Public warning concerning virtual currencyIn view of recent news reports on the proposed allocation of virtual currency (Auroracoin) to Icelanders, the Icelandic authorities wish to warn the general public of possible risks related to purchasing, storing, or conducting transactions with such virtual currency. Virtual currency can be described as an artificial digital medium of exchange.
Virtual currency has gained in popularity recently, but transactions with it have been extremely limited in Iceland until now.
Current Icelandic law does not protect consumers against losses they may suffer from using virtual currency; for instance, if a “market” that exchanges or holds virtual currency reneges on its obligations, or if a payment fails or ends up in the hands of the wrong party. The holder of virtual currency does not have a claim on the issuer, as do holders of banknotes and coin, electronic money, deposits, and other balances in payment accounts in the sense of the Act on Payment Services, no. 120/2011. Both the value of virtual currency and unrestricted access to it are entirely without guarantee from one period of time to another.
Issues related to virtual currency touch upon the statutory roles of various administrative institutions. Further explanations and discussions of the risks involved can be found on their websites.
19 March 2014
Financial Supervisory Authority Central Bank of Iceland The Consumer Agency
Ministry of Finance and Economic Affairs Ministry of the Interior
Links to administrative institutions’ websites:
Central Bank of Iceland (financial stability, financial market infrastructure, and capital controls)
Financial Supervisory Authority (payment services and consumer protection in the financial markets, including investor protection)
The Consumer Agency (general consumer protection)
Ministry of Finance and Economic Affairs (financial market issues)
Ministry of the Interior (consumer issues)