A virtual currency is a form of unregulated digital money, not issued or guaranteed by a central bank, which can act as a means of payment. More recently, the virtual currency ‘Bitcoin’ has set the scene for a new generation of decentralised, peer-to-peer virtual currencies – often referred to as crypto-currencies.

The European Banking Authority (EBA) has issued a warning concerning the risks deriving from buying, holding or trading virtual currencies. In particular, the EBA has said that consumers are not protected through regulation when using virtual currencies as a means of payment and may be at risk of losing their money. The EBA also reminded that as transactions in virtual currency provide a high degree of anonymity, they may be misused for criminal activities, including money laundering.

View EBA warns consumers on virtual currencies, 12 December 2013