ARE CRYPTOCURRECIES LEGAL?
Fiat currencies derive their authority from the government or monetary authorities. For example, each dollar bill is backstopped by the U. S. government.
But cryptocurrencies are not backed by any public or private entities. Therefore, it has been difficult to make a case for their legal status in different financial jurisdictions throughout the world. It doesn't help matters that cryptocurrencies have primarily functioned outside most existing financial infrastructure.
In the U.S.
The legal status of cryptocurrencies creates implications for their use in daily transactions and trading. In June 2019, the Financial Action Task Force (FATF) recommended that wire transfers of cryptocurrencies should be subject to the requirements of its Travel Rule, which requires AML compliance.
In the United States in July 2023, courts ruled that cryptocurrencies are considered securities when purchased by institutional buyers but not by retail investors purchased on exchanges.
Enthusiasts called it a victory for crypto; however, crypto exchanges are regulated by the SEC, as are coin offerings or sales to institutional investors. So, crypto is legal in the U.S., but regulatory agencies are slowly gaining ground in the industry.
In Asia
Japan's Payment Services Act defines Bitcoin as legal property. Cryptocurrency exchanges operating in the country are required to collect information about the customer and details relating to the wire transfer.
China has banned cryptocurrency exchanges, transactions, and mining within its borders, but has a Central Bank Digital Currency (CBDC).
India was reported to be formulating a framework for cryptocurrencies, but until it is enacted, crypto is not yet illegal. Exchanges are free to offer cryptocurrencies.
In Europe
Cryptocurrencies are legal in the European Union. Derivatives and other products that use cryptocurrencies must qualify as "financial instruments." In June 2023, the European Commission's Markets in Crypto-Assets (MiCA) regulation went into effect.