As a decentralized digital asset, Bitcoin’s legal status varies significantly around the world. This article will examine how different countries recognize Bitcoin’s status as legal tender and focus on the recognition of its status as “virtual property” in various jurisdictions.
Global Recognition of Bitcoin’s Status as Legal Tender
To date, only one country worldwide has officially granted Bitcoin the status of legal tender.
- El Salvador: In August 2021, it passed legislation to become the world’s first country to designate Bitcoin as legal tender.
- Most Developed Countries: Countries such as the United States, Canada, Japan, Singapore, Australia, and most European Union member states permit the holding, trading, and use of Bitcoin but have not granted it the status of legal tender; they typically regulate it as an asset, commodity, or payment instrument.
- Germany: As early as August 2013, Germany recognized Bitcoin as a legitimate unit of account with a clear legal and tax status.
- Countries with a complete ban: These include Bolivia, Nepal, Algeria, Qatar, and others, which completely prohibit activities related to Bitcoin or cryptocurrencies.
Recognition of Bitcoin’s “Virtual Property” Status
Unlike legal tender status, Bitcoin—as a digital asset with economic value—has been recognized to varying degrees in many jurisdictions as “virtual property.”
China: Judicial Recognition of Property Status, but Strict Prohibition on Financial Activities
China’s stance is very clear, characterized by the parallel coexistence of “recognition of property status” and “prohibition of financial activities.”
- Regulatory Classification: In documents issued in 2013 and 2017, regulatory authorities such as the People's Bank of China (PBOC) classified Bitcoin as a “virtual commodity” rather than currency in the true sense of the word.
- Judicial Practice: Chinese courts generally recognize Bitcoin’s status as virtual property in judicial precedents. For example, in a 2019 case, the Hangzhou Internet Court explicitly ruled for the first time that Bitcoin possesses value, scarcity, and disposability, and should therefore be protected as virtual property.In 2022, the Shanghai High People’s Court also issued a ruling stating that, as virtual property, Bitcoin’s property attributes are subject to legal regulation.
- Current Policy: In September 2021, ten Chinese government departments jointly issued a notice clarifying that all business activities related to virtual currencies (such as exchange and trading) constitute illegal financial activities and are strictly prohibited. Therefore, while the personal possession of Bitcoin is not illegal in itself, related trading and investment activities are not protected by law, and risks must be borne by the individual.Investors can monitor market trends through platforms such as Svmuu, but must be fully aware of the associated compliance risks.
United States: Legal at the Federal Level; States Actively Exploring Options
Bitcoin is not prohibited at the federal level in the United States, and mining activities are legal in all states. The U.S. Internal Revenue Service (IRS) treats mining proceeds as taxable income. Notably, as of early 2025, more than twenty states have proposed or passed legislation to explore the establishment of state-level strategic reserves of Bitcoin or cryptocurrencies.
European Union: Establishing a Unified Regulatory Framework for Crypto Assets
In April 2023, the European Union adopted the Markets in Crypto-Assets (MiCA) Regulation, the world’s first comprehensive regional regulation governing the cryptocurrency market. MiCA brings tradable crypto-assets, such as Bitcoin, under regulatory oversight, aiming to protect investors, maintain market integrity, and combat money laundering, thereby providing clear rules for the lawful operation of crypto-assets within the EU.
Other Regions
Different countries have adopted diverse regulatory approaches based on their specific circumstances: Indonesia treats cryptocurrencies as tradable commodities; Norway treats them as assets; and Israel imposes capital gains tax on them.
Summary
Overall, the global legal landscape for Bitcoin is complex and constantly evolving. While El Salvador has taken the lead by adopting it as legal tender, the vast majority of countries have chosen to define and regulate it within their existing financial and legal frameworks.In terms of property rights, judicial practices in many countries, including China, have recognized their status as virtual property; however, this is distinct from permitting them to engage in public, regulated financial activities. Investors must thoroughly understand the specific laws and regulations of their country or region before participating.
