The Washington State Department of Financial Institutions (“DFI”) issued a consumer alert warning of the risks of holding virtual currencies for investment or as a currency.  The Washington DFI specifically called out virtual currency’s volatility, lack of backing or guarantee, connection to criminal activity and potential tax repercussions.  This warning is the Washington DFI’s second announcement on virtual currencies following its earlier determination that it interprets Washington law to include digital or virtual currency in the definition of “money” in the Uniform Money Services Act, chapter 19.23 RCW.  The DFI also recently revised certain regulations to require all authorized delegates of licensed money transmitters to have a physical presence in Washington unless the licensed money transmitter received prior approval for an out of state licensed delegate.  This revision effectively requires all internet-based companies, including virtual currency firms, to obtain prior approval before acting as an authorized delegate for a licensed money transmitter.