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Ask CryptoVantage: Is It Legal to Use Bitcoin in North America?

You have probably come across several news headlines that emphasize bitcoin being used for illegal activities, which may have left you wondering whether it is legal to buy bitcoin.

In this article, we outline some ways bitcoin is used illegally and provide examples of legal usage in North America. We also touch on a few key takeaways that can help ensure you use bitcoin in a legal manner.

Is Bitcoin legal in North America?

Illegal Uses of Bitcoin

The media often emphasize when people use bitcoin for illegal activity, which can leave people with the impression that simply using bitcoin is illegal. In North America, using bitcoin is legal in the same way that any commodity is legal. The crime is typically separate from the currency itself.

It may sound obvious, but any situation where bitcoin is being used to break the law is illegal. Examples of crimes that might use bitcoin include money laundering, financing other criminal activity, and evading taxes. With all of the headlines on these topics, it may seem like bitcoin enables this behaviour. However, studies have found that an extremely small amount of bitcoin usage involves illegal activity, and regular fiat currency is still the most common money used in these types of crimes.

Evading taxes is possibly the most common illegal use for bitcoin. This can happen intentionally or unintentionally. Many people are not aware that they are required to pay taxes on gains from bitcoin, and others intentionally try to avoid paying taxes on their bitcoin gains because it can eat into a large part of the profits.

In addition to using bitcoin for the crimes listed above, there are other less obvious ways that using bitcoin can become a legal issue. For example, privacy enhancing tools are under scrutiny by regulators because they allow people to transact privately. Some regulators claim that these tools allow criminals to use bitcoin, and so the use may be deemed illegal in certain areas.

How to Ensure You are Using Bitcoin Legally

Below is a list of key points outlining the legal items which must be considered when using bitcoin. Generally, if you are aware of the following, you should feel comfortable using bitcoin in North America and knowing that you are not breaking any laws.

Disclaimer: We are not legal experts. The following recommendations should not be interpreted as legal advice. We recommend you consult a legal expert if you have any questions.

  1. Use regulated exchanges: Buying and holding Bitcoin through regulated exchanges can help relieve you of certain legal worries associated with bitcoin. Regulated exchanges are responsible for ensuring they are in compliance with local regulations.
  2. Become familiar with local regulations: Make sure you are familiar with the legal requirements around using bitcoin as a currency in your area. For example, in some regions, when you buy something with bitcoin it can count as a sale of that bitcoin for the value of whatever you traded it for. This means you would be required to pay capital gains tax on that transaction.
  3. Remember to record all the necessary information needed for taxes: It is important to make sure that you keep track of all your bitcoin-related transactions so that you can pay any required taxes (for example, capital gains tax). The tax authorities in North America are beginning to ask people if they own bitcoin. Being dishonest about this can lead to legal issues.
  4. Be cautious if using privacy enhancing tools: Because privacy enhancing tools are under regulatory scrutiny, you should be cautious using them, as they may be illegal in your area.

Examples of Legal Bitcoin Usage

While we are not legal experts, it seems pretty clear that bitcoin usage is legal in North America. The United States, Canada, and Mexico all have legal frameworks in place for bitcoin. In addition to these frameworks, the tax authorities in the United States and Canada both have clearly defined rules on how bitcoin is taxed.

Perhaps the most well-known example of legal bitcoin usage in North America is the online exchange Coinbase. Almost everyone involved with bitcoin has, at a minimum, heard of Coinbase. Coinbase is in the process of becoming a publicly traded company (on Nasdaq), with an estimated valuation in the $50 billion to $70 billion range. This is evidence that bitcoin is legal in the United States, but also in Canada and Mexico since Coinbase serves customers in both of those countries too.

There are also a large number of high profile individuals across North America who own and support bitcoin. In the United States, for example, the Winklevoss twins (who were involved with the creation of Facebook) reportedly own around 1% of all bitcoins, worth over $7 billion today. There are also U.S. Representatives, such as Warren Davidson, and recently the U.S. Senator Cynthia Lummis, who are outspoken supporters of bitcoin. In Canada, there are publicly traded bitcoin funds such as “The Bitcoin Fund” by 3iq and the “Galaxy Bitcoin Fund” by Galaxy Digital. Finally, in Mexico the second richest person in the country recently disclosed that 10% of his liquid assets are in bitcoin.


It is important to remember that we are not legal experts and none of this article constitutes legal advice. However, with all of these legal frameworks, public companies, and high profile individuals owning and supporting bitcoin, how could bitcoin not be legal in North America?

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CryptoVantage Author Billy Garrison

About the Author

Billy Garrison

Billy Garrison focuses his research and writing on Bitcoin and the Lightning Network. He is interested in the technical details that allow these technologies to survive and grow without the need for a central authority. Billy also loves helping people learn about Bitcoin which led him to start the Halifax Bitcoin Meetup.

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