Around the World in Bitcoin Stances: Government Attitudes towards Cryptocurrencies
On December 28th 2017, the Dar-al-Ifta of Egypt issued an official religious decree against Cryptocurrency, labelling it ‘Haram’. Whilst this is one of the more hostile of government attitudes towards Crypto, such a statement is a fair representation of some of the hurdles that digital currencies have faced since their initial 2008 inception. In some countries, however, cryptocurrencies have been greeted with openness and curious intrigue, with a willingness to integrate them into their financial ecosystems. Here, we take a look at official government approaches to the adoption of digital currencies across the world, highlighting those that have embraced the new technology, those that have shut their doors to it, and those with a changing mindset.
Disclaimer: This article is created for educational purposes only.
It is worth beginning this article by highlighting the fact that the perception of cryptocurrencies amongst Egyptian authorities is not — as far as we can see — widespread. However, there are certainly attitudes towards digital currencies that ultimately do not consider them to be authentic, trustworthy or ready for the public domain. With that being said, we are starting to see such attitudes exist in slight isolation, with the world beginning to warm up to the idea of a digital newcomer to the financial landscape.
The overall perception of Bitcoin amongst official government entities is generally positive. Far from the ‘cloak and dagger’ image that can sometimes be painted of crypto, there is a fairly unanimous spread of acceptance for its existence, and an openness to its significant potential. Some perceptions are entrenched in the good, some in the bad, and as will be demonstrated, others are swaying on the fence.
Crypto Fans — El Salvador, Malta, Kyrgyzstan
Not only do El Salvador, Malta and Kyrgyzstan treat cryptocurrency as a legal entity, its role in the fiscal affairs of their citizens is actively promoted. On September 7th 2021, El Salvador implemented the ‘Bitcoin Act’ — legislation that made Bitcoin official legal tender. The government even holds its own crypto wallet, the Chivo Wallet, that citizens can use to hold their crypto assets and facilitate trades and purchases from. That being said, 93% of companies in the country reported zero purchases from cryptocurrencies in its first month of implementation. This one will be a slow burner.
Malta has held an ‘open-door policy’ to Cryptocurrency since 2017, when President Joseph Muscat announced a government strategy that would invest in and promote both Bitcoin and Blockchain technology in general. However, it is worth noting that Crypto doesn’t simply run free in Malta — it is subject to taxation in the same way that fiat currencies are. However, it is very much an integrated part of the fiscal system of the country, and is an active participant in a healthy financial network.
The dominant power — no pun intended — in the Central Asia region for cryptocurrencies can be found in Kyrgyzstan. The country’s extremely cheap power rates make it a very popular crypto mining destination — it’s a lot cheaper to operate a mine in Kyrgyzstan than the vast majority of countries in the world. It is also a place where digital currencies can be bought, sold and traded openly. This, of course, sounds like a great deal for the Kyrgyz — particularly in the context of crackdowns from Chinese and Indian governments over crypto related activities that have driven enthusiasts towards Central Asia. However, crypto mining actively recently went underground in some places, and the Krygyz government has been forced into cracking down on illegal mining farms that do not comply with government crypto laws and regulations — whilst also dramatically affecting the country’s electricity supply. With all that said, Kyrgyzstan remains completely open to crypto activity — provided you don’t bring their electrical grid down in the process.
On The Fence — Ecuador, Turkey, Taiwan
There’s a common theme amongst the countries that find themselves somewhere in the middle of the cryptocurrency acceptance spectrum. Generally, it’s accepted that citizens can hold such assets, but their active use is not supported, nor protected by any kind of insurance, like fiat currencies would be.
Ecuador permits both the purchase and trading of Bitcoins, and it is perfectly legal to hold crypto in a digital wallet. What isn’t perfectly legal, however, is the purchase of goods with that crypto — but it’s not as black and white as that. Article 98 of the country’s financial rulebook threatens the seizure of crypto assets — and anything purchased with those assets — should an individual be caught completing transactions for commodities with crypto. However, in another twist, not one person has ever been prosecuted against this rule, so it’s questionable how active the rule really is. While that may not be a total indication of a softening approach towards digital currencies, it’s certainly a distinguishing feature between themselves and governments that are strong enforcers against crypto.
