Jersey is the latest British Crown dependency to take steps towards the regulation of virtual currencies.

The government of Jersey has launched a consultation period with the public on how virtual currencies such as Bitcoin should be regulated.

In its consultation paper, the chief minister’s department highlights money laundering and terrorist financing as key risks associated with the anonymous, non-face-to-face nature of convertible virtual currencies. It considers setting a standard for distributed ledger technology, which allows a payment system to operate without intermediaries, and explores the possibility of pan-Channel Islands work in this area.

The paper also calls attention to Bitcoin as the most prominent virtual currency, with current market capitalisation fluctuating around $3 billion. 

Last year, the UK’s HM Treasury ran a similar consultation before announcing in March 2015 that it plans to apply anti-money laundering regulation to digital currency exchanges. The Isle of Man then introduced anti-money laundering laws for its bitcoin businesses.

“Virtual currency systems represent new and empowering technology. This consultation will allow us to take into account a wide range of views when putting in place an appropriate and proportionate regulatory environment,” said the island’s assistant chief minister, Senator Philip Ozouf, in a statement.

“In the virtual currency marketplace we have a real opportunity to leverage Jersey’s leading position in financial regulation to create a business-friendly framework. I am optimistic about our opportunities in fintech and virtual currency is an important part of this area.” 

The consultation period will run from 9 July to 7 August 2015.

Ever since Bitcoin, a form of digital money that is designed to replicate inelastic mediums of exchange such as gold, first emerged, it has been targeted by regulators in some nations concerned about its threat to the ability of governments to control money, as well as its alleged use by criminals. Bitcoin has been championed by free marketers who argue that since governments embarked on massive monetary expansion, or quantitative easing, after 2008, normal forms of fiat money are in danger of losing value rapidly, creating the need for stronger alternatives.