U.K. imposes rules on e-money firms

Britain on Friday introduced new rules to regulate the digital-cash industry. The Treasury and the Financial Services Authority imposed the regulations to open up the market to entrants from outside the financial services industry such as mobile phone companies and Internet service providers. Under the guidelines, e-money companies cannot make loans, grant credit or pay any form of interest if they are not banks. They also must maintain minimum levels of liquidity and must be able to fully redeem all e-money issued. The regulations are likely to be welcomed by consumers who have been stung by failed e-money companies. In August 2001, Beenz.com ceased operations and was dissolved several months later, leaving customers with worthless Beenz currency. Also last year, Flooz.com, another online currency company, suspended its Web site operations and said it was in talks regarding a possible merger. As of Friday, the site was still inaccessible. ZDNet's Matt Loney reported from London. To read the full story, visit ZDNet U.K.