It has been confirmed by multiple sources that Bitcoin is not electronic money according to EU Directive 2009/110/EC, mainly because it does not represent "a claim on the issuer" and does not have a "face value". Ripple IOUs however do seem to fit the definition, especially if they are denominated in government currencies. According to many national implementations of the directive, only licensed institutions are allowed to issue electronic money.

Is there any legal investigation on that matter or some expert opinion regarding whether Ripple IOUs are in fact bound by electronic money regulations in the EU?

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    Another interesting aspect to this is that not all IOUs are for government currencies. Some are for Bitcoin, and some are for even more obscure "currencies" like Goodwill: ripple.com/forum/viewtopic.php?t=2895.
    – Nameface
    Commented Jul 2, 2013 at 3:21

1 Answer 1


This all depends on what asset the IOU represents and by extension what it can be used for.

If in the case of USD or EUR etc they are accepted for payment of goods or services by a third party who is not the issuer then they are e-money.

In this case the issuer has to be either authorized or registered as an Electronic Money Institution (EMI).

The key difference between this and a deposit account is that no benefit can be given for holding on to the e-money over time such as interest.

They are redeemable for face value minus any reasonable charges.

Ripple IOUs can also be for bitcoins for example. However since they are not considered legal tender - you cannot pay your taxes in bitcoins for example, they are considered barter or the same as gold. These IOUs are not e-money.

If I were to issue Ripple beer IOUs which could be exchanged in any pub worldwide for a beer these would still not be e-money if they were only exchanged for beer since this is a closed market. I could not use my $50 worth of beer IOUs to buy a book for example. If book stores and other establishments started accepting them at face value then they would become e-money USD.

The UK FCS does a good job of explaining


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