DoJ, SEC, the Fed to Senate Homeland Security: Bitcoin is legitimate

As Bitcoin settles in for another spasmodic leap in the ticker graphs, key agencies in the United States government are telling elected officials that Bitcoin is a legitimate financial instrument. Officials from the Department of Justice, the Securities and Exchange Commission, the Federal Reserve and other experts released letters ahead of a Senate Homeland Security Committee hearing to say Bitcoin "has great potential benefits" as well as risks, just as with any other financial instrument. This signals a widening public acceptance of the digital currency.

The purpose of the hearing is "to explore potential promises and risks related to virtual currency for the federal government and society at large" in light of the Silk Road crackdown last month and a hack-and-grab Bitcoin theft last week. None of the advance letters from the various government officials and experts are crying wolf, it would seem. Their statements are reassuringly mild, balanced and dull. The DoJ's principal deputy assistant attorney general Peter Kadzik:

The FBI's approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services. Like any financial service, virtual currency system of either type can be exploited by malicious actors, but centralized and decentralized online payment systems can vary significantly in the types and degrees of illicit financial risk they pose.

Federal Reserve chairman Ben Bernanke is also chiming in, saying the Fed has no plans to regulate the decentralized currency–despite a federal judge ruling that it is subject to regulation. Bernanke:

Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market.

Academia is also testifying to the legitimacy of the currency. George Mason University Mercatus Center senior research fellow Jerry Brito writes that Congress is beginning to understand that "like any new technology there are going to be some challenges."

Meanwhile, Bitcoin's market value continues its wild upward climb. Last week, we reported its value to be hovering around $400 per Bitcoin according to Mt. Gox, already a headline-spanking benchmark. As of this moment, its weighted average for the day is $523.55–with the last price being $589.70.

SOURCE: Bloomberg