What is the Legality of Crypto in America? (Till March 2022)

What is the legality of crypto in America? There are several different regions in America and the rules and regulations regarding crypto in all these different regions are different.

For a beginner in the crypto industry, especially one who stays outside of America, it may not be possible to be well aware about the legality status of crypto in America.

Moreover, the legal status of crypto is not only substantially different in different jurisdictions in America but it is also undefined in some regions and is changing in several of them.

In most of the regions in the American continent use of crypto may not be illegal but its usability and status when it comes to using it as a mode of payment for goods and services may be different.

It may also come with different regulatory implications. As a result, it may be confusing while taking a decision whether or not to indulge in crypto trading depending on the region of stay when you do not know about these regulations quite well.

Remember, violating the set of rules and regulations can fetch penalties and fines as well as criminal charges in some cases.

You will surely not want to add to the risk level of crypto trading.

The best way to avoid such things from happening is to be knowledgeable about the legal status of crypto in America.

In that case, you are fortunately in the right place and are reading the right article.

What is the Legality of Crypto in America?

What is the Legality of Crypto in America

If you are one of those crypto enthusiasts who are unaware of the legality status of crypto in America but want to step into this exciting world of crypto here, this is an article that will be very helpful for you.

Through this article you will come to know the regions in America where you can use and trade cryptocurrencies.

You will not have to worry about any legal consequences for failing to comply with the rules and regulations of the government.

North America

Arranged alphabetically, the legal status of crypto in different regions in North America is as follows:


In Canada, crypto is legal though its use is banned in the traditional banks. It operates independently without any central authority or bank governing it.

According to Canadian law, any company operating here and dealing with digital currencies need to register themselves with the Financial Transactions and Reports Analysis Centre of Canada, commonly known as FINTRAC.

All these companies have to abide by the requirements of the FINTRAC which includes implementing acquiescence programs, keeping the necessary records, reporting any transactions that are doubtful or related to funding terrorism, and determining whether or not any of their clients are ‘politically exposed person.’

The same law is applicable to any non-Canadian exchanges dealing with virtual currency provided they have any Canadian customers.

As for the banks in Canada, they are not allowed to open or maintain the accounts of such companies.

They are not even allowed to have any sort of banking relationship or correspondence with such companies dealing with cryptocurrencies if they are not registered with FINTRAC.

All dealers engaged in any type of business that involves digital currencies in one way or the other are considered to be Money Services Businesses in Canada and are therefore regulated.

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The financial regulator in the Quebec province, The Autorité des Marchés Financiers, has declared that a few business models that are related to Bitcoin are regulated according to the prevailing MSB or Money Services Business Act which includes all exchanges and even the ATMs.

And, the Bank of Montreal announced in April 2018 that it will not allow the credit and debit card holders of their bank to participate in crypto purchases with their cards.

This is however considered to be an effect of the banking interdict in Canada from Toronto Dominion.

United States

The use and transaction of crypto is considered to be legal in the United States of America. According to the United States Treasury Bitcoin crypto is classified as convertible and decentralized digital currency with effect from 2013.

Also, in September 2015, the CFTC or The Commodity Futures Trading Commission classified it as a commodity and the IRS or Internal Revenue Service in the United States considered it to be a property and is hence taxed accordingly.

Actually, the definition of money with relation to Bitcoin changed on June 21, 2018 when it was mentioned in an opinion of the US Supreme Court with relation to a case of Wisconsin Central Ltd. v. United States.

The rules and regulations for the MSBs or Money Services Businesses operating in the United States are pretty strict and well defined.

These rules are applicable to all crypto exchanges, money transmitters, as well as those anonymous services that are often called the ‘mixers’ or ‘tumblers.’ However, for that they will need to do a sizable amount of business in the United States.

The FinCEN director Kenneth Blanco specified in 2018 that these MSBs need to register themselves as a Money Services Business categorically with the FinCEN and create and implement a carefully designed AML or Anti-Money Laundering program as well.

According to the FinCEN, these businesses are also needed to maintain correct records of all transactions and report to them about any doubtful transaction.

This reporting should be done in a prescribed format called the Suspicious Activity Reports or SARs and Currency Transaction Reports or CTRs.


Use of crypto coins, especially Bitcoin, has been legal in Mexico since 2017. The Mexican government also has plans to regulate Bitcoin and treat it as a virtual asset according to the FinTech Law.

However, as of now the rules and regulations applicable on crypto use and transactions in Mexico are not well defined in terms of restriction in use or obligatory declaration of crypto holdings.

Central America

The legal status of cryptocurrencies in different regions in Central America is as follows:

Costa Rica

In Costa Rica, crypto coins and Bitcoin are not considered as currencies. However, anyone here is allowed to use crypto coins but at their own risk.

The Central Bank of Costa Rica issued a statement in October 2017 wherein it is stated that these digital coins are not supported by the law or the government. It, therefore, cannot be traded as the national payment system of Costa Rica.

El Salvador

In El Salvador, Bitcoin is considered as a legal tender according to the ‘Bitcoin Law’ passed on 8 June 2021. However, the law actually came into effect on September 7, 2021.

