The virtual currency, Bitcoin, can be a "legal means of exchange," said the Department of Justice at a U.S. Senate committee hearing, reports Bloomberg.
The hearing was set “to explore potential promises and risks related to virtual currency for the federal government and society at large” following the closure of the Silk Road Hidden Website in October, according to Bloomberg. The marketplace enabled people to obtain drugs, guns and other illicit goods using Bitcoins.
Introduced in 2008, Bitcoin is being used to pay for everything from gourmet coffee to smartphones on the Internet. There are almost 12 million Bitcoins in circulation, according to Bitcoincharts, a website that tracks activity across various exchanges.
“The FBI’s approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services,” Peter Kadzik, principal deputy assistant attorney general, wrote in a letter dated Oct. 23. “Like any financial service, virtual currency systems of either type can be exploited by malicious actors, but centralized and decentralized online payment systems can vary significantly in the types and degrees of illicit financial risk they pose.”
SEC Chairman Mary Jo White wrote in a letter dated Aug. 30 that “regardless of whether an underlying virtual currency is itself a security, interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation.”
Ben Bernanke, chairman of the Federal Reserve, saying that it has no plans to regulate the currency.
“Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market,” Bernanke wrote in a letter to the committee.