Recently, the Japanese authorities decided to allow foreign stablecoins to enter the local market. Will digital stable coins be able to circulate freely in the country? And where in the world can cryptocurrencies be used as a means of payment?

Cryptocurrency Legalization
The task of legalizing and regulating cryptocurrencies is solved differently depending on a particular country, but almost always raises a lot of questions for end users and investors: is it possible to pay with cryptocurrency for goods and services, is it worth paying taxes for transactions on the crypto market, and in general, is it legal to simply own bitcoin and carry out transactions?

Now many countries have embarked on a conditional "legalization of the crypto industry". This is partly facilitated by the gradual introduction of the digital currency of central banks (CBDC). Regulators often draw up "roadmaps" of development in order to remove cryptocurrencies from the "gray zone", that is, most often we are not talking about full legalization, but only about the fact that some individual operations with cryptocurrency will be allowed.

In this regard, in some countries, the cryptocurrency is legalized in different ways, depending on the directives of the financial regulator. For example, the European Union is gradually introducing MiCA regulation (Markets in Crypto-Assets), the main provisions of which oblige crypto exchanges to transfer user data and transaction information to specially authorized government agencies. Of course, this goes against the concept of anonymous altcoins.

Another example is Japan, which raised the issue of the legalization of the crypto industry among the first, and where at the moment, with certain restrictions, bitcoin is accepted as a means of payment by individual players in the market (including licensed banks). And yet, even in Japan, with its relatively free status, cryptocurrencies bitcoin and altcoins do not belong to the category of "legal tender".

What is legal tender
Legal tender in a broad sense can be translated as "a currency in free circulation as a legal means of payment." This status can be assigned either by the central banks of individual countries, or by authorized persons (governments, parliaments, and so on). What does this mean for ordinary people?

In practice, as a rule, if a certain asset is recognized as a legal tender, then with its help you can pay anywhere in the country: buy clothes in a store, order coffee in a restaurant or pay for some training courses.

For example, in Russia, hundred-ruble banknotes, ten-ruble coins and other banknotes related to the Russian ruble are the only legally permissible means of payment. Consequently, the ruble in the territory of the Russian Federation has a status similar to legal tender. As a rule, legal tender receives fiat state currencies in free circulation in the first and most often the only queue.

If we talk about cryptocurrency, then, as a rule, there is a similar algorithm for recognizing the status of legal tender. Until the relevant central bank establishes that, for example, BTC is free in circulation, and, most importantly, it can be used everywhere and legally for its intended purpose (as money, an object of equivalent exchange on the territory of the country), it is not. However, here we need to pay attention to two aspects.

Various organizations can accept BTC or altcoins for payment for their goods and services, but they will do this at their own risk if there is no relevant legislation from the jurisdiction where the companies operate. Hypothetically, the ban on use may be conditional, or the sanctions for such actions will not be strict enough. Then, in practice, people will use cryptocurrency as a means of payment relatively freely.

If the central bank of a country accepts bitcoin as a legal tender, this does not mean that all other altcoins will automatically become legal too. That is, it should be said that the cryptocurrency is legalized in a general sense, with reservations.

Countries that have recognized cryptocurrencies as a legal tender
There are few such states – only two. The first is El Salvador, the second is the Central African Republic (CAR). The authorities of both countries have recognized bitcoin as a legal means of payment with free circulation. However, the rest of the cryptocurrency in the same status has not yet been recognized there and in this sense has not been legalized. But there is an important fact: in these countries, you can really go to the store and pay with bitcoins.

Both countries are not rich and prosperous. Rather, quite the opposite. Both in El Salvador and in the CAR there are serious fundamental economic problems, and the recognition of bitcoin as a legal tender simply allows you to attract potential investors.

In El Salvador, almost a quarter of the total GDP is accounted for by remittances, the share of production of at least something remains low. The CAR, in turn, is a country rich in mineral resources, gold and diamonds. However, this does not help her much. More than 70% of the population lives below the poverty line, according to World Bank data for 2020.

