Is there a place for Bitcoin in the U.S. economy? Treasury says maybe

Tomohiro Ohsumi for Bloomberg Finance

Tomohiro Ohsumi for Bloomberg Finance

 

 

 

 

 

 

 

 

The federal government may be open to considering a role for Bitcoin, the spectacularly volatile virtual currency, in financial markets.

“The decision to bring virtual currency within the scope of our regulatory framework should be viewed by those who respect and obey the basic rule of law as a positive development for this sector,” Jennifer Shasky Calvery, the director of the Treasury Department’s Financial Crimes Enforcement Network, said at a Senate hearing. “It recognizes the innovation virtual currencies provide, and the benefits they might offer.”

The Senate heard from federal officials about the benefits — and risks — of the virtual currency at a hearing entitled “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies,” which started yesterday afternoon in the Senate Committee on Homeland Security and Government Affairs.

According to the Bitcoin website, the currency uses peer-to-peer technology to operate with no central authority or banks. Managing transactions and issuing of new Bitcoin is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.

For businesses, Bitcoin claims it allows lower transaction fees, protection against fraud and fast international payments. However, federal authorities also worry about Bitcoin being used for nefarious purposes, such as money laundering and illegal transactions, precisely because of its anonymity.

Yesterday, the price of Bitcoins rose 62 percent, up to $750 on the Mt. Gox currency exchange. That’s an increase of 107 percent in a week.

Read More: Silicon Valley Business Journal
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