Cryptocurrency regulation has been controversial since the launch of Bitcoin in 2009. The legal status of cryptocurrencies varies from country to country and can even change drastically in a single country. For example, India went from a complete ban to regulation and then to restrictions. Most of the cryptocurrency bans mostly happened during major bull runs in the crypto market in 2017-2018 and 2020-2021.
According to the Law Library of Congress survey, 51 countries have banned cryptocurrency. The report was released in November 2021, updating the survey conducted in 2018. To date, nine countries have “completely banned” crypto, while 42 others have issued “implied bans”. In most cases, these “implied prohibitions” prohibit banks and other traditional financial institutions from dealing with crypto.
Furthermore, the report revealed that the number of countries subjecting crypto to anti-money laundering and tax laws has increased 3x since 2018. For example, all members of the European Union, Except for Bulgaria, currently have these regulations in place.
Here are some countries that have decided to say no to crypto and why.
In 2018, the Algerian government introduced a law aimed at prohibiting any activity related to “so-called virtual currencies”. It stated that virtual currency could not be replaced or backed by any document or fiat currency. Algeria accepted this law shortly after its introduction and now prohibits the use of any cryptocurrency. Anyone who buys, sells, holds or uses cryptos in Algeria would be subject to penalties under the financial law.
China has restricted the use of cryptocurrency via several restrictive measures since 2013. Despite this, China has long had a thriving crypto market. But in September 2021, the Chinese government decided to completely ban mining, crypto trading, and crypto transactions.
These laws banned all crypto activity across the country. As a result, some major Chinese exchanges have decided to move to other countries, while global exchanges have announced that they will no longer provide services to Chinese citizens. Chinese miners have also chosen to outsource their mining capabilities. A series of crackdowns in China have made Kazakhstan the world’s second-largest bitcoin mining center after the United States.
Many experts view these government efforts to undermine cryptocurrency as an attempt to float Chinese state-issued e-money. The People’s Bank of China is looking to be one of the first major central banks to launch its own digital currency (CBDC). China has already completed its pilot program for e-CNY, and it will launch it somewhere in 2022.
Nepal has an absolute ban on the use of cryptocurrencies within its territory. In August 2017, Rastra Bank of Nepal declared Bitcoin illegal. Then the government banned crypto mining and trading in 2019 under the Foreign Exchange Act.
Nepal has also been exploring government-issued digital currency recently, and this may be one of the reasons why common cryptocurrencies like Bitcoin and Ethereum are banned there. This means that we could see a new CBDC issued by the Nepalese central bank being established in the coming years.
Egypt classifies crypto transactions as “haram” or prohibited by Islamic law. The corresponding religious decree was issued in 2018 by leading Islamic advisory body Dar al-Ifta. According to the country’s Islamic legislature, cryptocurrencies can pose a threat to national security as they could harm the country’s economy. Additionally, Egyptian banking laws were strengthened in September 2020 to prevent the promotion and trading of cryptocurrencies, but they are more advisory in nature than mandatory.
Nevertheless, cryptocurrencies are not completely banned in Egypt, and their restrictions do not prevent Egyptians from buying and using crypto. Many cryptocurrency exchanges provide services to customers based in Egypt and see thousands of registrations from this country. Users can buy ZRX (0x) coins, bitcoins, ethereum and use different crypto-related services.
Turkey has a large crypto market with many local exchanges, but the government is not very happy with it. Customers from Turkey were also very interested in crypto in 2021 due to the recent decline in the value of the national currency.
In April 2021, the Turkish government issued a regulation prohibiting the use of cryptocurrencies as a means of payment. Then Turkish President Recep Tayyip Erdogan issued an executive order to add crypto exchanges to the list of companies that must follow anti-money laundering rules. He also claimed that the country would control crypto activity by releasing a corresponding regulatory bill. At the moment, it is still unclear what the implementation of this bill will mean for Turkish crypto enthusiasts and when it will be implemented.
Currently, cryptocurrencies are banned for crypto trading, as authorities in Bangladesh consider digital currencies to be too risky and “too decentralized” assets. Moreover, crypto trading goes against the financial regulations and laws of the country. In September 2014, Bangladesh’s central bank claimed that crypto traders could be jailed for years under the country’s strict anti-money laundering laws.
Iran has specific relationships with cryptocurrencies. In 2018, Iran’s central bank issued a statement prohibiting banks and other financial institutions in the country from dealing with cryptocurrencies, but recognizing mining as a legal industry. The country decided to follow this path to escape the impact of economic sanctions and finance imports.
Iran’s central bank has encouraged Bitcoin mining in the country, offering cheap energy to licensed miners. But miners in Iran are forced to sell all mined cryptocurrencies to the central bank. According to blockchain analytics firm Elliptic, this has helped Iran collect over $1 billion in revenue.
However, there are still many unlicensed miners in the country that consume so much electricity that it causes power shortages. This became one of the main reasons for Iran’s temporary four-month ban on Bitcoin mining in 2021.