In the US, there are laws defining money and regulating its use. Bitcoin is a money there by definition because it is used as money (almost anything can be used as money), but it isn't legal for several reasons. One reason is that legal money in the US must be denominated in a US Dollar value with a minimum value of 1 USD.
So it's actually illegal to conduct any transaction in the US using any foreign currency that's less than 1 USD in actual value? Like say Japanese Yen or India Rupees?
It is illegal in the US to use foreign currency because it is illegal to use any money that is not denominated in US Dollars. More specifically, it is illegal to denominate money in a foreign currency. Interestingly, Canadian coins are in common use in the US near the Canadian border, but I doubt if anyone has ever been prosecuted.