Legal tender is defined as the accepted medium of exchange to settle a public or private debt. The national currency is considered legal tender in almost every country in the world and the primary medium of exchange for most countries. Legal tender is determined by government statute and its manufacture/creation is strictly controlled.
Is Cryptocurrency Legal Tender?
Many governments have not explicitly defined cryptocurrencies whether cryptocurrencies are legal tender. Regarding the tax treatment for cryptocurrencies, many tax authorities have defined cryptocurrencies as capital assets.
As online commerce continues to grow and more merchants continue to use cryptocurrencies as a payment option, the market (although not officially endorsed by any government institution) does treat cryptocurrency as legal tender.
Will Cryptocurrency become Legal Tender?
As we continue to move into the digital age, its likely governments will adopt the technology and protocols used by cryptocurrencies, which may lead to the creation of the government's own cryptocurrency.
Launched in February 2018, the Petro, a centrally controlled cryptocurrency developed and issued by the government of Venezuela. The Republic of the Marshall Islands (RMI) also has announced it would adopt its own sovereign cryptocurrency as legal tender.
Will Bitcoin become Legal Tender?
Bitcoin has been explicitly classified as a capital asset by most developed countries in the world. However this changed in June 2021.
On June 24th, the El Salvadorian President, Nayib Bukele passed a law making Bitcoin legal tender. This makes El Salvador the first country in the world to officially make Bitcoin legal tender.