In recent weeks there has been a major focus on the impact government regulation could have on Bitcoin. There are fears that increased regulation could make it more difficult to buy, sell and innovate by making bitcoin illegal.
However, at present Bitcoin is only regulated in a very small number of countries, including a handful of countries where Bitcoin is illegal. The bans are structured in different ways with no real common pattern as to how the bans are being structured just yet.
This article looks at the countries which currently ban Bitcoin, showing the reasons why it was banned and how the ban works. This will help you to understand the potential impact of a ban should they become more widespread globally.
In Algeria, the purchase, sale, and use of Bitcoin and any other Crypto is completely illegal. There is an interesting definition as to what constitutes a Crypto in Algeria.
It is described as currency is that used by internet users via the web and doesn’t have a physical form such as coins and notes which would allow payment by cheque or credit card. This is a unique definition and one which could be more widely adopted.
However, its one that could also become redundant very quickly. Bitcoin cards are now available, and you can buy physical Bitcoins although at this stage they are just a novelty. It is expected that this definition will be revised in the future but at present, it clearly represents a ban.
Any breach of the laws against Crypto Currency is punishable under Algerian law, it is not advisable to break any law in Algeria.
Bitcoin is also banned in Bolivia. The Central Bank of Bolivia has adopted a slightly different approach in their definition of Cryptos to Algeria. They say simply that you cannot denominate prices in any currency that are not previously approved by a part of the Bolivian government; hence in effect, you cannot use Crypto Currency or Bitcoin for anything.
Many countries have strict currency controls, so this type of approach could be adopted more widely in countries that do.
The Government of Bolivia believes that the ban is necessary to protect the Boliviano, the country’s national currency also citing a vaguer general need to ‘protect their citizens’.
Again, the ban is under Bolivian law, not something to be taken lightly. The Boliviano has historically been an unstable currency so any perceived threat to its strength would appear to be dealt with very harshly.
The ban in Ecuador is again unique. The Government of Ecuador banned decentralized digital/cryptocurrencies, due to the upcoming establishment of a new state-run electronic money system.
This system would be controlled by the government and tied directly to the local currency. Users will be able to pay for select services and send money between individuals.
The system is to be backed by the assets of the Banco Central del Ecuador, the nation’s central bank with the government overseeing it and integrating it into the national financial system. This is a totally unique reason for a ban to date.
Companies offering digital currency services will have to withdraw from operations or cease entirely and there will be no Bitcoin investment.
The ban in Kyrgyzstan was introduced with very severe language. The government saw Cryptos, as very unstable and a completely unsuitable payment tool. Citizens who proceed to use Cryptos such as Bitcoin “assume all the possible negative consequences of the possible violation of the legislation of the Kyrgyz Republic”.
That is not a sentence you want to hear in a former part of the Soviet Union. Any violation of the laws there would again likely result in severe penalties.
Bangladesh is another country with a ban, but one which is tiny in the Cryptocurrency world. Anybody caught involved with Crypto Currency could be jailed under the country’s strict anti-money laundering and foreign exchange laws, the messages from the government to date have been strongly worded but still somewhat unclear.
In Bangladesh, the transaction of virtual currencies online with any unnamed or pseudo named peer may cause a violation of the above-mentioned acts and lead clients to face various financial and legal risks.
How exactly they plan to enforce the law is however very unclear from government communications with further detail shrouded in very general statements.
In Nepal, things are much simpler. Bitcoin and other Cryptos were simply declared illegal. End of. Nepal is tiny economically so the impact here on the wider world is minimal. The main impact is on the citizens of this isolated kingdom. You certainly will not be using Bitcoin at Everest base camp anytime soon anyway. Bitcoin investment is categorically banned.
The National Bank of Cambodia has stated that Crypto Currencies are illegal in Cambodia and has instructed commercial banks in the country not to accept Bitcoin and other coins in financial transactions.
The picture is somewhat confused however with nobody sure if that represents an outright ban. This is interesting as many countries may find it difficult to legislate to ban something which is essentially lines of computer code but it does make Bitcoin investment very hard.
Taking a step back
As can be seen in the article above very few countries have made Bitcoin illegal to date, the ones that have are small players in the Crypto world and tend to be in less stable parts of the world.
This could be considered a shame as the main beneficiaries of Crypto Currency are likely to be the unbanked and those without access to excellent infrastructure. Not to mention the inability of the countries citizens to interact and grow with this new technology.
However, the nature and structure of the bans outlined above offers some insight into how a ban may work elsewhere and what form it might take.
It is hard to find a pattern in any of the bans to date as they are so different, the only thing that can be learned is that the stricter the government in general, the higher the likelihood some ban will be introduced if it enters the national discussion.