Enforcement Comparison: Which Countries Prosecute Crypto Users Most in 2026
Jan, 8 2026
If you hold cryptocurrency, your biggest risk isn’t price drops-it’s prosecution. While many assume crypto is a global free-for-all, the truth is starkly different. In some countries, just owning or trading Bitcoin can land you in jail. Others tax you into submission. And in a few, you’re basically invisible to the law-if you’re careful.
China: The Hardest Line in the Sand
China doesn’t just discourage crypto. It erases it. Since 2017, the government has banned all crypto exchanges, mining operations, and trading platforms within its borders. By 2021, it shut down the last major mining hubs in Sichuan and Inner Mongolia. Today, if you’re caught running a node, using a P2P app like LocalBitcoins, or even accepting Bitcoin as payment, you could face criminal charges. Chinese authorities don’t just fine you-they arrest you. In 2023, a man in Guangzhou was sentenced to three years in prison for operating a crypto mining farm. In 2024, over 200 individuals were prosecuted under vague "illegal business operations" laws for facilitating crypto transactions. The state’s surveillance tools track blockchain activity, and banks are required to flag any crypto-related transfers. There’s no gray area. If you’re in China and you touch crypto, you’re breaking the law.Algeria and Bolivia: Total Bans, Zero Tolerance
Outside China, Algeria and Bolivia stand as the most extreme examples of crypto prohibition. Algeria declared all cryptocurrency activities illegal in 2018 under a decree that calls them "a threat to financial stability." The law doesn’t just target exchanges-it criminalizes holding, transferring, or even discussing crypto publicly. In 2024, Algerian customs seized over $4.2 million in crypto-related assets from travelers attempting to cross borders with digital wallets. Bolivia’s Central Bank issued a similar ban in 2014, calling crypto "an illegal financial instrument." The government doesn’t just block transactions-it prosecutes under existing fraud and money laundering statutes. In 2023, a Bolivian man was sentenced to 18 months for using Bitcoin to pay for imported goods. The penalty? No trial, no appeal process. Just detention and fines. These countries don’t rely on technical enforcement. They rely on fear. People know the rules. And they know the consequences.Bangladesh: Taxation by Threat
Bangladesh doesn’t have a formal law against crypto-but it doesn’t need one. The country’s Anti-Money Laundering Act (2012) gives authorities the power to treat any crypto transaction as a criminal act. The Bangladesh Bank has repeatedly warned citizens that using Bitcoin or Ethereum could lead to imprisonment under Section 420 of the Penal Code: cheating and dishonesty. In 2024, authorities raided 17 crypto trading offices in Dhaka and arrested 43 people. Most weren’t traders-they were intermediaries running WhatsApp-based P2P groups. The government doesn’t care if you’re buying for investment or just sending money to family overseas. If it’s crypto, it’s illegal. And they’re actively hunting.India: The Tax Trap
India doesn’t ban crypto. But it makes it painful. Since 2022, every crypto trade-buying, selling, swapping-is taxed at 30%. On top of that, a 1% Tax Deducted at Source (TDS) is automatically taken out of every transaction, whether you make a profit or not. This isn’t just a tax-it’s a surveillance tool. The Income Tax Department tracks wallet addresses linked to Indian bank accounts. If you send $10,000 in ETH to a foreign exchange, they’ll see it. If you don’t report it, you’re flagged. In 2024, over 12,000 crypto users received notices demanding back taxes, penalties, and interest. Some faced asset freezes. No one’s been jailed yet-but the threat hangs over every trader. The Supreme Court lifted the banking ban in 2020, but the tax regime has made crypto feel like a legal minefield. You can own it. But you can’t use it without risking your finances.
United States: Targeting the Big Fish
The U.S. doesn’t go after regular users. It goes after the infrastructure that enables crime. In September 2024, the Treasury’s OFAC sanctioned Russia-based exchange Cryptex and its operator Sergey Sergeevich Ivanov. Why? Because Cryptex processed $5.88 billion in transactions tied to ransomware, darknet markets, and fraud shops. The State Department offered a $10 million reward for Ivanov’s capture. The U.S. focuses on money laundering, terrorist financing, and unlicensed exchanges-not people buying Bitcoin on Coinbase. The Trump administration’s 2025 crypto-friendly stance reduced regulatory pressure on retail investors. But that doesn’t mean you’re safe. If you’re moving crypto through mixers, using unlicensed platforms, or laundering funds from hacks, you’re a target. The FBI’s Crypto Task Force has doubled in size since 2023.Europe: Regulation Over Prosecution
Europe doesn’t ban crypto. It regulates it. The new Anti-Money Laundering Authority (AMLA), launched in July 2025, now oversees all crypto exchanges across the EU. With 400+ staff planned by 2028, AMLA has the power to freeze assets, shut down non-compliant platforms, and demand transaction records. The EU’s AMLD5 rule forces exchanges to know their customers. If you’re in Germany or France and you use a licensed exchange like Kraken or Bitpanda, you’re protected. But if you use an unregulated platform, your funds can be seized. In 2024, Dutch authorities seized €7 million from a payment processor linked to Cryptex-using blockchain analytics from Chainalysis and Tether. The message is clear: Play by the rules, and you’re fine. Break them, and you’ll lose everything.Singapore and South Korea: Compliance, Not Punishment
Singapore and South Korea show how regulation can work without fear. Singapore’s Monetary Authority (MAS) requires stablecoin issuers to back every token with real assets held in regulated banks. Exchanges must report suspicious activity-but they’re not required to report every user. South Korea’s 2024 Virtual Asset User Protection Act (VAUPA) forces exchanges to insure client funds, segregate assets, and implement strict KYC. The Financial Services Commission doesn’t prosecute users-it punishes exchanges that fail to comply. In 2025, three Korean exchanges were fined over $15 million for not reporting suspicious transactions. No users were arrested. These countries treat crypto like banking: regulated, transparent, and accountable. They don’t want you to stop using it. They want you to use it safely.
Portugal: The Crypto Safe Haven
In 2025, Portugal remains one of the few countries where crypto users face virtually no legal risk. There’s no capital gains tax on crypto profits. No reporting requirements. No penalties for holding or trading. The government doesn’t ban it, tax it, or track it. Crypto exchanges operate legally. ATMs accept Bitcoin. Restaurants take Ethereum. And the tax office doesn’t ask questions. This isn’t an accident-it’s policy. Portugal wants to attract tech talent and digital nomads. Prosecuting crypto users would kill that.Who’s Really at Risk?
If you’re a casual holder, trader, or investor, your risk depends entirely on where you live.- High risk: China, Algeria, Bolivia, Bangladesh-criminal prosecution is real and active.
- Moderate risk: India-financial penalties, audits, and asset freezes are common.
- Low risk: U.S., EU, Singapore, South Korea-only major criminals or unlicensed operators are targeted.
- Negligible risk: Portugal-no taxes, no reporting, no enforcement.