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Former US Securities and Exchange Commission Chairman Arthur Levitt didn't know much about Bitcoin when several Bitcoin companies asked for his advice.

But he quickly got excited about two particular companies -- Bitpay, the largest processor of bitcoin payments, and Vaurum, an up-and-coming Bitcoin exchange being boosted by influential Silicon Valley investor Tim Draper. The companies announced Tuesday that Levitt is an official adviser.

BitPay, which launched in 2011, helps 40,000 business accept Bitcoin as a form of payment. Vaurum, founded in 2012, allows financial institutions to trade, store and offer bitcoins to customers.

Levitt's involvement signals the bitcoin industry's interest in making the digital currency attractive for the masses. Bitcoin has gained notoriety in both the tech and finance worlds because it can be used to buy stuff anonymously, without having to go through banks. That means no transaction or credit card fees. And because bitcoins aren't tied to any country or subject to any regulations, international purchases are both easy and cheap. Some people also view bitcoins as an investment, buying them in the hope they will rise in value -- much like gold or silver.

Levitt thinks regulation will be key to Bitcoin's success because it will help legitimize the currency. "The founders of these companies tend to be entrepreneurial, irreverent and probably feel that regulation should be avoided at all costs," he said in an interview. "I understand where they're coming from but I also believe that regulations really will do more to establish their credibility as an alternative. It's got to be sensible, balanced regulation and it can't be regulation that chokes them."

Levitt is the longest-serving chairman of the SEC, the federal agency that regulates the securities industry, including the stock markets. He served between 1993 and 2001. Levitt said many tech companies have approached him for advice on how to grow their businesses and navigate the regulatory waters. Most recently, those companies have been Bitcoin companies.