Virtual currency and cryptocurrency

Virtual currency is defined in the new Money Laundering Directive 1) . For virtual currencies, it is equal that:

they are not issued or guaranteed by a central bank or an authority
they may not be denominated in a currency that has been legal tender
they do not have the same legal status as currency or money
they are accepted as means of exchange by natural or legal persons
they can be transferred, stored and sold electronically.

One of the most famous virtual currencies is Bitcoin, a virtual currency that is convertible into a legal tender such as the euro. It is also the first cryptocurrency, a virtual currency based on encryption algorithms. A cryptocurrency is built on public and private keys that transfer value from one person to another and are encrypted before each transfer with Meme Coin.


Bitcoin and other virtual currencies can be considered a form of wealth, but only as long as they have a functioning market. Instead of virtual currencies and cryptocurrencies, we often talk about cryptographic or virtual assets. For example, the OECD’s Financial Action Task Force (FATF) uses the terms virtual asset and virtual asset service provider (VASP) in its recommendations and guidelines. Bitcoin and other virtual currencies are nonetheless a relatively small phenomenon and, at least for the time being, have no impact on financial markets or financial stability.

ICO (Initial Coin Offering) and the issuance of virtual currencies

There is also a phenomenon associated with virtual currencies called ICO (initial coin offering), which is one way to issue a new virtual currency. An ICO is a way to raise risk funding for a company or product development project. It means a new virtual currency or so-called. pre-sale of the token.

The new virtual currencies issued through the ICO may vary greatly in their characteristics, depending on how the ICO is implemented. Virtual currencies can be roughly divided into three categories. Hybrid models combining several different features have also been observed in the market.

Virtual currencies, such as a means of payment, originally designed as alternatives to traditional currencies and intended to be used as a means of payment outside the services of their issuer. The most well-known virtual currency-like currency is Bitcoin.
Utility coin is used to pay for a specific asset , which can be used to pay for the issuer’s products or services. Usually, products or services are only at an early stage of development when the virtual currency used to pay for them is issued.
Virtual currencies are considered to be financial instruments , in which case virtual currencies may have, for example, the characteristics of a security, such as voting or ownership rights or return expectations. These can be referred to, for example, by the English term security token.

Stablecoines are virtual currencies whose value is pegged to a predefined underlying asset, such as a fiat currency, commodities, real estate or financial instruments. The usual purpose of the arrangement is to mitigate the sharp and sudden fluctuations in value that are a feature of many virtual currencies.

Wallet service providers

A wallet service provider is a natural person or entity that provides services for storing, storing and transferring virtual currencies on behalf of its customers.

What are the risks associated with virtual currencies?

The security, integrity and balance of virtual currency systems are based on a relationship of trust between their users. Value creation in virtual currency systems is not subject to the supervision of the Financial Supervisory Authority or any other authority.

Virtual currencies are used primarily as speculative investments and their use for payment is secondary. No one guarantees their value, which is why market prices fluctuate sharply. For these reasons, Bitcoin or other virtual currencies are not a real alternative to money and are not good means of payment. Virtual currencies also carry the risk of money laundering and terrorist financing and are widely used in criminal activities. The Financial Supervision Authority has warned about the risks of virtual currencies.

What regulations must be taken into account when virtual currencies are traded or accepted as means of payment?

Those dealing with virtual currencies should take into account the regulations related to them and be aware of future regulatory projects. An investor who buys and sells virtual currencies must take into account the instructions of the Tax Administration regarding the taxation of income in virtual currencies. Similarly, those who accept virtual currencies as means of payment or those who earn them from mining should read the instructions of the Tax Administration.

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