Texas Virtual Currency Act Incorporates Cryptocurrency Into Existing Financial Framework

I. Introduction to Virtual Currencies

The advent of the digital era has not only popularized online transactions but has also led to the development of virtual currencies to expedite business transactions. The Financial Action Task Force, an independent intergovernmental body, defines virtual currency as "a digital representation of value that can be digitally traded and functions as a medium of exchange, and/or a unit of account, and/or a store of value, but does not have legal tender in any jurisdiction. It is not issued or guaranteed by any jurisdiction and fulfills the above functions only by agreement within the community of users of the virtual currency."¹

Virtual currencies can be divided into both convertible and nonconvertible currencies in that nonconvertible currencies cannot be exchanged for fiat currency. These currencies can be further divided into centralized and decentralized currencies because centralized currencies have a single administrating