Importantly, the announcement says that it is to define, for its own purposes, the terms “virtual currency,” “digital currency,” “digital currency wallet,” and “digital currency address." History shows that when US Government sources use a term in a particular way, that is how the world ultimately comes to use it, even if it is different to how the term has until then been used and, even, when the term is a fundamental misuse of the term ("oversight" instead of "supervision" and "anti-money laundering" instead of "counter-money laundering," for example).

Here, however, the definitions used are essentially the same as those already in use and in some cases makes a useful clarification of definitions that have hitherto been muddled. In fact, it's difficult to imagine that a US Government Department could have produced anything so clear and precise. The definitions are genuinely excellent and, for once, we would wholeheartedly say "adopt that as a global definition."

Virtual currency is a digital representation of value that functions as (i) a medium of exchange; (ii) a unit of account; and/or (iii) a store of value; is neither issued nor guaranteed by any jurisdiction; and does not have legal tender status in any jurisdiction.

Digital currency includes sovereign cryptocurrency, virtual currency (non-fiat), and a digital representation of fiat currency.

A digital currency wallet is a software application (or other mechanism) that provides a means for holding, storing, and transferring digital currency. A wallet holds the user’s digital currency addresses, which allow the user to receive digital currency, and private keys, which allow the user to transfer digital currency. The wallet also maintains the user’s digital currency balance. A wallet provider is a person (individual or entity) that provides the software to create and manage wallets, which users can download. A hosted wallet provider is a business that creates and stores a digital currency wallet on behalf of a customer. Most hosted wallets also offer exchange and payments services to facilitate participation in a digital currency system by users.

A digital currency address is an alphanumeric identifier that represents a potential destination for a digital currency transfer. A digital currency address is associated with a digital currency wallet.

OFAC goes on to produce a short Q&A on related topics.