Senate Committee Considers Virtual Currencies, Agencies Say Legitimate Benefits Exist

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The Senate Homeland Security and Governmental Affairs Committee heard testimony Monday concerning virtual currencies. During the hearing, titled “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies,” Federal agencies told lawmakers that currencies such as Botcoins can be can be “legal means of exchange,” meaning that wider acceptance of the virtual currency could be in the future.

The Senate Committee requested comments on virtual currencies in an August 12 letter agencies, seeking input Monday to “explore potential promises and risks related to virtual currency for the federal government and society at large.”

A great deal of the focus on virtual currencies in recent months has been bad following the government shutdown of Silk Road, a hidden website that served as an online marketplace for a number of illicit activities where Bitcoins were a widely accepted form of payment.

“The FBI’s approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services,” Peter Kadzik, principal deputy assistant attorney general, wrote in a letter dated Oct. 23. “Like any financial service, virtual currency systems 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.”

Senator Tom Carper (D-Del.) praised the shuttering of Silk Road in an opening statement and warned that similar marketplaces still exist.

“Today, a number of similar enterprises that accept bitcoins are still in business, selling weapons, child pornography, and even murder-for-hire services,” he said.

But while some lawmakers fear the anonymity and decentralized nature of virtual currencies, much of the testimony focused on benefits provided by currencies such as Bitcoins.

“Bitcoin for the first time makes possible transactions online that are person-to-person, without the need for an intermediary between them, just like cash,” Jerry Brito, a senior research fellow at George Mason University, told the Senate Committee in prepared testimony.

Personal Liberty News Desk

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