Libya and Cryptocurrency
Libya Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
In 2018, the Central Bank of Libya announced that virtual currencies are illegal and that no legal protection will be afforded to anyone using or trading them. The Central Bank of Libya explained that virtual currencies were banned because the currencies may be used to carry out criminal activities and violations of laws such as money laundering, financing of terrorism, drugs, guns, forged documents, and even illegal pornography. [1]
However, greater attention is being paid to the virtual currency by legitimate financial organizations, and some central banks are beginning to explore how they can cash in on bitcoin’s growing popularity. [2] According to Cointobuy’s analysis tool, the legal status of cryptocurrency in Lybia is controversial, it’s also ranked on the 226 out of 249 countries in terms of cryptocurrency safety, leading the country to a 1.1/10 safety rank. [1]
Regardless of the digital currency activity is considered illegal, Libya is emerging as the center for digital currency mining operations in the Arab world. The rising popularity of bitcoin mining is linked to the extraordinarily low cost of electricity in Libya because mining cryptocurrencies requires a large amount of computational power. Hence, requires a large amount of electricity. [4]
According to the University of Cambridge Center for Alternative Finance, between September 2019 and April 2020, an average of 0.6 percent of all bitcoin mining operations worldwide were taking place in Libya. [5]
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Libya?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation, or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] Cryptocurrency Adoption in Africa, (Mar. 9, 2021), DO4 Africa.
[2] New Arab Staff, Low-Cost Libya Becomes Regional Centre for Energy Intensive Bitcoin Mining Operations, (Apr. 20, 2021) The New Arab.
[3] Cryptocurrency Analysis, “Ultimate crypto investment safety rankings”, (Jun. 2, 2021) Cointobuy.
[4] Supra note 2.
[5] Id.
