Regulation
Which countries ban cryptocurrencies? – TechRound
Cryptocurrencies, which operate without central authority, have attracted a lot of attention recently. While some nations support them with regulatory frameworks, others impose heavy restrictions or outright bans.
Bitcoin, introduced in 2009, and subsequent cryptocurrencies have been controversial due to their volatility, use in illegal transactions and high energy consumption. Despite this, many in developing countries see cryptocurrencies as a financial haven.
As their popularity grows, so do global legal restrictions, with varying degrees of acceptance and regulation in different countries.
Reasons to ban cryptocurrency
Several governments have chosen to ban or restrict the trading and use of cryptocurrencies due to a mix of economic, regulatory and security concerns. Here are some key reasons why some countries have opted for a cautious stance or an outright ban:
Association with criminal activities
Cryptocurrencies, particularly Bitcoin, have historically been linked to criminal activity. In the beginning, Bitcoin was often used on illegal platforms. The authorities claim that the decentralized nature of cryptocurrencies makes it difficult to track illegal activities such as money laundering, drug smuggling and terrorist financing.
Despite an overall increase in crypto transactions, the percentage of cryptocurrencies used in crime has declined over the past decade. However, many regulators still associate cryptocurrencies with criminal activity, prompting some countries to ban them.
Competition with Fiat currencies and CBDCs
Nations could also ban cryptocurrencies to protect their fiat currencies and promote them central bank digital currencies (CBDC).
In Turkey, for example, citizens have turned to stablecoins and Bitcoin as alternatives to the rapidly inflating Turkish lira. To curb this trend, the Turkish central bank has banned the use of digital assets for daily payments, with the aim of preserving the value of the lira.
Additionally, countries like China and Russia see cryptocurrencies as competitors to their CBDCs. By banning cryptocurrencies, these nations hope to ensure the dominance of their state-backed digital currencies.
Consumer protection
Cryptocurrencies are highly volatile and lack the insurance protections offered by traditional financial assets. This makes them prone to scams and hacks. Some countries ban cryptocurrencies to protect their citizens from these risks.
Following the collapse of Terraform Labs’ UST stablecoin, many nations have introduced stricter regulations on stablecoins to improve consumer protection. For example, the European Union has proposed restrictions on algorithmic stablecoins, which are perceived as riskier due to the lack of equivalent fiat reserves.
The importance of adhering to cryptocurrency laws
By joining cryptocurrency laws and regulations are crucial for individuals and businesses operating in this industry. These rules aim to promote fairness, transparency, and accountability within the crypto ecosystem. Failure to comply can result in severe penalties, including large fines or even criminal charges in some cases.
The regulations cover various aspects, such as anti-money laundering measures, tax obligations, consumer protection and reporting requirements. By following these guidelines, users and crypto companies can establish trust, mitigate risks, and contribute to the overall stability and legitimacy of the industry.
Trusted crypto platforms prioritize regulatory compliance, implementing robust measures to protect user interests and maintain a safe environment for transactions and investments. Navigating complex regulations requires diligence and commitment to upholding the highest standards of ethical conduct.
Countries that have banned cryptocurrencies
Several countries have imposed bans or strict regulations on cryptocurrencies due to concerns about financial stability, investor protection and potential risks of illicit activity. Here we look at countries that ban cryptocurrencies and their reasons for doing so.
Afghanistan
The Taliban banned cryptocurrency trading in August 2022.
Algeria
In 2018, the Algerian parliament passed the Financial Law, which bans the purchase, sale, use and possession of cryptocurrencies.
Bangladesh
In 2017, Bangladesh Bank declared cryptocurrencies illegal. In 2022 they reiterated their position, stating that virtual currencies are not recognized.
Bolivia
The Central Bank of Bolivia banned the use of cryptocurrencies in 2014 and reaffirmed it in 2022, prohibiting the banking sector from carrying out cryptocurrency-related transactions.
China
In 2021, China extended previous restrictions to ban cryptocurrency mining, outlaw transactions, and prevent foreign exchanges from serving Chinese citizens.
Egypt
In 2022, the central bank renewed its warning against cryptocurrencies due to high risks, value fluctuations and use in financial crimes.
Ghana
In 2022, the Government of Ghana reiterated its 2018 ban on cryptocurrencies in financial transactions, assessing of blockchain technology role in the payment system.
Iraq
The Central Bank of Iraq banned cryptocurrencies in 2017. In 2018, the Supreme Fatwa Council of the Kurdistan Regional Government ruled against the use of the OneCoin cryptocurrency.
Kuwait
In July 2023, Kuwait’s Capital Markets Authority banned transactions of virtual assets, including cryptocurrencies, as part of anti-money laundering initiatives.
Lesotho
Since 2018, the central bank has declared that cryptocurrencies are neither regulated nor licensed, thus prohibiting the promotion of cryptocurrency investments.
Libya
In 2018, the Central Bank of Libya declared virtual currencies illegal pending regulation, due to concerns about their use in criminal activities. In June 2023, authorities arrested 50 Chinese citizens in a crackdown on illegal mining.
Morocco
The Ministry of Economy and Finance banned all crypto transactions in 2017 for violating exchange regulations. However, in January 2023, the central bank announced a draft law on the regulation of cryptocurrencies.
Myanmar
In 2020, the Central Bank of Myanmar banned cryptocurrency trading, warning of imprisonment or fines for violators. In July 2023, the shadow government created a crypto-bank to disrupt the ruling military junta’s foreign currency flows.
Nepal
Nepal Rastra Bank banned the use, trading and mining of cryptocurrencies in 2017. In 2021, it declared the trading and promotion of cryptocurrencies illegal. In January 2023, Nepal Telecom Authority instructed ISPs to block all cryptocurrency-related websites, apps, or online networks.
North Macedonia
The government has completely banned the use of cryptocurrencies since 2016.
Republic of Congo
According to the IMF, the government has imposed a total ban on cryptocurrencies.
Saudi Arabia
In 2017, the Saudi Arabian Monetary Agency (SAMA) banned financial institutions from carrying out crypto transactions. In 2019, the government issued a warning about unauthorized cryptocurrency transactions. In 2022, SAMA hired a virtual resource manager to develop the regulations.
Sierra Leone
The Bank of Sierra Leone banned two cryptocurrency companies in 2019 and announced that no company or financial institution is authorized to operate investments in cryptocurrencies or trade.
Tunisia
Tunisia has strictly banned the use of cryptocurrencies. Calls for decriminalization emerged after a teenager was arrested in 2021 for using cryptocurrencies in an online transaction.
In summary, various countries have banned or restricted cryptocurrencies due to concerns about criminal activity, competition with national currencies, and the need for consumer protection. These measures reflect each nation’s unique regulatory and economic priorities, with the goal of ensuring financial stability and security.
Understanding these reasons can help individuals and businesses navigate the complex marketplace of global cryptocurrency regulations, promoting safer and more compliant participation in the digital asset market.