Virtual Currency on Trial: Senate to Probe Bitcoin at Upcoming Hearings

November 6, 2013 By: Jenn Roberts Ma

The United States Senate is ramping up its efforts to monitor cryptocurrencies—including Bitcoin, the world’s most popular form of digital money.

Bitcoin, which was first mysteriously introduced in 2009, is fully decentralized and verifies transactions using encryption. With its value surging this year, government agencies are more closely scrutinizing whether the currency potentially facilitates criminal activity.

According to Senate aides, both the Senate Committee on Homeland Security and Government Affairs and a subpart of the Senate Banking Committee will hold hearings on Bitcoin in the coming weeks.

They say the discussions, which have not yet been scheduled, will likely focus on how regulators are responding to the new forms of payment. The hearings could highlight key concerns surrounding virtual forms of money, including implications for tax collection.

“As with all emerging technologies, the federal government must make sure that potential threats and risks are dealt with swiftly; however, we must also ensure that rash or uninformed actions don’t stifle a potentially valuable technology,” said Sens. Tom Carper (D., Del.) and Tom Coburn (R., Okla.), who serve as the top lawmakers on the Homeland Security panel.

In the meantime, Bitcoin continues to rapidly expand its influence.

On Tuesday, the currency reached a record high for the first since April on Mt. Gox, the largest Bitcoin exchange.

“We think these upcoming hearings are good for Bitcoin,” said Jinyoung Lee Englund, Director of Public Affairs at the Bitcoin Foundation. The organization aims to standardize, protect and promote Bitcoin protocol.

Englund added, “Education is key. Understanding the unique possibilities and challenges of virtual currency in general, and Bitcoin specifically, is important to the process of writing safe and sane regulatory policy. As a foundation, we welcome opportunities to educate and dispel myths on Bitcoin to legislators, regulators and the general public.”