Bitcoin made another leap toward legitimacy this week as federal regulators held hearings to discuss the promise and the risk of the burgeoning virtual currency.
On Nov 18, regulators held the first ever hearing on bitcoin, with discussion and questions from a committee of senior law enforcement and regulatory officials. The framing of the discussion centered on the anonymity and decentralized nature of the currency, exploring its capacity to facilitate both business growth and illegal activity online.
Despite the risks though, The Wall Street Journal reports that regulators were receptive to the fact that bitcoin does have a place in the economy, offering an alternative means of exchange online.
“The Department of Justice recognizes that many virtual currency systems offer legitimate financial services and have the potential to promote more efficient global commerce,” Mythili Raman, acting assistant attorney general for the department’s criminal division, said in testimony before the Senate Homeland Security and Government Affairs Committee The Wall Street Journal reports.
The positive attitude towards bitcoin caused the currency’s value to increase considerably, with the price per unit soaring as high as $700 on some exchanges. The currency’s estimated market capitalization now exceeds $8 billion, despite being only four-years-old.
Bitcoin is not centrally backed, but it has seen increasing acceptance in businesses across the world. That being said it is still best known for its association with SilkRoad, an online market that used the digital currency to sell everything from drugs to murder-for-hire services.
“Bitcoin can facilitate private and anonymous transactions, which are resistant to oversight and control,” Patrick Murck, general counsel for the bitcoin Foundation said in his testimony. “This by no means implies that using bitcoin can or should provide anyone immunity from the law.”
Regulators still want to ensure that the use of bitcoin does not increase protection for those who would use it for illegal activity. Ensuring that the currency is subject to the same rules as any financial institution, especially those that would prevent it from being used in money laundering schemes is a top priority.
The hearings will continue on Nov 19, when Senior Treasury Department officials are expected to weigh in.
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