banks of individual fears, or by authorized persons (governments, parliaments, and so on). What does this mean for the common people? In practice, as a rule, if a certain asset is recognized as a legal tender, then with its help you can pay anywhere in the country: buy clothes in a store, order coffee in a restaurant, or pay for some training courses. For example, in Russia, one hundred-ruble banknotes, ten-ruble coins and other banknotes related to the Russian ruble are the only means of payment legally acceptable. Consequently, the ruble on the territory of the Russian Federation has a status similar to legal tender. As a rule, fiat state currencies that are in free circulation are received first and more often the only place in legal tender. If we talk about cryptocurrency, then, as a rule, there is a similar algorithm for recognizing the status of a legal tender. Until the relevant central bank establishes that, for example, BTC is free to circulate, and, most importantly, it can be used everywhere and legally for its intended purpose (as money, an equivalent exchange item in the country), it is such is not. However, there are two aspects to be considered here. Various organizations may accept BTC or altcoins for payment for their goods and services, but they will do so at their own peril and risk, unless there is appropriate legislation from the jurisdiction where the companies operate. Hypothetically, the ban on use may be conditional, or the sanctions for such actions will not be strict enough. Then, in practice, people will use cryptocurrency as a means of payment relatively freely. If the central bank of a country accepts bitcoin as a legal tender, this does not mean that all other altcoins will automatically become legal as well.. That is, to say that the cryptocurrency is legalized in the general sense, it should be with reservations. Countries that have recognized cryptocurrencies as a legal tender There are few such states – only two. The first is El Salvador, the second is the Central African Republic (CAR). The authorities of both countries recognized bitcoin as legal tender with free circulation. True, the rest of the cryptocurrency in the same status has not yet been recognized there and in this sense has not been legalized.. But there is an important fact: in these countries you can actually go to the store and pay with bitcoins. Both countries are not rich and prosperous. Rather the opposite. Both in El Salvador and in the Central African Republic there are serious fundamental economic problems, and the recognition of bitcoin as a legal tender simply allows attracting potential investors. In El Salvador, almost a quarter of all GDP comes from remittances, the share of production of anything remains low. CAR, in turn, is a country rich in mineral resources, gold and diamonds. However, it doesn't help her much.. More than 70% of the population lives below the poverty line, according to 2020 World Bank data. The adoption of BTC as a medium of exchange is intended to attract money into the economy. While yes, this move shows that lawmakers in these two countries are ready to keep up with the times. Which countries can recognize bitcoin According to CNBC forecasts, some other countries in the future may also recognize bitcoin as a legal tender. Among the likely candidates is St. Kitts and Nevis. Recently, the Prime Minister of this Caribbean state said that the country's authorities are ready to consider the possibility of legalizing altcoins.. Considering that the economy of many Caribbean countries is built on tax privileges and a favorable investment climate, it is possible that in the future we will encounter the phenomenon of “crypto-offshore zones”. Paraguay may also recognize BTC as a legal tender, following El Salvador, according to CNBC analysts. Many well-known politicians of this country publicly declare that it is necessary to adopt useful experience. The situation with the legalization of cryptocurrencies in the world Each state has its own approach to legalization. Some prefer a complete ban on cryptocurrencies, such as in China. In China, the ban was introduced in 2021. What does not prevent the Celestial Empire from developing its CBDC. Interestingly, a complete ban on cryptocurrencies in the country did not lead to a complete halt in mining.. A significant share of the total computing power involved in the production of PoW cryptocurrencies still falls on the PRC, although not to the same extent as before. On the one hand, cryptocurrency is not prohibited in Russia, but, on the other hand, it cannot be classified as a legal tender. At the same time, users on the Internet from time to time come across ads for the sale of goods and services for bitcoin or altcoins.. True, it is very doubtful that sellers will notify the tax or other supervisory authorities about this. In general, the legislation is still at the stage of development and discussion.. As before, many concepts are simply absent or have fuzzy formulations.. And the positions of departments differ greatly. Representatives of the Bank of Russia oppose the introduction of cryptocurrency into circulation, while representatives of the Ministry of Finance, on the contrary, are considering the possibility of legalization. The State Duma is now considering a number of amendments related to the possibility of conditional legalization of mining. But this can hardly be attributed to the category of legal tender. An ambiguous situation has developed in the United States. Firstly, the authorities of individual states approach the issue of regulating the crypto market in different ways, since historically in the United States many issues are resolved at the local level, and not exclusively by the federal government.. In the whole country, cryptocurrency or separately bitcoin are not free in circulation.. However, in January 2022, Arizona tried to pass a bill that would give BTC legal tender status.. Moreover, this is the second such attempt by Arizona parliamentarians.. The first was in 2020, but even then it was not successful.. In a number of other states, any transactions for any money are allowed, but the status of the main means of payment remains with the dollar. Cryptocurrency is not free to circulate in Switzerland. But in a single city of Lugano, an interesting situation is developing: back in 2021, the authorities there announced that they were going to de facto give the stablecoin Tether and bitcoin the status of a legal tender. True, when performing the relevant operations, the cryptocurrency will be automatically converted into Swiss francs through a special intermediary. Sufficiently free legislation regarding cryptocurrencies has been formed in Japan. We repeat: here it is still not a legal tender. But no one forbids holding a cryptocurrency, trading it, and in certain cases (for a number of participants) as a means of payment. In favor of further legalization is the recently adopted law, according to which foreign stablecoins are allowed to be traded on exchanges.. It is worth adding that although in Japan the cryptocurrency does not apply to legal tender, there are organizations that still accept it as payments.. For example, the large company Rakuten accepts a number of coins to top up their Rakuten Pay and Rakuten Point services. In December 2022, Brazilian President Jair Bolsonaro signed a law recognizing bitcoin as a means of payment.. A reservation is immediately made that the cryptocurrency will not be recognized as a legal tender. In addition, where it can still be used as a means of payment, the local central bank will later determine. So it seems that you can pay, but not everywhere. Most likely, the story will be the same as in Japan or the USA. Slightly different situation in Taiwan. Here, banks are absolutely forbidden to be involved in the process with cryptocurrencies.. In addition, in the summer of 2022, it was proposed to introduce a ban on the use of credit cards when conducting transactions with cryptocurrencies. But on all other points there is no legislation as such. Well, since it is not there, then you can nominally buy it. In India, in fact, cryptocurrency is not regulated or prohibited.. It can be assumed that investment, accumulation or use of cryptocurrency as a means of payment is acceptable. But even here it is necessary to follow legislative initiatives, many wordings are vague and can be changed at any time. In Australia, the attitude towards cryptocurrencies is quite warm: they are legal there. However, they do not have the status of legal tender. Although the current category may be revised in the future, according to Forbes. It is nominally impossible to buy the same real estate for cryptocurrency today. However, a case is known when in Australia in the past they still sold a house for BTC at an auction. Conclusions If we talk about where you can pay in cryptocurrency for goods and services, then all states can be divided into four categories: Where cryptocurrencies have become a legal tender (El Salvador and the Central African Republic). Where they are banned (China, North African countries and some others). Where until now the clear status of cryptocurrency has not been defined (either it is being determined at the moment, or it depends on a particular region of the country), and therefore there is no clarity on the question: is it possible to pay in cryptocurrency (most countries of the world: USA, Singapore, India etc). Where it is clearly stated that a cryptocurrency or individual digital coins is a means of payment, but is not a legal tender (for example, Brazil).
The legal status of Bitcoin: in which countries you can pay with cryptocurrency
Officials and businesses will gather for a discussion on the legalization of virtual assets in Ukraine