Digital and virtual currencies
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Digital currencies are established forms of crypto-logically secured currencies that are traded, and recognised by institutions like the Financial Conduct Authority and HMRC. Bitcoin is the most well-known.
Virtual currencies are unregulated and generally issued and controlled by developers, and used and accepted among the members of a specific virtual community, for instance within a video game or social casino. Where they can be exchanged for cash or traded for items of value they are considered money or money’s worth.
In our view, the ability to convert any in-game items into cash, or to trade them (for other items of value) means they attain a real world value and become articles of money or money’s worth. Where facilities for gambling are offered using such items a licence is required in exactly the same manner as would be expected in circumstances where somebody uses or receives casino chips as a method of payment for gambling which can later be exchanged for cash.
Digital currencies: points to consider
- The degree of anonymity associated with digital currencies may be attractive to individuals who want to conceal their identity and/or the source of their funds
- There is no central authority that supports the value of digital currency – for example, Bitcoin has a history of large price fluctuations
- There is a history of hacking, theft and other criminal activity associated with digital currencies.
If you want to accept digital currency as a means of payment (either directly or through a payment processor which accepts digital currencies) you must satisfy yourself and us that you can meet your obligations in relation to anti-money laundering and that you are acting in a socially responsible way.