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FMLC notes uncertainty in MLD5 definition of ‘virtual currencies’

In their (late) response to the consultation of the transposition of the Fifth Money Laundering Directive into UK law, the Financial Markets Law Committee has alerted Treasury to a potentially unintended consequence in the legislation.  Treasury had asked whether the MLD5 definition of  “virtual currency” should be used, or whether it needs to be amended to capture the “currencies” described in the UK Cryptoassets Taskforce policy paper of 2018.

FMLC notes that the definition of ‘virtual currencies’ in MLD5 excludes any cryptoassets that are deemed to possess a legal status of currency or money – therefore potentially excluding some currently issued cryptocurrencies which can be used as and so share some of the characteristics of, money.

FMLC has suggested an alternative definition (removing “or money” from the MLD5 definition) which it says would include within it current exchange tokens such as Bitcoin.

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Emma Radmore