This Senate hearing is a Bitcoin lovefest

November 18, 2013

Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (The Washington Post)

The Senate Committee on Homeland Security and Governmental Affairs, chaired by Sen. Tom Carper (D-Del.), is holding the first congressional hearing on the future of Bitcoin. The first panel features senior figures from the Obama administration. And their comments about Bitcoin have been remarkably positive.

After the officials gave their opening statements, Carper's first question drew a parallel to the Internet. He pointed out that in the early days of the Internet revolution, many people raised concerns about illicit use of Internet technologies. Yet in the long run, he argued, the Internet has had a hugely beneficial effect on peoples lives, making possible previously unimagined services like Facebook and YouTube. Carper wanted to know if the witnesses saw Bitcoin in the same light.

Jennifer Calvery, director of the Financial Crimes Enforcement Network, agreed with Carper. "Innovation is a very important part of our economy. It's something for us to be proud of," she said.

"We are attuned to the criminal use," added Mythili Raman of the Justice Department. But "there are many legitimate uses. These virtual currencies are not in and of themselves illegal."

"There is good reason for us to remain watchful" about Bitcoin being used for illicit purposes, Raman added. "But we also intend to balance that against the need for legitimate users" to use the technology.

Later in the same panel, Edward Lowery of the Secret Service testified that cyber criminals "have not by and large gravitated toward peer-to-peer cryptocurrencies." Rather, they "have by and large gravitated toward centralized digital currencies that are based in a locale that may have less regulatory guidelines and less aggressive law enforcement."

That's been the tenor of the entire hearing so far. All three Obama administration officials expressed concern about Bitcoin being used for illicit uses. But they also stressed that Bitcoin has important legitimate uses and that regulators need to be careful not to stifle innovation in virtual currencies. And they seemed to believe that the situation was under control, and none asked for new regulatory powers to crack down on illicit uses of the currency.

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Brian Fung · November 18, 2013