As far as we know, Bitcoin is not illegal in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) strictly restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may restrict the licensing of certain entities, such as Bitcoin trading platforms.
Regulators from various jurisdictions are taking steps to provide some rules for individuals and businesses on how to integrate this new technology with the formal, regulated financial system. For example, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has issued non-binding guidance on how to describe certain activities involving virtual currencies.
