Bitcoin called ‘legitimate’ in Senate, soars in value

In a letter released a day before a Senate committee hearing on Bitcoin, the FBI recognized the digital currency as offering “legitimate financial services,” though it warned criminals and those with malicious intent could exploit the currency.

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Bitcoin called ‘legitimate’ in Senate, soars in value

In a letter released a day before a Senate committee hearing on Bitcoin, the FBI recognized the digital currency as offering “legitimate financial services,” though it warned criminals and those with malicious intent could exploit the currency.

Still, it was a sufficient vote of confidence to send Bitcoin prices to new record highs. The Mt. Gox exchange briefly saw trades of 1 BTC for 900 USD before the price stabilized. The asking price just three weeks earlier had been around $200.

The hearing was called by the Homeland Security and Governmental Affairs Committee to determine the risks and potential of Bitcoin for both government and society.

The US Senate called for the hearing after the anything-goes online marketplace Silk Road was closed in October. The FBI shut it down because drugs, illegal goods and illegal services were being sold for Bitcoins.

Many US officials expressed great concern over what criminal behavior Bitcoin could enable. The Justice Department’s Mythili Raman said her organization has seen “increasing use of such currencies by drug dealers, traffickers of child pornography, and perpetrators of large-scale fraud schemes.”

Still, mainstream audiences can’t help but get interested in a currency with a value that has grown in leaps and bounds this fall.

George Mason University researcher Jerry Brito said, “Congress has been education itself and understands that there are great potential benefits, and like any new technology there are going to be some challenges.”

The question is where to strike a balance between letting the currency proliferate organically in the US and trying to regulate it. Perhaps counterintuitively, interest from regulators increases the value of a currency designed to be unregulated and decentralized.

An official from the Dutch Rabobank, which previously forbade customers from using Bitcoins, supported regulation and said “decisions taken now could have wider repercussions were such virtual currency experiments to be expanded in the future.”

Others strictly focused on the use of the currency by criminals.

Patrick Murck from the Bitcoin Foundation argued that by design it is not a good match for criminals or illegitimate users. He said the foundations finds that there are fare more legitimate users than those who would seek refuge for their schemes behind the currency’s anonymity.

Brito put a big-picture perspective on the hearings, saying that this level of recognition means the currency is finally “coming into its own.” He said Bitcoin is real and is here to stay.

It’s up to governments and everyone else to catch up.

 

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