The rise of Bitcoin and crypto has rattled governments around the world. Faced with the possibility of waning national currencies, less visibility into people’s financial transactions, and lower tax revenues, many countries have moved to ban Bitcoin and make the use of cryptocurrency illegal.
But which countries currently have Bitcoin on their blacklists? And what penalties could you face if you use crypto in those jurisdictions? Let’s take a closer look.
Although it’s not driven by the Canadian government, some banks in Canada have started to block their customers from making crypto purchases using either their debit or credit cards. The most notable institutions to have made the decision are Bank of Montreal and Toronto Dominion (both in 2018).
There are obvious ethical questions that arise from banks dictating how you can spend your own cash, but regardless, the ban has been mostly unsuccessful. It merely forced those banks’ customers onto P2P platforms like LocalBitcoins. The site’s trading volume jumped from $1.2 million to $7.2 million after the ban began.
2. United Arab Emirates
The United Arab Emirates—in particular, Abu Dhabi and Dubai—has spent much of this millennium forging itself a reputation as being one of the foremost financial zones on the planet.
It is perhaps surprising, therefore, to learn that there’s an absolute ban on crypto in the country. In June 2018, The Law Library of Congress published a report which claimed the Central Bank of the United Arab Emirates published a regulatory framework in January 2017 that “prohibited all transactions in virtual currency.”
However, in practice, the situation is less clear. In February 2018, a Dubai company (Regal RA DMCC) became the first company in the Middle East to get a license to trade cryptocurrencies. The license does not cover ICOs or exchanges.
There are not many countries in the world that have an outright ban on all forms of crypto use and ownership. Egypt, however, is one of them.
Much the reasoning can be traced back to religious reasons. The Dar al-Iftaa issued a religious decree in 2017 that classified all commercial transactions in bitcoin as haram (illegal under Islamic law). He went on to say that “cryptocurrencies could damage national security and central financial systems and could also be used to fund terrorism and terrorist activities.”
The decision was validated in 2018 when the Central Bank of Egypt confirmed that “commerce within the Arab Republic of Egypt is confined only to the official paper currencies approved by the Bank.”
Like Canada, there are banking restrictions on using crypto in India. Unlike Canada, however, the ban has been instigated by the government rather than by the banks themselves.
Reserve Bank of India (RBI) announced a complete ban on all crypto transactions in April 2018. During its first policy statement for the 2018/19 fiscal year, it said:
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [virtual currencies]”.
In a further declaration, the Finance Minister, Arun Jaitley, said “[India] will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system.”
Since the announcement, an appeal has slowly been moving through India’s Supreme Court. An update to the proposed Indian Draft Blockchain Strategy bill includes a digital version of the Rupee, pushing Bitcoin and other cryptos towards legality in India.
BREAKING: A national crypto Rupee has been proposed in an Indian Draft Blockchain Strategy,
a week after the RBI confirms legal status for crypto.@coinkit_ mon 5 25 doge
— Bloqport (@bloqport) January 29, 2020
Not all countries are banning Bitcoin. There are numerous countries investigating or implementing a national cryptocurrency already!
The legality of crypto and Bitcoin in China is a complex beast. Officially, it is not illegal for a Chinese citizen to own crypto. However, a steady stream of restrictive laws has made it very difficult for residents to get their hands on any.
In 2013, the crackdown began when the People’s Bank of China prohibited any financial institutions from handling or processing crypto transactions. That was followed by a 2014 law that forced banks to close all Bitcoin trading accounts. In 2017, exchanges and trading platforms were banned across the country, before in 2018, Bitcoin mining was widely restricted by the State Administration of Foreign Exchange.
China’s policy places the country in opposition to its Hong Kong territory, in which all Bitcoin and crypto usage remains legal.
Bitcoin has been banned in Ecuador since June 2014—making it one of the first countries in the world to issue a Bitcoin ban.
However, unlike some of the other countries with Bitcoin bans, Ecuador’s decision wasn’t necessarily based out of desire to restrict its population per se. Rather, it was borne out of a misguided belief that the government could create its own digital currency and make some money.
That doesn’t mean that the law was any less draconian. It states, “Business must shut down their operations immediately […] Those who defy the ban will face prosecution, and all bitcoins circulated and assets in bitcoin trades face confiscation.”
Unsurprisingly, Ecuador’s own digital currency— Dinero Electrónico—hasn’t been a great success. The coin is pegged to the US dollar, but private banks are not using it.
Here’s how Julio José Prado, President of the Association of Private Banks (ABPE), described the new token:
“We cannot at this point support any financial program that is administered by the BCE since we have no confidence that it is secure.”
Fast-forward to today, and the government is making little effort to enforce its ban. LocalBitcoins remains popular, and some Bitcoin ATM machines have even started popping up.
When neighboring India made moves to ban crypto in 2018, Pakistan quickly moved to formalize its own ban. The ban went live in April 2018 following an announcement by the State Bank of Pakistan (SBP)
Although the situation is a bit murky, it appears that the ban only applies to banks and financial institutions.
In a statement, the bank said, “The SBP has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any [crypto]. All banks should refrain from processing, using, trading, holding, transferring value, promoting, and investing in virtual currency. Any transaction in this regard shall immediately be reported to the Financial Monitoring Unit as a suspicious transaction.”
The Future of Bitcoin Bans
Are we going to see more bans come into force as time goes by? Or might we see countries with current bans slowly relax their laws as Bitcoin adoption around the world continues to grow? Make sure you reach out on our Twitter and Facebook pages and let us know.
And if you’d like to learn more, make sure you read our other articles on illegal uses for Bitcoin that are still valid today and the legality of Bitcoin tumblers.
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