Financial Crime World

Libya’s Paradoxical Relationship with Cryptocurrency: Illegal But Attracting Mining Operations

Libya, despite declaring virtual currencies, including Bitcoin, illegal in 2018 due to concerns over criminal activities, is becoming a hub for cryptocurrency mining operations in the Arab world. This paradoxical situation arises due to the country’s strikingly low electricity costs.

Illegal But Thriving: Cryptocurrency Mining in Libya

The Central Bank of Libya’s declaration of cryptocurrencies as illegal [1] has not deterred Bitco인 miners from setting up operations in the country. The uncertain legal framework [6] surrounding the use of virtual currencies in Libya, combined with the cheap electricity, has attracted hundreds of miners, further increasing the demand for power [2].

  • Low electricity costs make Libya an attractive hub for cryptocurrency mining.
  • Hundreds of miners have taken advantage of this situation, despite the illegal status of cryptocurrencies.
  • The University of Cambridge Center for Alternative Finance reported that about 0.6% of all Bitcoin mining operations globally occurred in Libya between September 2019 and April 2020 [5].

The regulatory landscape for cryptocurrencies varies from country to country. While some consider mining operations as money transmitting businesses, subject to relevant regulations, others treat it as a business with corporate income tax.

  • The U.S. Financial Crimes Enforcement Network (FinCEN) considers miners as money transmitters, subject to regulations [6].
  • Israel treats crypto mining as a business with corporate income tax [6].
  • In countries like India, regulatory clarity remains elusive [6].
  • Few jurisdictions, like Libya, have explicitly banned crypto mining, leaving its legality ambiguous in the absence of specific provisions regulating cryptocurrencies.

Navigating the complexities of understanding and regulating cryptocurrencies can be a challenge. Freeman Law offers valuable insights into the international regulatory landscape, able to clarify the legal status of cryptocurrencies for various jurisdictions.

  • Contact Freeman Law for consultation and expert advice on cryptocurrencies, digital currencies, and blockchain technology [6].
  • Email email@freemanlaw.com or call +1 (214) 984-3410.

Sources

  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. See supra note 2.
  5. Id.
  6. Freeman Law, “Cryptocurrency Law Resource Page,” (Accessed Jun.18, 2021) Freemanlaw.com.