is cryptocurrency legal 
fiat currencies derive their authority from the government or monetary authorities for example the u s dollar is recognized and issued by the government as the official currency of the united states and is legal tender but cryptocurrencies are not issued 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 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 although cryptocurrencies are considered a form of money the internal revenue service irs treats them as financial assets or property for tax purposes and as with most other investments if you reap capital gains selling or trading cryptocurrencies the government wants a piece of the profits how exactly the irs taxes digital assets either as capital gains or ordinary income depends on how long the taxpayer held the cryptocurrency and how they used it 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 as of june 2024 el salvador is the only country to accept bitcoin as legal tender for monetary transactions in the rest of the world cryptocurrency regulation varies by jurisdiction 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 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 this law sets safeguards and establishes rules for companies or vendors providing financial services using cryptocurrencies 