Since the emergence of Bitcoin in 2009, cryptocurrencies have attracted attention from multiple policy-making bodies, each of which has characterised them in somewhat different ways.
The European Central Bank (ECB) treated cryptocurrencies as a form of virtual currency in its 2012 report Virtual Currency Schemes, and updated that characterisation in a 2015 follow-up. The ECB describes virtual currencies as digital representations of value not issued by a central bank, credit institution or e-money institution, and offers a three-type taxonomy (closed virtual systems, unilaterally linked, bilaterally linked). Cryptocurrencies such as Bitcoin are typically treated as convertible/bilaterally-linked virtual currencies.
Sources: ECB, Virtual Currency Schemes (2012) and Virtual Currency Schemes – a further analysis (2015).
The International Monetary Fund (IMF) discusses virtual currencies as private-sector digital representations of value and focuses on taxonomy and policy implications rather than a single legal definition.
Source: IMF staff note (2016).
The BIS/CPMI has described “digital currency schemes”, noting common features such as value driven by supply and demand, use of distributed ledgers to enable peer-to-peer exchange, and often no single central operator.
Source: BIS/CPMI publications.
The European Banking Authority (EBA) defines virtual currencies as digital representations of value that are not issued by a central bank or public authority and are used as a means of exchange and can be transferred, stored or traded electronically.
Source: EBA Opinion on Virtual Currencies (2014).
ESMA, together with EBA and EIOPA, has issued warnings for consumers and used language consistent with EBA’s characterisation: virtual currencies are digital representations of value not issued or guaranteed by a central bank and not having legal tender status.
Source: ESMA/EBA/EIOPA joint warning (2018).
The World Bank treats cryptocurrencies as a subset of digital currencies that rely on cryptographic techniques to achieve consensus (e.g., Bitcoin, Ether).
Source: World Bank publications.
The FATF adopted operational definitions (virtual asset, virtual asset service provider) and distinguishes convertible from non-convertible virtual currencies; its 2019 guidance applies AML/CFT obligations to virtual assets and VASPs.
Source: FATF Guidance (2019).
There is no single universal legal definition of “cryptocurrency” accepted by all regulators. Several authorities (ECB, EBA, IMF, BIS/CPMI, FATF, World Bank, etc.) have published definitions or operational characterisations. Broadly, cryptocurrencies are best described as digital representations of value, typically secured by cryptography, transferable electronically, usually not issued by a central bank, and often (but not always) convertible into fiat currency. The specific definition used depends on regulatory context and the issuing authority.
Primary sources used: ECB (2012, 2015), IMF (2016 staff note), BIS/CPMI publications, FATF (2019 guidance), World Bank publications, EBA (2014) and ESMA/EBA/EIOPA joint warning (2018).