Virtual Currency

Virtual currency is a legal and regulatory term for a digital representation of value that can be traded or transferred and used for payment or investment, but that is not issued by a central bank and is not legal tender. Supervisors and standard-setters use it, alongside the related term virtual asset, to bring cryptocurrencies and similar instruments into anti-money-laundering rules without treating them as official money. Under those frameworks, businesses that exchange, transfer or hold virtual currency for customers are normally licensed as virtual asset service providers and must run identity checks and reporting. Definitions differ by country, so the same token can be a virtual currency in one jurisdiction, a security in another, and largely unregulated in a third.