Can cryptocurrency replace fiat currency?

12 Feb 2022 By PAYCEC

Cryptocurrency is a new type of currency that is protected by cryptography, a type of computer encryption that makes counterfeiting impossible. At this time, no cryptocurrency has successfully surpassed fiat in any portion of the world.

While tax authorities, enforcement agencies, and regulators around the world debate best practices, one hot question is whether or not bitcoin is lawful. The user's location and activity influence the answer.

Countries That Say Yes to Bitcoin

1. The United States

Since 2013, the Financial Crimes Enforcement Network (FinCEN) of the United States Department of Treasury has issued guidance on bitcoin. The Treasury has classified bitcoin as a money services business (MSB) rather than a currency. This brings it into compliance with the Bank Secrecy Act, which mandates that exchanges and payment processors follow particular reporting, registration, and record-keeping requirements.


Bitcoin exchanges are classified as money service businesses (MSB) in Canada. As a result, they are subject to anti-money laundering (AML) regulations. Bitcoin exchanges must register with FINTRAC, report any suspicious transactions, abide by the compliance plans, and even keep certain records.

3. Australia

Bitcoin is neither money nor a foreign currency in Australia, according to the Australian Taxation Office (ATO), which classifies it as an asset for capital gains tax purposes.

The European Union

The European Court of Justice (ECJ) declared on Oct. 22, 2015, that purchasing and selling digital currencies is deemed a provision of services and is therefore exempt from VAT in all European Union (EU) member states.

4. The UK

The Financial Conduct Authority (FCA) in the United Kingdomhas a pro-bitcoin stance and wants the regulatory climate to encourage it. In the United Kingdom, Bitcoin is subject to taxation.

5. El Salvador

El Salvador is the world's only country that accepts bitcoin as legal money. The country's Congress supported President Nayib Bukele's plan to formally use bitcoin as a mode of payment in June 2021.

Countries That Say No to Bitcoin

  • China
  • Russia
  • Vietnam
  • Bolivia
  • Columbia
  • Ecuador

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