Legal Status of Crypto: What’s Allowed, Banned, and Where It Matters

When you hear legal status, the official recognition or restriction of cryptocurrency by a government or regulatory body. Also known as crypto regulation, it determines whether you can buy, trade, mine, or even hold digital assets without breaking the law. This isn’t about opinion—it’s about rules that change daily. One country lets you pay rent in Bitcoin. Another locks up exchanges that don’t follow its rules. And some ban banks from touching crypto entirely.

The VASP, a Virtual Asset Service Provider that’s licensed to handle crypto transactions is now the key player in most legal frameworks. Places like Argentina, Taiwan, and Nigeria don’t ban crypto outright—they ban banks from dealing with it. That forces users to go through licensed VASPs instead. In Pakistan, the government gave 2,000 MW of electricity to crypto miners, but the IMF is pushing back. Meanwhile, Thailand says you don’t pay tax on crypto gains from licensed exchanges until 2029—but only if you’re trading on approved platforms. The crypto ban, a government action that blocks specific crypto activities or platforms isn’t always total. Russia didn’t ban all exchanges—it shut down Garantex and Grinex for ignoring local rules, while letting others operate under strict oversight.

Then there’s the money side. The cryptocurrency tax, the way governments treat crypto rewards, sales, and trades as taxable income or capital gains is a trap for the unprepared. The IRS says staking rewards are taxed as income the moment you get them—not when you sell. That means you could owe taxes on crypto you never cashed out. And if you’re using crypto for everyday purchases, some countries treat that like selling an asset. It’s not just about legality—it’s about what you owe the government after you trade.

Some places are experimenting. Estonia and Switzerland use blockchain for voting. Others, like Nigeria, let businesses accept crypto only after converting it to local currency. Meanwhile, scams pretend to be legal airdrops or exchanges to trick you into handing over your keys. The truth? The legal status of crypto isn’t the same in Tokyo, Lagos, or Buenos Aires. It’s a patchwork of rules that shift with politics, economics, and public pressure. Below, you’ll find real-world examples of what’s banned, what’s taxed, and what’s quietly allowed—so you know where you stand before you move your crypto.