Bitcoin has soared to a new record high of $750 as U.S. officials testified about the benefit of the virtual currency as a "legal means of exchange" to the U.S. Senate Homeland Security and Government Affairs Committee.
According to senior U.S. law-enforcement and regulatory officials, there are benefits in the digital forms of money and they are making progress in tackling the risks associated.
On Monday, November 19, U.S. authorities appeared at the first-ever hearing pertaining to the digital currency, where the pitfalls and benefits of Bitcoin were highlighted.
U.S. Senators heard that the virtual currency, which has come under scrutiny for illegitimate activities, is a "legal means of exchange."
"We all recognize that virtual currencies, in and of themselves, are not illegal," said Mythili Raman, acting assistant attorney general at the Justice Department's criminal division, at the hearing.
The hearing gave a financial fillip to Bitcoin as it was called a "legitimate" financial service.
"The Department of Justice recognizes that many virtual currency systems offer legitimate financial services and have the potential to promote more efficient global commerce," said Raman.
Federal Reserve Chairman Ben Bernanke couldn't make it in person to the hearing but in a letter to the senators, he said that virtual currencies like Bitcoin hold a lot of "long-term promise."
"Particularly if the innovations promote a faster, more secure, and more efficient payment system," Bernanke said.
Sen. Tom Carper (D., Del.), who chairs the committee, said it may be "possible to have the benefits of virtual currencies and to actually be able to not facilitate" criminal activity. However, the senator also expressed concerns that, unless regulated, virtual currencies may be used for crimes, including "selling weapons, child pornography and even murder-for-hire services."
While the digital currency has not yet received an official stamp of approval, the hearing gives some legitimacy to Bitcoins, which were previously associated with illegal activities.
"The government is taking a very thoughtful and balanced approach to bitcoin and bitcoin regulation," said Barry Silbert, founder of the Bitcoin Investment Trust.
The trust holds around 53,000 Bitcoins and was launched in September this year. On Friday, November 15, shares in the Bitcoin Investment Trust had a net asset value of $42.44, each share being 0.1 percent of a Bitcoin.
Following Monday's hearing, Bitcoin surged briefly to an all-time high of $900 on Tokyo-based exchange Mt. Gox, the best-known operator of a bitcoin digital marketplace, before settling around $650. In the last two months, the digital currency has gained over 400 percent.
