The Washington PostDemocracy Dies in Darkness

Last month, Sen. Joe Manchin wanted to ban Bitcoin. Now, he’s not so sure.

Sen.  Joe Manchin (D-W. Va.) speaks to the media on Capitol Hill in December 2012. (Joshua Roberts/ Reuters)
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A previous outspoken critic of Bitcoin says he's starting to come around on the virtual currency, one month to the day after he called on regulators to ban it.

In an interview with the Washington Post, Sen. Joe Manchin (D-W. Va.) said recent moves by the Internal Revenue Service, private Bitcoin entrepreneurs and other government officials have buoyed his faith in the government's ability to "get more of a handle" on digital cash.

"Sure, it makes us look at it differently," said Manchin. "It sure will. When I said what I said, it was because it was totally unencumbered. The whole thing lent itself to a lot of improprieties — especially in the underworld, if you will, whether it be drugs or arms. Those were the things I was concerned about."

Last month, Manchin — a member of the Senate banking committee — wrote a letter to officials including Federal Reserve Chairman Janet Yellen and Treasury Secretary Jack Lew, calling Bitcoin "highly unstable." Pointing to restrictions on Bitcoin levied by China, South Korea and Thailand, Manchin urged U.S. officials to "prohibit this dangerous currency from harming hardworking Americans."

Yellen responded the next day by saying the Fed lacked any authority to regulate alternative currencies. The Internal Revenue Service has declined to recognize Bitcoin as a currency at all, saying it's more akin to property. On Tuesday, the IRS issued new tax rules that formally require Americans to report Bitcoins on their tax returns.

Manchin said Wednesday the growing integration of Bitcoin into the U.S. financial and regulatory system were easing his concerns. But he's still a little skeptical.

"There still has to be transparency and a reserve base," he added. "There has to be something that's tangible. If the feds can't get their hands around it to where they can secure it, then I would be very leery of investing in it or trading with it or buying with it."