Bitcoin prices have exploded over the past week, and just in time: Federal agencies are gearing up to defend the digital currency’s legitimacy in a Senate hearing today.
The United States Department of Justice and Securities and Exchanges Commission will argue in favor of Bitcoin’s viability, with the risks and benefits of any payment technology, Bloomberg reports based on letters released ahead of the hearing.
The discussion comes none too soon, as Bitcoin prices have surpassed $600 for the first time ever today, according to the Bitcoin exchange Mt. Gox. Update: And as of 4:30 pm Eastern today, Mt. Gox is showing Bitcoin prices above $750.
To put the new price in perspective, Bitcoin reached $400 for the first time last week and only reached $500 yesterday. A recent trading surge in Asia is driving Bitcoin’s massive growth, reports CNBC.
Bitcoin, the pseudo-anonymous digital currency, faced its biggest threat ever last month when the FBI took down the underground market Silk Road, which was widely used to purchase drugs and other illegal substances. Bitcoin prices dropped close to $100 after Silk Road’s shutdown (it was also the largest functioning Bitcoin market), so its rebound over the past week is particularly impressive.
Last month, it seemed as if the U.S. was years away from legitimizing Bitcoin. But now, as its price is exploding, government agencies seem eager to support it.
“The FBI’s approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services,” said Peter Kadzik, principal deputy assistant attorney general, in a letter ahead of the Senate hearing. “Like any financial service, virtual currency system[s] of either type can be exploited by malicious actors, but centralized and decentralized online payment systems can vary significantly in the types and degrees of illicit financial risk they pose.”
Federal Reserve chairman Ben Bernanke also noted in a letter that the Federal Reserve isn’t planning on regulating Bitcoin any time soon.