The Financial Markets Law Committee (FMLC) has published a discussion paper on issues of legal uncertainty arising in the context of virtual currencies. In the paper, the FMLC analyses the legal aspect of virtual currencies and addresses issues of uncertainty in the context of their development as a medium of exchange and also considers how virtual currencies should be allocated to the traditional categories of property and personal rights developed by the common law.
The FMLC suggests that, even though virtual currencies may have a strong claim to negotiability as money, this does not necessarily mean that they should be treated as money in all contexts. It states that virtual currencies have similarities with money, commodities, securities and instruments of payment and it may be appropriate to regulate schemes by analogy with commodities or securities accordingly.
The FMLC concludes that virtual currencies that have achieved status as a medium of exchange within a significant user community have a good claim to be regarded as money and consequently that they will be negotiable. It suggests that there may be an argument for extending the traditional legal categories so as to recognise virtual choses in possession as a new form of property.
View FMLC paper on virtual currencies, 22 July 2016