Welcome to PYMNTS.com’s VC Voices: a weekly column where we bring you commentary from the best of the best around the world of payments investment. Want to know what the biggest backers of our industry’s innovators and disrupters think? We give our VCs 500 words of unedited space to do with as they please, so you’ve come to the right place.

In our inaugural edition last week, we heard from Dan Rosen, general partner at Commerce Ventures, about his experiences at FinovateSpring 2013.

This week, we’re joined by Matt Witheiler, principal at Flybridge Capital Partners, who gives us his take on the Bitcoin boom and what government intervention in Mt. Gox’s business means for the industry.

By Matt Witheiler, Principal, Flybridge Capital Partners

Bitcoin is all the rage these days in the VC community. What started with some mild investor attention a year ago, around the time Dwolla raised their $5 million Series B financing from A-list investors, came to froth-like levels in the past month with high profile investors like Chris Dixon proclaiming that, thanks to Bitcoin, “finally something interesting is happening in financial tech.” Slowly over the past year, Bitcoin has gone from a hacker cottage technology to being the darling of the VC industry. Excitement around the alternative currency seemed insatiable - until last Tuesday.

Last week rumblings from the Commodity Futures Trading Commission head gave way to a full-on Department of Homeland Security action, with the government seizing and freezing U.S. funds at Mt. Gox, the largest Bitcoin exchange. It was a massive blow to the Bitcoin world where Mt. Gox handled 66 percent of all currency conversion. While the Bitcoin community struggled to understand what this government action meant for their industry, the venture community also grappled with what to do with the news. After all, nothing gets VC blood pressure up quite like the risk of an entire industry, and thus investment, being wiped out in one swoop of the government’s arm.

The focus of the debate in the VC community centered on what exactly the Mt. Gox action means for Bitcoin-centric investments going forward. One side argues that the DHS activity is just the first shoe to drop in what will be a series of government interventions in the Bitcoin space; an effort to curb money laundering, illegal trade and consumer risk, they point out. The other side makes the case that the Mt. Gox action is limited to one entity who, admittedly, did not go through the proper process when establishing the business; businesses who do register appropriately with the government and play within the bounds set by the money transfer and banking rules will face no such government intervention.

One week after the first action, the jury is still out. Shoe number two has yet to fall and the various regulatory bodies have been silent on the topic. All that one can do now is speculate - something us VCs like to pretend we’re good at. We, at Flybridge, tend to think that the Bitcoin movement is real and that startups in the ecosystem who follow the rules will thrive. That said, the overhang of potential government intervention keeps our pulses high and our checkbook close for the time being.