Only two countries have taken the step of declaring bitcoin legal tender: El Salvador and the Central African Republic. According to CoinMarketCap’s list of legal tender countries, they remain the only two countries where the cryptocurrency holds that status. Everywhere else in the world, cryptocurrency sits somewhere on a wide spectrum — from fully legal to buy, hold and spend, to heavily restricted, to banned outright.
The difference between a country allowing cryptocurrency and a country adopting it as legal tender is easy to blur, but it changes everything about how the asset works day to day. This guide walks through the two countries that have made bitcoin official currency, the much larger group of countries where crypto is legal without being legal tender, and the places where it is restricted or prohibited.
What legal tender status actually means
When a country makes a currency legal tender, accepting it stops being optional. El Salvador’s experiment shows what that looks like in practice: when bitcoin became legal tender there, all economic agents were required to accept bitcoin for all payments. Compare that with a country like Denmark, where cryptocurrencies can be used but are not classified as legal tender. Residents of such countries may transact in crypto if they choose, but nobody is obliged to accept it as payment.
El Salvador: the first country to adopt bitcoin as legal tender
El Salvador became the first country in the world to adopt Bitcoin as legal tender, kicking off a big and bold experiment for the popular cryptocurrency. The country’s Bitcoin Law was passed on 8 June 2021 and took effect on 7 September 2021. In September 2021, bitcoin officially became legal tender, and all economic agents were required to accept bitcoin for all payments.
The rollout came with strong state backing. The El Salvadorian government gave citizens $30 in free bitcoins to kick-start adoption, and President Nayib Bukele launched the state-backed Chivo to support the transition. The country has also leaned into a broader crypto-friendly posture, pairing its legal tender policy with zero capital gains tax on bitcoin.
The Central African Republic: the second country
The Central African Republic became the second country in the world to adopt bitcoin as official currency, following El Salvador’s lead. In doing so, it overtook regional cryptocurrency front-runners such as Kenya and Nigeria to become the first nation on the African continent to officially adopt bitcoin as legal tender.
Countries where crypto is legal — but not legal tender
Outside those two countries, a long list of jurisdictions permits cryptocurrency without granting it official currency status. Legal acceptance of Bitcoin extends to countries like Japan, Germany, and Switzerland, as well as the U.S. and Canada. In most of Europe, Japan, Singapore, Brazil and parts of the Middle East, businesses can accept crypto, with Switzerland frequently singled out as one of the most crypto-friendly jurisdictions.
In Latin America, several countries take a middle path. Crypto is partially regulated in Mexico, Argentina, Chile, Panama, Costa Rica and Colombia — legal to use, but governed by rules that stop short of either full embrace or prohibition.
Is cryptocurrency legal tender in the United States?
No. The United States is not among the countries that have adopted a cryptocurrency as official currency. That said, Bitcoin is not illegal in the U.S. How you can buy it, what services and exchanges you can use, and what you can use it for might depend on which state you are in, however, so the practical rules vary depending on where you live.
Taxes are another point where the American approach differs sharply from a legal tender regime. The IRS considers cryptocurrency holdings to be property for tax purposes, which means your virtual currency is taxed in the same way as any other assets you own, like stocks or gold — a classification that treats crypto as an investment rather than as money.
Where cryptocurrency is banned or restricted
At the opposite end of the spectrum, more than 40 countries have either completely banned or restricted use of cryptocurrency. Countries where bitcoin is illegal include Bahrain, Burundi, Cameroon, Gabon, Georgia, Guyana and Kuwait. If you are travelling to or doing business in a country you are unfamiliar with, it is worth confirming its stance before holding or spending crypto there.
The most crypto-friendly countries
Short of granting legal tender status, some countries actively court cryptocurrency users with favourable rules. Portugal is a standout: since 2018, all proceeds from selling crypto are tax free there, crypto trading isn’t considered investment income, and provided you’re not a business, your crypto is also exempt from VAT and income tax. Other frequently cited crypto-friendly countries include Switzerland, known for its banking standards, along with Germany, Singapore and Malta. The US, UAE, Portugal, and Switzerland also provide favorable environments for crypto holders.
Quick answers
Which country was the first to formally adopt bitcoin as legal tender?
El Salvador. It became the first country in the world to make bitcoin legal tender in September 2021.
How many countries use bitcoin as legal tender?
Only two — El Salvador and the Central African Republic, according to CoinMarketCap.
Which country has no tax on cryptocurrency?
Portugal is one of the best-known examples: since 2018, proceeds from selling crypto are tax free for individuals who are not operating as a business.
Cryptocurrency rules differ widely from one jurisdiction to the next, as the examples above show. Before making any decisions that depend on a country’s crypto rules, check the current official guidance for that country.
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