Despite the growth of bitcoin why haven't it been legalized by many nations?

[Abiky]

Tax comes before any plans any government has for their citizens. Regulations might actually be because they want to know who own Bitcoin and not because they want it. If they want Bitcoin like that, it wouldn't cost them much to buy and hold instead of waiting for people to tax. The government has the power to print money the way they like and people might not know, they know how to manipulate the numbers better without even the economists attention.

If the government are going to tax you of your Bitcoin, it's better it's kept in non custodial wallet, that way you don't have to worry the government will put eyes on your investment and be tracking your Bitcoin investment, you never can tell exactly what government can do next, they don't see money and let it go.

Using a non-custodial wallet does not guarantee you'll be safe from paying taxes. Especially if you're careless. By sending your coins from the non-custodial wallet to a centralized exchange, the government will have a trail (or track record) they can follow to collect taxes from you. It's all due to the enforcement of KYC/AML laws. That's why everything needs to be done in a decentralized and off-chain manner (in-person/Face-to-Face trades). Even better when you use a privacy coin.

Many countries in the past used to reject Bitcoin out of skepticism. It was the wild west in the early days. Now almost everyone is on-board as Bitcoin has taken the path towards "institutionalization". Of course, there are a few countries that are still against Bitcoin. But I believe that's bound to change in the future. At the pace we're going, it seems to me that we'll be living in a "hyperbitcoinized" world. This means the widespread use of Bitcoin as a currency on top of Fiat. As long as decentralization is preserved, there should be nothing to worry about.

[Rubuchi]

Major reason is tax. The government is having a hard time to tax bitcoin that’s why they are having a hard time justifying the use of bitcoin in their country.

I don't believe that taxation is the main obstacle to legalize Bitcoin in many countries because some countries have successfully set legislation to tax Bitcoin holdings and daily use with countries recognized bitcoin as a tender asset. In other words, any example can be followed and applied by the government willing to legalizing bitcoin use.
Governments always looking for new activities to apply taxation, but with bitcoin it can't apply taxation because they don't recognize it. Why they delay recognition despite it will generate more revenues from taxation? Simple because of decentralized nature of the blockchain which doesn't allow them to controle everything as they used with Fiat money.

but if I May want to ask how easily possible is it for government to tax the bitcoin and other digital crypto currencies like the altcoins among others. Is it just going to be applicable to those who are on centralized platforms or even the decentralized platforms too can be taxed? How can they deal with your anonymity ?

[endut15]

It’s mostly about control and regulation. Governments move slowly and don’t like systems they can’t fully control or reverse if something goes wrong. Bitcoin challenges existing financial rules, tax systems, and capital controls, so many countries prefer to regulate it cautiously rather than fully legalize it right away. It’s not about technology anymore, it’s about politics and power.

[john_egbert]

It’s mostly about control and regulation. Governments move slowly and don’t like systems they can’t fully control or reverse if something goes wrong. Bitcoin challenges existing financial rules, tax systems, and capital controls, so many countries prefer to regulate it cautiously rather than fully legalize it right away. It’s not about technology anymore, it’s about politics and power.

Govs don't do steps they are not 100% sure of.

Or if they do think they would be 100% right, while in reality, they won't.

It was always like that and it will stay that way

[Agbamoni]

You should understand that these countries have their own reasons.
Not every sector is acceptable because the government wants to have full control of it. If they can't control the system, they wont accept the technology.
Bitcoin is banned in many countries because it is a decentralized network. The users have full control of their money, they can't be taxed thorugohly unlike regular money and the traditional system of finance.