Bitcoins are stored in encrypted wallets secured with a private key. There is currently no legislation aimed at the virtual currencies. Currently we have the following:-
Payment Services Regulations 2009 (SI 2009/209), implementing the Payment Services Directive (2007/64/EC) (PSD).
Electronic Money Regulations 2011 (SI 2011/99), implementing the second Electronic Money Directive (2009/110/EC) (2EMD).
Money Laundering Regulations 2007 (SI 2007/2157) (2007 Regulations), implementing the third Money Laundering Directive (2005/60/EC) (3MLD).
This August the New York State Department of Financial Services (DFS) started an inquiry into the appropriate regulatory guidelines that it should put in place for virtual currencies (www.dfs.ny.gov/about/press2013/memo1308121.pdf). This is considered to be the first of what will likely be very many discussions and guidelines. At the moment the demand for bitcoins may be frowned upon by the great and the good and there are frequent and legitimate references to the dark side of the web i.e. Silk Road, drugs, criminal gangs but one thing for sure Bitcoins are here to stay as people look for alternative methods of investing.
Â Finally if you are going to buyÂ and you may well get laughed out the room if you do mention it but if a virtual currency is being issued to consumers in return for real currency, your attention must be drawn to the risks of devaluation, or to put safeguards in place, I would expect all consumers to be made aware of the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) and the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083)).