Bitcoin Price Soars as the Senate Mulls Regulating the Cryptocurrency

The question isn't whether to regulate the virtual money, but how best to go about it

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The value of Bitcoin skyrocketed Monday, coinciding with Senate hearings into the regulatory environment surrounding the virtual online currency.

As of 7:04 p.m. the Coindesk Bitcoin Price Index valued the currency at 1 Bitcoin to $675.61, an increase of more than 50 times its value 12 months ago. As recently as late October, Bitcoin was valued at less than $200.

The dramatic increase in price highlights the volatility of the stateless, regulation-averse, encryption-based currency. It also coincided with hearings at the Senate Homeland Security Committee, in which legislators, regulators, law enforcement and interest groups grappled with how to deal with the new currency.

During Monday’s hearing, Bitcoin was primarily characterized as a new technological frontier for criminal activity in need of regulatory innovation. “Regulation both at home and abroad is going to catch up. Because it has to,” said Jennifer Shasky Calvary, director of FinCEN, the Treasury Department’s Financial Crimes Enforcement Network.

Acting Assistant Attorney General Mythili Raman lauded the efforts of law enforcement to bring down the illicit online networks—like the contraband marketplace Silk Road—that run on Bitcoin, saying big busts show that Bitcoin “is not in fact anonymous and it is not in fact immune to investigation. And that is an important message to send.”

Whatever course the regulators take, it’s clear this is just the beginning. For every weakness revealed by recent events like the bust of the online contraband marketplace Silk Road, there is an anecdote pointing to what a mammoth task the U.S. government faces as it seeks to impose a regulatory regime on the so-called “Dark Web.” Not long after it was shutdown, for example, the Silk Road was reborn online, an apt illustration of the game of whack-a-mole that awaits law enforcement on the dark web.

On the other hand, as George Mason U. law professor Jerry Brito noted at Monday’s hearing, virtual currencies are not particularly new. “They’ve been around for years,” he said, citing World of Warcraft gold as his first example. And as FinCen Director Jennifer Calvary said, “Cash is probably still the best medium for laundering money.”

9 comments
TomWard
TomWard

Sorry, you're not going to be able to regulate it like you could with a hard currency. You'd have to regulate the entire internet and the negative impacts of that far outweigh the benefits.

EdWapole
EdWapole

Google: bitcoin beef jerky

micsolana
micsolana

In which the phrase "in need of regulatory innovation" is used non-satirically.

drudown
drudown

Just this: as if the not-so-speculative-but-eminently-foreseeable-and-unpreventable "possibility" that (lo and behold!) manipulation of "cyber currency" is an arguably an ABSOLUTE CERTAINTY…the concurrent "risk" that the State attempts to use such a "pre-meditated" pretext to "regulate content on the internet" to stifle FREE SPEECH is yet ANOTHER independent reason why the State has a COMPELLING STATE INTEREST to NEVER, EVER "acknowledge" ANY "cyber currency."

Such vigilance is, as they say, the price of Liberty.

Sorry, no Zelda coins. 

"All bad precedents began as justifiable measures." - Julius Caesar

sn't it true that the imaginary "cyber currency" Bitcoins are ALREADY used by drug dealers because it is impossible to trace and, as such, makes ANY sanctioned use of them in our political elections per se UNCONSTITUTIONAL? Of course it does.  

Your assent is immaterial to the truth of the matter asserted. 

And why would OUR OWN GOVERNMENT SANCTION ANY CURRENCY other than our own and/or our trusted Allies? 

Duh.

This red herring Bitcoin farce is just more Tea Party "chaos"…that is all such "de facto currency deregulation" foreseeably brings.

"Good order is the foundation of all things."- Edmund Burke

Get REAL CONGRESS. 

RAISE TAXES- IN REAL MONEY OWED TO THE PEOPLE's DE FACTO PROXY (IRS) TO COLLECT TAXES TO FUND THE STATE FROM US CORPORATIONS. 

yesh1prabhu
yesh1prabhu

The concept of Bitcoin and how it works is very hard to understand. Even well educated people I have talked to do not understand it. The number of people who will use them are rather few, I believe, because ordinary consumers will not be able to use them. If I own a bitcoin, for example, I will not be able to carry the "Bitcoin Wallet" with me when I go shopping. And while at the mall if I feel hungry for two slices of pizza, can I use my bit coin worth $550 to pay $5.30 for them? Souds like a crazy idea. Also, since my bitcoin wallet is stored in my computer, and let me say I have 4 bitcoins in the wallet, and the computer crashes due to a viral attack and the screen goes blank, will I lose my bit coins worth $2200? It's a scary thought.

Yesh Prabhu, Bushkill, Pennsylvania

EmilKoutanov
EmilKoutanov

Based on the huge discrepancy between the supply of bitcoin (which is algorithmically regulated) and the demand (China, institutional investors, etc), some have predicted that the price of Bitcoin will increase to between $500,000 and $5,000,000 per unit within a three-year time frame. Whether this will happen or not, only time will tell. But what its telling us now is that Bitcoin has already increased 50x over the last 12 month, and it's only getting warmed up.

EmilKoutanov
EmilKoutanov

@rubyrails.guru Do you methodically hit reply to every comment, accusing people that they're trying to mislead others based purely on the fact that the comment is in favour of bitcoin?