Senate jumps into Bitcoin fray

The Senate Homeland Security and Government Affairs Committee has launched a review of how the government regulates virtual currencies such as Bitcoin.

The panel sent a letter on Monday to seven federal agencies, requesting information about any policies, procedures or initiatives for overseeing virtual currencies. 

In the letter, committee Chairman Tom Carper (D-Del.) and ranking member Tom Coburn (R-Okla.) revealed their aides have been interviewing people in the government and private sector about the potential risks of Bitcoins and other virtual currencies.

{mosads}”The expansive nature of this emerging technology demands a holistic and whole-government approach in order to understand and provide a sensible regulatory framework for their existence,” the senators wrote. “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.” 

The lawmakers sent the letter to the Federal Reserve, Securities and Exchange Commission, Office of Management and Budget, the Commodity Futures Trading Commission and the departments of Homeland Security, Justice and Treasury.

Bitcoins, which exist only online, have no central managing authority, and their owners are anonymous. 

Carper and Coburn worried that the “anonymous and decentralized nature has also attracted criminals who value few things more than being allowed to operate in the shadows.”

The currency has caught the attention of state and federal regulators as its popularity has surged in recent months. 

New York’s financial regulator subpoenaed 22 firms associated with Bitcoins and said on Monday that it is considering new regulatory guidelines for virtual currencies.