Countries Around the World Where Cryptocurrency Is Banned

Cryptocurrency has been praised and criticised for a number of different reasons, thus making digital currency an extremely polarising topic of discussion.

It has been heavily criticised for its volatility, its use in nefarious transactions and for the excessive use of electricity to mine it. In contrast, crypto is being viewed by many, particularly in the developing world, as a safe harbour that offers protection during economic storms.

In September 2021, El Salvador became the first country on the planet to make Bitcoin a legal currency. In April 2022, the Central African Republic became the second country to adopt Bitcoin as a legal currency.

However, as more people turn to cryptocurrency as either an investment or a lifeline, criticisms of crypto have continued to rise in an array of restrictions on their usage.

The legal status of Bitcoin and other altcoins (alternative coins to Bitcoin) varies significantly from country to country. Although in some, the relationship remains to be properly defined or is constantly changing.

Whereas the majority of countries don’t make using Bitcoin or other forms of crypto itself illegal, its ability to be used as a form of payment or as a commodity varies with differing regulatory implications.

Some countries have placed limitations on the way crypto can be used, with banks banning its customers from making cryptocurrency transactions. Other countries have banned the use of Bitcoin and cryptocurrencies outright with heavy penalties in place for anyone making crypto transactions.

Here is a list of countries that have a very fraught relationship with cryptocurrency.

Algeria - Algeria currently prohibits the use of cryptocurrency following the passing of a financial law in 2018 that made it illegal to buy, sell, use or hold virtual currencies.

Bangladesh - Bangladesh has an ambiguous relationship with cryptocurrencies. Officially, prohibitions are in place with transactions in crypto punishable by up to 12 years under the country's money laundering and terrorist financing laws. However, the country has proposed a new blockchain strategy signalling a warming towards crypto and virtual assets and there have been no credible reports of any convictions related to the use of cryptos.

China - In late September 2021, the Chinese Government banned all forms of cryptocurrency transaction. The Chinese Government outlined that the reasons for their ban is that they believe that the role of cryptocurrencies in facilitating financial crime as well as posing a growing risk to China’s financial system owing to their highly speculative nature. Despite these claims, one other possible reason behind the cryptocurrency ban is an attempt to combat capital flight from China.

Egypt - Egypt’s Dar al-Ifta, the country’s primary Islamic advisory body, issued a religious decree in 2018 on cryptocurrency, classifying Bitcoin transactions as “haram,” something which is prohibited under Islamic law. While not binding, Egypt’s banking laws were tightened in September 2020 to prevent trading or promoting cryptos without a Central Bank license.

Ghana – Cryptocurrency is currently illegal in Ghana. However, its central bank has expressed an interest in blockchain technology and its potential uses and is accessing how it could be integrated into the country's financial system.

India – In 2021, the Indian Government had considered criminalising the possession, issuance, mining, trading, and transference of crypto assets. Prime minister Narendra Modi said he wanted to ensure crypto "does not end up in wrong hands, which can spoil our youth".

Iraq - Despite sustained efforts by authorities to block their use, cryptocurrencies are becoming increasingly popular in Iraq. The Iraqi Central Bank has been particularly hostile, issuing a statement in 2017 prohibiting their use which is still in force to the present day. In early 2021, the Ministry of Interior for the Kurdistan regional government issued similar guidance to stop money brokerages and exchanges handling cryptos.

Mexico - Cryptocurrency are illegal in Mexico, stating in June 2021 that virtual assets were not legal tender and not considered currencies under existing laws. Despite the restrictions, there are some in Mexico who have embraced the virtual currencies, with the country's largest crypto exchange Bitsos boasting 1 million registered users.

North Macedonia - North Macedonia is the only European country to have so far introduced an official ban on cryptocurrencies, such as Bitcoin, Ethereum, and other altcoins.

Russia - In July 2022 Russian President Vladimir Putin signed a law that issued a national ban on using digital assets for payments. The announcement comes after the Russian government and central bank have long debated what to do about cryptocurrency.

In January 2022, The Bank of Russia proposed an outright ban on crypto for payments or investments. The law announced in July 2022 doesn't go quite that far. In February, Russia's Finance Ministry submitted a draft of cryptocurrency regulations to the government which, like the law enacted today, allows for investing in digital assets like Bitcoin or Ethereum, but not using them to buy things.

The law, as published on the Russian parliament website says;

“It is prohibited to transfer or accept digital financial assets as a consideration for transferred goods, performed works, rendered services, as well as in any other way that allows one to assume payment for goods (works, services) by a digital financial asset, except as otherwise provided by federal laws.”

Turkey - On the 16th April 2021, the Central Bank of the Republic of Turkey issued a regulation banning the use of cryptocurrencies including Bitcoin, directly or indirectly, to pay for goods and services. The following day, The President of Turkey Recep Tayyip Erdoğan went even further and issued a decree that crypto exchanges to a list of firms subject to anti-money laundering and terrorism financing rules.