Countries That Banned Bitcoin and Why
Counties of the world have varying perspectives on the legitimacy of Bitcoin and other available cryptocurrencies; while Western nations like the United States and Britain have shown support for it and countries like Canada and Australia are still somewhat uncommitted about it, there are several countries that have made the decision to go against it and its operation.
Please keep in mind that not recognizing the use of Bitcoin and banning Bitcoin entirely are not one and the same. The focus of this piece will be on countries that have completely banned the use of Bitcoin.
The reasons for these rejections vary a lot from country to country, although a few include fear of the failure of the cryptocurrency (a phenomenon which has become a major topic of debate among international financial heavyweights), a general ignorance about it as well as what it is supposed to achieve, a desire of these countries to protect their currency and their financial systems, and a desire to build a patented cryptocurrency in the image of Bitcoin. Although the list is still comprised of a few countries, the number is definitely subject to change, especially as a lot of countries have yet to make an official decision as to whether or not to allow the operation of Bitcoin.
The ban on Bitcoin in some countries is an action usually taken by either the Central Banking systems of these countries or the governments. While some countries take the ban action through their Central Banks, others do so thanks to the government (and in some cases, the Central Banks and the governments could be acting as one and the same in taking the action)
In no order at all, these are the top bans of the Bitcoin platform, through an official statement that served to ban the currency on a nationwide level.
Through an official statement, the Central Bank of Bangladesh expressed serious concerns over one of the major characteristics of Bitcoin; a lack of a centralized payment system. According to the Bank, this could lead to a lot of people facing diverse forms of financial harm. The Central Bank invoked the Foreign Currency Control Act of 1947 as well as the Money Laundering Control Act of 2012. The Central Bank then went on to add that any individual found guilty of trading Bitcoin and other crypto assets would be eligible for a 12-year prison sentence.
“Bitcoin is not a recognized legal tender of any country. As such, any transaction that is carried out through Bitcoin and any other cryptocurrency will be treated as a punishable offense”
- The Central Bank of Bangladesh, via an official statement in September 2014.
The ban is a consequence of the enforcement of Sections 4, 5, and 8 of the Foreign Currency Control Act; a law that was formulated in 1947 as a means of governing the trading of foreign currencies without the provision of general permission from the country’s Central Bank. Section 5, in particular, forbids any form of payment made outside of Bangladesh, and this affected Bitcoin directly.
In an official statement that served as a ban on Bitcoin and other forms of cryptocurrency, El Banco Central de Bolivia (the Bolivian Central Bank) said;
“The use of any currency that has not been issued and is not being controlled by the government or any other authorized entity in Bolivia is strictly illegal and prohibited”
- El Banco Central de Bolivia, in an official statement
At some point, China was actually the biggest trading market for Bitcoin in the world. However, at some point, there was a common misconception about how the ban took effect. In truth, while there was a ban imposed on the use and trading of cryptocurrency in China for some years now, the ban in question only applied to banks. The Chinese government actually owns 70% of the People’s Bank of China (the Chinese central banking authority). When the ban was imposed, it restricted banking employees and institutions from engaging in the trade of Bitcoin through banking, and the act of doing business with the services industry through Bitcoin as well was banned. At that point, it wasn’t seen as an illegal act to mine or trade in Bitcoin, especially for civilians
However, it all changed when in January 2018, when the Leading Group of Internet Financial Risks Remediation (the top internet finance controller in China) asked local governments to “actively guide” the mining and manufacturing of Bitcoin and to “orderly quit” the business.
As a response to this notice, the People’s Bank of China immediately issued an order for all financial institutions to halt the provision of financial services as well as the provision of any form of funding to any crypto asset-related activity.
Of all the bans imposed on Bitcoin, the one issued by Ecuador is seen as the one which made the most sense and which has seemingly been the most effective. The reason for Ecuador’s Bitcoin ban is the fact that they are looking to build a national electronic cash system. The government felt the need to protect this new and budding cash system from the effects of something far superior. They saw Bitcoin, a decentralized currency with a finite production amount that is free of any form of banking and government control and manipulation, as a force that could bring untold consequences to the growth of their cash program, especially as it offered none of those benefits.
On the 14th of March 2014, the Central Bank of Iceland, in a released official press statement, explained their stand and the level of legality that Bitcoin and other crypto assets had in Iceland. In this statement, they asserted that the purchase of Bitcoin will violate the Icelandic Foreign Exchange Act (which states that under no circumstances should Icelandic currency leave the borders of the country)
This designation clearly lacked any form of definite context, but it definitely seemed like a ban.
The first Bitcoin exchange platform that was created and designed in India was BTCXIndia. Although it followed guidelines set by AML and KYC, and it also allowed for the instant withdrawals and deposits of IR (the Indian Rupee), BTCXIndia was forced to shut its doors by their bank, as the bank announced that they were halting the provision of their services to Bitcoin-based businesses. The reasons for this sudden halt was unknown, although many sources stated that it was either a direct ban from the Indian government or a perceived threat that was posed by the cryptocurrency. Regardless, the issue was a widespread ban all through India.
“Today, our bank informed us that they will no longer be providing their services to business that work with Bitcoin. We have gone on to investigate the possibility of doing business with other banking institutions, but it seems as though this is a policy that has gone all throughout India as of today”
- BTCXIndia, in an official statement
Even though there was a legal victory that set a precedent for the lifting of a ban that was imposed on websites that conducted business advised on Bitcoin and other crypto assets, there still seems to be a practical ban on Bitcoin. Due to the fact that the Ruble is still in a rebound process, there isn’t really much encouragement from the government as regards the use of other currencies, regardless of whether digital or official legal tender.
In Sweden, there has been a little ban imposed on the use of Bitcoin as a means of buying and selling waste products like parts, scrap metal, and other spare materials. Although this sets a majorly ominous precedent for the government to have an interfering influence anytime in the future, the ban is still currently restricted to the industry.
According to reports by various news outlets, Bitcoin was named as an illegal entity in Thailand on the 29th of July, 2013. However, from all indications, it will appear that there was a preliminary ruling that was issued which stated that the use of Bitcoin was seen as illegal due to an apparent lack of any obvious and pre-existing laws.
The effect of this is that although the ban is still in place in Thailand, it is yet to take any significant form of effect and this means that companies that deal, transact and invest in Bitcoin and other crypto assets are still able to conduct their day-to-day business activities seamlessly and without stress.
In February of 2014, the Vietnamese government banned credit institutions from making use of Bitcoin. The basis for this ban was the fact that it was easy for criminals to make use of Bitcoin, and that it has incredibly high risks for investors.
“Any transaction that is carried out with the use of Bitcoin is highly unknown, and that has made it an effective mechanism for crimes like tax evasion, internet fraud, money laundering, and much more”
- The Central Bank of Vietnam, via an official statement
Although the Vietnamese government didn’t officially ban the use of Bitcoin for use by citizens, they highly discouraged it. This division seems to be the norm for many countries around the world; put your faith in the currency owned and controlled by the Central Bank but don’t trust in digital currency. It is much more desirable (and highly recommended) for you to trust the Central Bank to look after and ensure the safety and actualization of your economic interests but you at least have a choice to do so if you’re not currently.