A new definition of virtual currency is needed in the UK, the UK’s Financial Conduct Authority (FCA) said on Wednesday, after it found a new loophole in the way it sets up its currency exchange rate.
The FCA said it had decided to extend the current definition of digital currency from its previous one that focused only on money held by banks to include other digital currencies, like bitcoin and ether.
The move comes as the FCA also said it will require all virtual currency companies operating in the EU to report to the regulator how much of their business they generate.
The change will allow regulators to monitor companies and make sure they don’t abuse the system to boost their profits.
“There is a new element in our view that has emerged in recent times, which is the new way in which virtual currencies are being defined,” said Peter Taylor, chief executive of the FCO.
“The FCA’s view is that a definition of the term virtual currency should include a definition that takes into account other aspects of the digital economy, including other forms of digital property, such as the internet of things, or a new form of virtual money, which could be digital or digital-like in nature.”
In particular, a virtual currency must be a type of digital asset that can be used to create and transfer value without having to rely on a central authority.
“The FCO has said it is not looking to change how it sets its currency.
Instead, it will set up an “interagency working group” to develop a “workable definition of a virtual coin”, based on existing standards.
The change is likely to be welcomed by the UK and US markets. “
We will consider any suggestions we receive from the working group,” Taylor said.
The change is likely to be welcomed by the UK and US markets.
It will come into force in January, although some firms could still be left out of the process.
Last year, the FPA reported it had found a loophole in a UK definition of bitcoin, which did not require a physical unit of the virtual currency to be used in transactions.
In a separate report, the regulator said it could not find a similar loophole in its US definition.
In its report, it also found there were gaps in the definitions of the three other virtual currencies it looked at: ether, ripple and litecoin.