As Feds Sing Praises, Bitcoin Hits Record High

Senators told IRS plans to regulate virtual currency

By Rob Quinn,  Newser Staff

Posted Nov 19, 2013 1:46 AM CST

(Newser) – Bitcoin had a good day yesterday—as did people holding the virtual currency. On some exchanges, it hit record prices of $800 or more after a Senate hearing that saw federal officials praise some of the benefits of digital money, the Wall Street Journal reports. The first-ever congressional hearing on the subject was told that the Department of Justice "recognizes that many virtual currency systems offer legitimate financial services" that could boost global commerce, and that Federal Reserve Chairman Ben Bernanke believes the likes of Bitcoin "may hold long-term promise" and could promote a "faster, more secure, and more efficient payment system."

"There are plenty of opportunities for digital currencies to operate within existing laws and regulations," testified a Secret Service special agent. The IRS said it was "actively working" on regulations for Bitcoin and other virtual currencies, and financial regulators said they were looking at moves to increase oversight. Officials also testified about the use of Bitcoin for illegal purposes—including the now-closed illegal drug marketplace Silk Road—but said existing laws are good enough to prosecute offenders who use Bitcoin. The surge in the price of Bitcoin—which was just $13 in January—sent the value of the total outstanding pool of the currency to more than $7 billion, reports the New York Times.

Sen. Tom Carper, D-Del., chair of the Senate Homeland Security and Governmental Affairs committee, asks questions about virtual currencies.
Sen. Tom Carper, D-Del., chair of the Senate Homeland Security and Governmental Affairs committee, asks questions about virtual currencies.   (AP Photo/Jacquelyn Martin)
Mike Caldwell, a software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
Mike Caldwell, a software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.   (AP Photo/Rick Bowmer)
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