FILE PHOTO: Sparks glow from broken Bitcoin (virtual currency) coins in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic/Illustration/File Photo

WASHINGTON (Reuters) - The U.S. Senate’s financial services panel will hold a hearing next month with the country’s top markets regulators to discuss bitcoin amid rising concerns over the risks cryptocurrencies pose to the financial system, a person with direct knowledge of the matter told Reuters.

The Senate Banking Committee will take testimony from Commodity Futures Trading Commission Chairman Christopher Giancarlo and Securities and Exchange Commission Chairman Jay Clayton in early February, the source said.

Concerns about a bubble in the bitcoin market have heightened since the currency soared to record highs of more than $19,000 in December - only to then slump more than 28 percent. On Wednesday, bitcoin was trading at $14,676, according to prices compiled by the Luxembourg-based Bitstamp exchange.

The emerging asset class has created a divide among Wall Street and central bankers alike over whether it is a legitimate and sustainable financial instrument.

The SEC and the CFTC have been increasing their jurisdiction over the cryptocurrency market, which has no overriding U.S. federal regulator. Both watchdogs have warned of the considerable risks posed by the volatile currency and have said they may not be able to protect investors from cryptocurrency fraudsters.

The CFTC last month allowed CME Group Inc CME.O and CBOE Global Markets Inc CBOE.O to list bitcoin futures contracts, but this month said it would review its process for listing digital currency futures following criticism from market participants.

Five fund managers this week shelved plans to launch exchange-traded funds based on bitcoin futures, citing concerns from the SEC regarding the liquidity of the underlying futures market.