Bitcoin: Probe Into Virtual Currency Launched
A US Senate committee has launched investigations into Bitcoin and other virtual currencies amid concerns over criminal activity and national security.
The Senate Committee on Homeland Security and Government Affairs has written to major financial regulators and law enforcement agencies asking about the "threats and risks related to virtual currency".
Virtual currencies such as Bitcoin, are used in online transactions that are not monitored by traditional financial institutions.
The Senate's letter raised concerns that virtual currencies "can be sent nearly anonymously, leaving little or no trail for regulators or enforcement agencies".
"Their near anonymous and decentralised nature has also attracted criminals who value few things more than being allowed to operate in the shadows," the senators wrote.
The letter was sent to the US Department of Justice, the Federal Reserve, the Treasury, the Securities and Exchange Commission and the Commodity Futures Trading Commission.
It follows a move by New York's top banking regulator, which is considering issuing guidelines to regulate virtual currencies.
On Monday Benjamin Lawsky, superintendent of the New York Department of Financial Services released a formal inquiry notice.
In it he warned: "The cloak of anonymity provided by virtual currencies has helped support dangerous criminal activity, such as drug smuggling, money laundering, gun running, and child pornography."
He added: "If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country's national security, but also the very existence of the virtual currency industry as a legitimate business enterprise."
The virtual currency industry has been under scrutiny before as institutions try to crackdown on potential wrongdoing.
In May, US prosecutors filed an indictment against the digital currency exchange Liberty Reserve, accusing the Costa Rica-based company of helping criminals around the world to launder more than $6bn in illicit funds.
The Federal Bureau of Investigation also reported last year that Bitcoin was used by criminals to move money around the world.
The probe comes as Bitcoin users were left at risk of theft earlier in the week, after a flaw in some Android "wallet" apps.
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