As of 2021, Turkey holds a similar ban to Ecuador on the usage of digital currencies to purchase typical commodities that fiat currencies would usually be used for. However, while we may be able to observe a deviation in the application of government policy on crypto in Ecuador, the opposite can be said in Turkey. Come 2022, it is expected that a cryptocurrency related bill, seeking to implement strict regulations on the industry, will be put to the Turkish Parliament. There is a mood amongst Turkish authorities that some kind of control over the crypto boom in the country is required — although the country’s Treasury has stated they do not intend to ban the practice of trading.
Taiwan follows Ecuador and Turkey in explicitly stating that cryptocurrencies such as Bitcoin are not acceptable forms of payment. In fact, there was an opportunity in 2014 for the country to install a world first Bitcoin ATM — sadly, it refused. However, what is worth noting with Taiwan is that the focus is on financial institutions that facilitate transactions involving crypto when it comes to punitive measures, rather than the citizens themselves — a direct contrast to Ecuador. There is nothing to suggest that it is illegal to hold cryptocurrencies in the country however, and Taiwan is itself being tipped to be a safe haven for crypto in the future. Watch this space.
Closed Doors — Bolivia, Nepal, Morocco (and Egypt)
It is rare to find countries that are completely hostile to the presence of cryptocurrencies. Whilst there is, as demonstrated, levels of scepticism about its existence, and a push from government authorities to establish rules and regulations for the industry, it is not commonplace to see total hostility towards the technology. With that being said, there are certainly exceptions.
In September 2021, the Central Bank of Nepal sought to remind its citizens that crypto trading and mining is ‘illegal and punishable’. This may have sent a shudder down the estimated 1.45% of the Nepali population that hold cryptocurrencies privately — although their existing position as crypto holders in the first place may suggest otherwise. Nonetheless, the government’s stance is clear, although it is being heavily lobbied by media outlets in the country who see crypto as a ‘currency of the future’.
In a similar move to Nepal, the Central Bank of Bolivia has been explicit in its condemnation of cryptocurrencies for a long time. Not budging from their preset 2014 stance on digital currencies, Bolivia considers any kind of trading in crypto as illegal — although it is not clear what level of punishment is handed down to violators. In what appears to be a common theme across crypto-banning nations, activists in the country are continuing to contest the strict rules, advocating the potential of the technologies and the secure nature of the blockchain. Time will tell if this one will change, however it is fair to say that if we do see a shift in policy from the Bolivian government, it would be a colossal win for crypto advocates across the world.
Suspicion is the best word to use to describe the Moroccan government’s perception of cryptocurrencies. While not considered a ‘Haram’ practice like its African counterpart Egypt, crypto is considered something of a lawless entity, and something that needs regulating significantly. In 2017, Bitcoin was considered by then governor of Bank Al-Maghrib Abdellatif Jouahri as a financial asset, and vitally not a currency — therefore delegitimizing its position in the country’s fiscal network. That said, it is estimated that approximately 2.4% of the Moroccan population hold crypto — they won’t be spending it in Morocco anytime soon.
A Changing Landscape
One thing is common amongst the countries listed, and the many dozens that aren’t — cryptocurrency is a talking point. The debate rages on about its legitimacy, how it can collaborate with traditional financial networks, and provide a suitable alternative to fiat currencies for citizens of countries across the world. Judging by the trends we are able to see more recently, there is optimism amongst crypto enthusiasts that the list of countries who are fans of the technology will continue to grow in the near future.
List of Sources
http://www.dar-alifta.org/home/index?aspxerrorpath=/ar/ViewFatwa.aspx
http://kluwertaxblog.com/2021/07/08/how-maltas-system-is-embracing-the-crypto-revolution/
https://freemanlaw.com/cryptocurrency/ecuador-and-cryptocurrency/
https://www.dailysabah.com/business/tech/turkeys-cryptocurrency-law-soon-to-be-debated-in-parliament
https://www.sciencedirect.com/science/article/pii/S2590051X21000058
