Bitcoin is over 10 years old but many countries still dont have a clear legal framework and rules for cryptocurrencies. It is partly related to the fact that a lot of countries started discovering crypto recently and dont have a sustainable position regarding the cryptocurrency market. This creates an atmosphere of uncertainty which makes it difficult for investors and businesses to understand how to work with cryptocurrencies and whether it is worth working with them.
However, in some countries, the regulatory framework for cryptocurrencies is constantly evolving and market participants have some understanding of the pros and cons of using cryptocurrencies on the local market. Clear rules that favor cryptocurrencies help businesses to implement blockchain and cryptocurrencies into the existing system. On the other hand, some countries consider cryptocurrencies as a threat, so they have introduced strict restrictions and bans
Will there ever come a day when cryptocurrencies come out of the gray area and become legal all over the world? In fact, this is quite difficult since the concept legal is sometimes deceptive and requires some additional questions.
Legal as what?
Not all cryptocurrencies are the same and it raises the question about how they should be classified. Even the same cryptocurrency is treated differently in many countries. For example, in the US, bitcoin is classified as a commodity, while in the European Union it is considered as legal tender and electronic money, making bitcoin a currency as opposed to being a commodity.
The further development and taxation of cryptocurrencies on the local market largely depends on this classification. Since bitcoin is recognized as a commodity in the United States, it became possible for bitcoin futures to appear on the American exchanges CME and CBOE.
At the same time, some altcoins are viewed by regulators as securities, which is already a completely different asset class and requires a different approach to regulation. That is why different cryptocurrencies will have different paths to become legal.
Legal for what?
Even if cryptocurrencies are legal in a particular country, this does not always mean that they can be used as a payment method. For example, in Vietnam, bitcoin is outlawed as a means of payment and it could not be used to purchase goods or services but crypto trading is not banned. This means that even if you buy Tron (TRX)
, ETH or BTC, you can only use them to trade and as a store of value.
Besides, legal status is not a protection against certain restrictions that users may face. For instance, in Cambodia, there are restrictions for banks regarding transactions related to cryptocurrencies which makes cryptocurrency adoption slower and harder.
As you can see, the word legal can be quite insidious and doesnt always reflect the complete freedom to use an asset in accordance with possible expectations. Therefore, even if cryptocurrencies become legal all over the world, it is still important to pay attention to how cryptocurrencies are viewed and how they can be used.
The main obstacles to be legal in all countries
Each country is unique, they have a different cultural, historical, political, and religious legacy, so the attitude towards cryptocurrencies as such can differ significantly. This is one of the main reasons why cryptocurrencies are unlikely to be legal in all countries, because some countries may have their own reasons to ban them. For example, Bolivia has completely banned cryptocurrencies. According to the Central Bank of Bolivia, this ban was put in place to protect the national currency, as well as to protect the citizens from the risks of using unregulated currencies.
It is clear that the government or the economic situation may change and then the attitude towards cryptocurrencies will be different, but the same applies to countries that look supportive of cryptocurrencies. Legal status does not give immunity and the regulators position may be changed.
Also, some countries are experimenting with the idea of a central bank digital currency (CBDC). It means that in the future they may see cryptocurrencies as competitors.
Why do cryptocurrencies still have a small chance to be legal all over the world?
Cryptocurrencies are decentralized
and dont have a single point of failure, they are politically neutral and not related to a particular country. The main thing is that users, developers and regulators see the potential in cryptocurrencies to solve certain problems in traditional financial systems. If the potential value of cryptocurrencies exceeds the potential risks, then cryptocurrencies may become legal in most countries.
Given the differences between cryptocurrencies, it is unlikely that all of them will be legal in all countries, especially anonymous cryptocurrencies. However, certain cryptocurrencies may achieve a legal status around the world, but this takes time and the formation of a clear legal framework for cryptocurrencies.