Countries where cryptocurrencies are restricted

Bitcoin has been controversial since its inception in 2009, as have other cryptocurrencies that followed. Critics of cryptocurrencies most often warn of their volatility, exposure to various illegal activities, huge consumption of electricity for their "mining", but in some countries, especially in developing countries, cryptocurrencies are often accepted as a "safe haven" during the economic crisis.

Thus, El Salvador became the first country in the world where bitcoin became the legal currency in September 2021, followed by the Central African Republic, which legalized bitcoin as a currency in April this year. But on the other hand, restrictions or complete bans on the use of cryptocurrencies have been introduced in several countries.

The legal status of bitcoin and other cryptocurrencies varies significantly from country to country, and in some, the relationship to cryptocurrencies has yet to be legally defined or is constantly changing. While most countries do not make the use of cryptocurrencies illegal, their status as means of payment or goods varies with different regulatory implications. 

Some countries have set restrictions on how cryptocurrencies can be used, and banks have banned their clients from conducting cryptocurrency transactions. Other countries have completely banned the use of cryptocurrencies with severe penalties for all those who perform crypto transactions. The most rigorous bans on cryptocurrencies are in the following countries:

Algeria

Algeria bans the use of cryptocurrencies following the execution of financial law in 2018 that made it illegal to buy, sell, use or hold virtual currencies.

Bolivia

There has been a total ban on the use of cryptocurrencies in Bolivia since 2014. The Central Bank of Bolivia has issued a resolution banning the use of any cryptocurrency that is not regulated by a country or economic zone.

China

China has increasingly disable cryptocurrencies in 2021. Chinese officials have repeatedly warned their people to stay away from the digital property market and have severely restricted mining in the country as well as currency exchanges in China and abroad.

On August 27, 2021, Yin Youping, Deputy Director of the Consumer Financial Protection Bureau of the National Bank of China (PBoC), called cryptocurrencies speculative assets and warned people to “protect their pockets”.

Efforts to undermine decentralized currencies beyond the control of governments and institutions - are largely seen as an attempt by the Chinese authorities to launch their own e-currency.

PBoC wants to be one of the first large central banks in the world to launch its own digital currency, and in this way could more closely monitor the transactions of its people. On September 24, 2021, the PBoC completely banned cryptocurrency transactions in the country.

Colombia

In Colombia, financial institutions are not allowed to facilitate cryptocurrency transactions. The Superintendencia Financiera warned financial institutions in 2014 not to “protect, invest, mediate or manage virtual money operations”.

Egypt

Egypt’s Dar al-Ifta, the country’s primary Islamic advisory body, issued a religious decree in 2018, classifying cryptocurrency transactions as “haram,” something that is prohibited by Islamic law. Although not binding, Egyptian banking laws were tightened in September 2020 to prevent the trading or promotion of cryptocurrencies without the permission of the central bank.

Indonesia

Bank of Indonesia, the country's central bank, has issued new regulations banning the use of cryptocurrencies, including Bitcoin, as a means of payment as of January 1, 2018.

Iran

Cryptocurrencies in Iran have a variable status. To avoid the worst impact of economic sanctions, Iran has turned to lucrative cryptocurrency mining practices to finance imports.

Although the Central Bank bans trade in cryptocurrencies mined abroad, cryptocurrency mining in Iran is encouraged. In order for the crypto industry to flourish, Iran has offered cheap energy to licensed miners but requires that all mined cryptocurrencies be sold to the Central Bank. 

And with such measures, unlicensed mining drains more than 2 GW from the national grid every day, causing power shortages. As a result, the Iranian government imposed a four-month ban on cryptocurrency mining until September 22, 2021.

About 4.5 percent of the world's Bitcoin mining takes place in Iran, which, according to blockchain analyst Elliptic, could generate revenue of more than 843 million euros.

India

India is becoming increasingly hostile to cryptocurrencies. On November 23, 2021, the government announced its intention to present a new law to the Indian parliament that would establish a new digital currency supported by the central bank, as well as ban almost all cryptocurrencies. 

Earlier in 2021, it considered criminalizing the possession, issuance, mining, trading, and transfer of crypto assets. Prime Minister Narendra Modi said that he wanted to ensure that cryptocurrencies "do not end up in the wrong hands, which can ruin our youth."

Iraq

Despite constant efforts by the authorities to block their use, cryptocurrencies are becoming increasingly popular in Iraq. The Iraqi central bank was particularly hostile, issuing a statement in 2017 banning their use, which is still in force. 

In early 2021, the Ministry of Interior of the Kurdistan Regional Government-issued similar guidelines to stop the mediation of money and exchange offices that handle cryptocurrencies.

Nepal

Nepal’s Rastra Bank has declared Bitcoin illegal since August 2017.

Northern Macedonia

Northern Macedonia is the only European country so far to have an official ban on cryptocurrencies.

Russia

Russia has a rather vague regulation of cryptocurrencies, which has been further complicated by its invasion of Ukraine. Although cryptocurrencies are not banned in Russia until recently there was a conflict against their use. It is now seen as a way out to help the country avoid the heavy financial sanctions imposed by the West.

Russia passed its first laws to regulate cryptocurrencies in July 2020, which for the first time designated cryptocurrency as a taxable asset. The law, which came into force in January this year, also prohibits Russian civil servants from owning any cryptocurrency. Russian President Vladimir Putin has repeatedly linked cryptocurrencies to criminal activities, calling for more attention, especially to cross-border cryptocurrencies.

In July, the chief prosecutor announced a new bill that would allow police to seize cryptocurrencies believed to have been obtained illegally, citing their use in bribery. However, as the world's third-largest mining hub, according to Cambridge University, there are fears that Russia could now accept cryptocurrencies and use its natural resources to exploit cryptocurrency mining instead of banning them.

Turkey

Many in Turkey turned to cryptocurrencies when the Turkish lira began to lose value a few years ago. With some of the highest levels of cryptocurrency use in the world, regulation of crypto assets by the government accelerated last year as inflation peaked. On April 16, 2021, the Central Bank of the Republic of Turkey issued a decree banning the use of cryptocurrencies, directly or indirectly, to pay for goods and services. 

The next day, Turkish President Recep Tayyip Erdoğan issued a decree to exchange cryptocurrencies on a list of companies subject to anti-money laundering and anti-terrorist financing rules.

Vietnam

The State Bank of Vietnam has declared that the issuance, supply, and use of cryptocurrencies are illegal as a means of payment and are subject to fines ranging from 5,600 to 7,445 dollars. However, the government does not prohibit the trading of cryptocurrencies or their possession as assets.