The legality of Bitcoin is very different from one country to another. Countries have not banned the mere possession of Bitcoin, but they have imposed various limitations on trading, mining, and using it for payments or among institutions which have led to a mixed bag of regulations. In the majority of the countries, Bitcoin is considered legal to own and trade as an asset or commodity, but very few of them declare it as legal tender.
Is Bitcoin Legal Tender Anywhere?
The term “legal tender” implies that a certain currency must be utilized for settling debts and taxes. Bitcoin has been in the news for being the first to do so in a few nations, but its usage has still been restricted and is changing over time.
In 2021, El Salvador declared itself the first country to embrace Bitcoin as legal tender along with the U.S. dollar. The government introduced the Chivo wallet as a means to carry out transactions and even used the energy from volcanos to mine Bitcoin.
Nevertheless, at the beginning of 2025, El Salvador changed its Bitcoin Law as a consequence of the IMF’s (International Monetary Fund) pressure for a loan agreement. The compulsion for businesses to accept Bitcoin was scrapped, thus making the use of Bitcoin optional. Even though this retrenchment took place, Bitcoin is still regarded as legal and the government is also keeping reserves and pushing for the adoption of people voluntarily thereby continue holding reserves and promoting voluntary adoption.
In 2022, the Central African Republic momentarily did the same but then changed its mind very quickly because of the difficulties that were involved such as poor internet access. By 2025, there was no country that had completely adopted Bitcoin as obligatory legal tender.
Countries like Bhutan, for example, involve the government in mining and keep the mined Bitcoin but do not give it the status of legal tender. These cases show the difficulties of the present day: even though forward-thinking leaders regard Bitcoin as a means to safeguard against inflation or as an instrument for financial inclusion, its practical use is still opposed by international organizations and is not widespread among the general public.
Is Bitcoin Legal in the United States?
In the United States of America, the situation with Bitcoin is such that it is absolutely legal and has really taken its place in the financial system. For the IRS, Bitcoin is property and so it is taxed like one (this means capital gains taxes apply on its trading). At the same time, the Commodity Futures Trading Commission (CFTC) declares it to be a commodity, while the SEC regulates certain associated products.
The year 2025 was a big turnaround year for the crypto industry, thanks to the new government’s friendly policies towards it. Spot Bitcoin ETFs that had been approved earlier got a large amount of money coming in and by the end of 2025 had over $150 billion worth of assets under management.
More legislation like the GENIUS Act helped to clarify the situation of stablecoins, thus indirectly benefiting the Bitcoin ecosystem. Besides, a presidential decree set up Strategic Bitcoin Reserve which is going to hold on to the confiscated Bitcoin rather than selling it off.
Different banks and major companies have now provide custodial and trading services as their core offerings. For example, Texas is known to offer miners pretty advantageous energy policies, and at the same time, New York is known for its tough licensing. All in all, the U.S.A still holds the position of the most Bitcoin-friendly nation among the large economies, as evidenced by the fact that there are more than 37,000 Bitcoin ATMs across the country.
Bitcoin’s Legal Status in the European Union Under MiCA
The Markets in Crypto-Assets (MiCA) regulation of the European Union, which is completely operational as of January 2025, establishes a single legal framework for 27 EU countries. Bitcoin is not regarded as either a security or a stablecoin, thus it is not subjected to rules applicable to issuers, nonetheless, exchange and wallet services are required to get a license as Crypto-Asset Service Providers (CASPs).
MiCA regulation focuses on the protection of consumers, compliance with anti-money laundering (AML), and the maintenance of the market’s integrity. More than 100 CASPs were already registered by December 2025, thus enabling the practice of passporting (the practice of allowing licensed firms to operate all over the EU) in the market. Germany and Switzerland are among the countries that provide national incentives to MiCA, while for example, Germany allows tax-free gains for investments lasting more than one year, thus attracting long-term investors. The UK, after Brexit, has its own regulations but is closely parallel to that of the EU, classifying Bitcoin as a property. It is possible to buy, sell, and hold Bitcoin across Europe; besides, there is an increase in the involvement of institutions in tokenized assets.
Where Is Bitcoin Banned or Heavily Restricted?
While a few numbers of countries go for an outright prohibition of Bitcoin, they often cite problems like money laundering, capital flight, or energy consumption risks as reasons for doing so. Among them, China, as usual, has the strictest position. Starting from 2021, no cryptocurrency transaction, mining, or any related business is allowed in the country. This resulted in an exit of miners from the country.
Apart from China, the other countries that have put a total ban on cryptocurrency are Algeria (criminalizing all crypto activities in 2025), Egypt, Bangladesh, and Nepal. They all share skepticism about crypto that ranges from the fear of losing financial stability to very moderate religious interpretations calling crypto speculative.
In India, Bitcoin is completely legal to own and trade; however, a 30% tax on profits and 1% deduction on transactions are basically deterrents to the trade, thus making the activity less popular. Russia legalized mining during 2024-2025 but prohibited the use of cryptocurrencies for payments, nevertheless, it is experimenting with crypto for international trade and sanctions.
Is Bitcoin Mining Legal Worldwide?
Mining is closely linked with trading, and this connection often determines the legality of both practices in different jurisdictions. The U.S. and Canada are among the few countries where such practices are completely legal, and it is often the case in Europe, provided they comply with energy regulations. The state of Texas, for instance, has seen a surge in mining activities, thanks to the availability of inexpensive renewable energy.
The European Union, through its MiCA regulation, keeps an eye on the environmental effects of mining activity but does not prohibit it.
Mining is still banned in China and some countries like Kosovo, where the ban is a direct consequence of energy shortages. Kazakhstan has a strict licensing policy and requires that a percentage of the mined bitcoins be sold in the local market. In Russia, mining is subject to heavy regulations, and the profits are taxed.
