National authorities regulating currency generally do not have direct
jurisdiction over virtual currencies, to date, as they are not national fiat currencies.
However, currency regulators are influencing development of digital currency in several
key indirect ways. Through their authority to protect the value and integrity of national
fiat currencies, they take actions affecting digital currencies claiming that such actions
are necessary to protect their national currency. Additionally, as these regulators
generally have the authority to control the activities of banks and other key financial
institutions, they influence digital currency development and use by restricting the
ability of those institutions to use or accept virtual currency. Currency regulators
commonly have jurisdiction over conversion of foreign currency, and through this role,
they now routinely restrict the ability of parties to conduct conversions between digital
currencies and traditional national currencies. National currency regulators have also
issued substantial warnings to consumers of the risks associated with digital currency
use. Currency regulators often have authority over funds transmission and money
transfers, and they frequently exercise that jurisdiction in the context of virtual currency
use. Some government are now exploring the possibility of government controlled
digital currency and of government participation in the blockchain of existing virtual
currency platforms.
Keywords: Banks, Bolivia, Brazil, Canada, China, consumer protection, Croatia,
currency, currency conversion, Cyprus, digital currency, Ecuador, Electronic
Currency System, European Union, fiat currency, financial institutions, financial
services, foreign exchange, France, Germany, government participation, Iceland,
India, Indonesia, Isle of Man, itBit, Kenya, Kyrgyzstan, legal tender,
Luxembourg, Malta, Mexico, money transfer, M-Pesa, national currency,
Netherlands, New York, Nigeria, private money, Russia, Singapore, Thailand,
units of account, Vietnam, wallet.