As a result, there were more Bitcoin wallets than bank accounts in El Salvador. Among all of these Bitcoin wallets, the most popular one is however the officially sponsored wallet called Chivo.

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According to a few recent reports, this particular Bitcoin wallet has been downloaded by more than 3 million Salvadorans, which is about 46% of the entire population of El Salvador.

However, the use of Bitcoin as such does not seem to have taken off yet with only 12% of the consumers have used this crypto coin and more than 90% of companies have not reported receiving payments in Bitcoin in the initial months.


Until 2014, the Nicaraguan government did not pass any law regarding the regulation of Bitcoin. The central bank also did not issue any guidelines or rulings regarding the crypto coins.

However, the government passed new regulations later on in order to comply with many different credit rating companies of the world as well as the FATF or the Financial Action Task Force.

According to the new legislation, virtual assets are regulated in Nicaragua and it is primarily aimed at the electronic transactions and operations related to the Virtual Asset Service Providers or VASPs in Nicaragua.

The law wants anyone engaged in such types of businesses to check with the new legislation and consult with their lawyer s that they do not fail to comply with it.

According to the new law, both virtual assets and the VASPs will come under the inspection of the Financial Analysis Unit of Nicaragua.

This new law has reformed its previous ‘Law on Money Laundering, Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction’ and was put to effect on and from May 17, 2021.

It also comes with a few notable additions in the ‘General Law of Banks, Non-Banking Financial Institutions and Financial Groups.’


In some of the major regions in the Caribbean Islands, the legal status if crypto coins are as follows:


Using and trading of crypto coins has been legal in Jamaica since 2017 when the Bank of Jamaica or BoJ issued a statement in which it said that it should however create more opportunities to use the technology underlying cryptocurrency.

The BoJ also said that it has thought of creating several campaigns and programs to create more awareness among the citizens regarding crypto coins as a part of their broader financial literacy drive.

Trinidad and Tobago

Use of crypto coins is also legal in Trinidad and Tobago and the Central Bank of Trinidad and Tobago announced in 2018 that it is keen to work with all those FinTech companies as well as those that deal with virtual currencies.

However, in their statement they have also warned the people regarding the risks involved in using and trading crypto coins.

They also made the people aware of the possibilities of using these virtual currencies for funding criminal activities including terrorism and money laundering.

They also specified that using virtual currencies typically do not have any regulator recourse or insurance protection in case there is any issue or fraud.

South America

In different regions in South America, the legal status of crypto coins is mentioned hereunder:


In Argentina, Bitcoin is not considered to be the legal tender but is considered either as a good or commodity according to the Civil Code of Argentina.

Therefore, it may be considered as ‘money’ but any transaction made with Bitcoin will be governed according to the rules of sale of goods based on the Civil Code of the country.


In Bolivia, use and transaction of crypto coins is absolutely banned. The Central Bank of Bolivia considers it to be illegal to deal with crypto coins in the country and has also issued a resolution in which Bitcoin and other crypto coins are not regulated.

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According to the statement issued by the Central bank of Brazil in 2014, cryptocurrencies are legal in the country but not regulated.

However, the central bank also discourages the people from using crypto coins due to the risks in operation.

However, in November 2017 the central bank reiterated the unregulated status as well as its discouragements.

Apart from that, on May 7, 2019 another document was published by the Special Department of Federal Revenue of Brazil which informed the people about the tax implications related to cryptocurrencies.


As far Chile is concerned, there are no regulations imposed by the Chilean government as of now regarding the use of crypto coins including Bitcoin.


In Columbia however, crypto is legal but comes with a banking ban like it is in Canada. No financial institutions or banks are allowed to indulge or help in making Bitcoin transactions.

According to the 2014 ruling of The Superintendencia Financiera of Columbia, financial institutions are not supposed to ‘protect, invest, broker, or manage virtual money operations’ in any way whatsoever. Failing to comply will result in grim consequences.


In Ecuador, you are allowed to hold and trade crypto coins as these are considered to be legal. Moreover, according to a statement published by the Central bank of Ecuador on January 8, 2018, buying and selling of Bitcoin in the country is considered to be legal.

However, if you use the same crypto coins as a payment tool, it will be considered as an illegal activity according to the existing law of Ecuador.

Moreover, transaction and endorsement of crypto coins is banned in the banks in Ecuador according to Article 98 of the Organic Code on Monetary and Financial Matters.

Any violation to this rule is dealt with strictly. The crypto coins or any other product acquired by them can be seized by the government in that case.

However, according to some recent reports no banks or any person has been prosecuted for failing to comply with the set rules. The Ecuadorian financial system is pretty strict with crypto related transactions and blocks them promptly.


In Venezuela, use of crypto coins is legal though Bitcoin miners were arrested before by the law enforcement department.

However, the scenario changed in January 2018 when the cryptocurrency superintendent of the government, Carlos Vargas said that such activities are perfectly legal.

The government even went a step ahead and met with the Supreme Court of Venezuela so that the charges brought against the victims of arrests and seizures are dismissed.


If you live in America, you should never start trading or using crypto coins without knowing whether or not you are allowed to do so in the first place. This article has let you know exactly that and go ahead with your endeavor with full confidence.