U.S. officials urge greater oversight of virtual currency Bitcoin
WASHINGTON — Warning that virtual currencies are attracting money-launderers and drug dealers, U.S. officials called for greater government oversight of Bitcoin and other peer-to-peer payment systems during the first-ever congressional hearing on the fast-growing Internet-based technology.
Treasury, Justice and Homeland Security department officials told members of the Senate Committee on Homeland Security and Governmental Affairs on Monday that websites facilitating payments with Bitcoin should receive more scrutiny from federal financial regulators to ensure that the relative anonymity granted by virtual currencies isn’t exploited.
“Criminals are nearly always early adopters of new technologies and financial systems, and virtual currency is no exception,” Mythili Raman, the acting assistant attorney general for the Justice Department’s Criminal Division, said in written testimony.
She said criminals are attracted to virtual currencies by the ability to complete transactions quickly, securely and “often with a perceived higher level of anonymity than that afforded by traditional financial services.”
Bitcoin, one of the world’s leading virtual currencies, is not regulated by any government or central authority, unlike Facebook’s online currency for games or Web-based e-commerce systems such as PayPal.
Bitcoins cannot be used at most online retailers yet, but a growing number of websites, such as WordPress and Reddit, have begun to accept it. So do a handful of conventional bricks-and-mortar stores.
Bitcoins are typically transferred from person to person. But some websites now let users exchange their Bitcoins for U.S. dollars, potentially putting them under the purview of the Treasury Department.
At one point Monday, the value of a single Bitcoin reached $600, up from just $13 earlier this year. At present, more than $6 billion worth of Bitcoins are believed to be in circulation worldwide, according to Bitstamp and other sites that track the price.
Earlier this year, Bitcoin gained international notoriety as the currency of choice in the Silk Road black market, a hidden website that federal prosecutors said facilitated drug deals and other illegal transactions. Last month, U.S. officials seized the Silk Road site and arrested its alleged operator.
“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others and confused the heck out of many of us,” said Sen. Tom Carper (D-Del.), the committee’s chairman. “Fundamental questions remain about what a virtual currency actually is, how it should be treated and what the future holds.”
Bitcoin proponents agreed that some government guidance is needed to combat criminal activity, but warned against moving too aggressively to regulate the budding payment system, which might only drive users abroad and put the currency out of reach of U.S. authorities.