The adoption of BTC as a medium of circulation aims to attract money into the economy. Although yes, this step shows that legislators in these two countries are ready to keep up with the times.

Which countries can recognize Bitcoin
According to CNBC forecasts, some other countries may also recognize bitcoin as a legal tender in the future. Among the likely candidates is Saint Kitts and Nevis. Recently, the Prime minister of this Caribbean state said that the country's authorities are ready to consider the possibility of legalizing altcoins. Given that the economy of many Caribbean countries is built at the expense of tax privileges and a favorable investment climate, it is possible that in the future we will face the phenomenon of "crypto-offshore zones".

Paraguay may also recognize BTC as a legal tender, according to CNBC analysts, following El Salvador. Many well-known politicians of this country publicly declare that it is necessary to adopt useful experience.

The situation with the legalization of cryptocurrencies in the world
Each state has its own approach to legalizing. Some prefer a complete ban on cryptocurrencies, for example, as in China. In China, the ban was introduced in 2021. That does not prevent the Celestial Empire from developing its CBDC. Interestingly, the complete ban of cryptocurrencies in the country did not lead to a complete stop of mining. A significant share of the total computing power involved in the production of PoW cryptocurrencies still falls on the PRC, although not to the same extent as before.

In Russia, on the one hand, cryptocurrency is not prohibited, but, on the other hand, it cannot be classified as a legal tender. At the same time, users on the Internet from time to time encounter ads for the sale of goods and services for bitcoin or altcoins. However, it is very doubtful that sellers will notify the tax or other supervisory authorities about this.

In general, the legislation is still under development and discussion. As before, many concepts are simply missing, or have unclear formulations. And the positions of the departments vary greatly. Representatives of the Bank of Russia oppose the introduction of cryptocurrencies into circulation, while representatives of the Ministry of Finance, on the contrary, are considering the possibility of legalization. The State Duma is currently considering a number of amendments related to the possibility of conditional legalization of mining. But this can hardly be classified as a legal tender.

An ambiguous situation has developed in the United States. Firstly, the authorities of individual states approach the issue of regulating the crypto market in different ways, since historically in the United States many issues are solved at the local level, and not exclusively by the federal government. In the whole country, cryptocurrency or bitcoin separately are not free in circulation. Nevertheless, in January 2022, Arizona tried to pass a bill according to which BTC would receive the status of a legal tender. Moreover, this is the second such attempt by Arizona parliamentarians. The first was in 2020, but even then it was not crowned with success. In a number of other states, any transactions for any money are allowed, but the status of the main means of payment remains with the dollar.

In Switzerland, the cryptocurrency is not free in circulation. But an interesting situation is developing in a single city of Lugano: there, the authorities announced back in 2021 that they were going to de facto give the Tether stablecoin and bitcoin the status of a legal tender. However, when performing the relevant operations, the cryptocurrency will be automatically converted into the Swiss franc through a special intermediary.

Fairly free legislation regarding cryptocurrencies has been formed in Japan. Let's repeat: here he is still not a legal tender. But nobody forbids holding cryptocurrency, trading it and in certain cases (for a number of participants) using it as a means of payment. The recently adopted law, according to which foreign stablecoins are allowed to be traded on exchanges, speaks in favor of further legalization. It is worth adding that although in Japan the cryptocurrency does not belong to the legal tender, there are organizations that still accept it as payments. For example, a large Rakuten company accepts a number of coins to replenish its Rakuten Pay and Rakuten Point services.

In December 2022, Brazilian President Jair Bolsonaro signed a law according to which bitcoin is recognized as a means of payment. A reservation is immediately made that the cryptocurrency will not be recognized as a legal tender. In addition, where it can still be used as a means of payment will be determined later by the local central bank. So it seems that you can pay, but not everywhere. Most likely, the story will be the same as in Japan or the USA.