Now Congress is Concerned About Bitcoin

Bitcoin and virtual crypto-currencies have become so mainstream that even the U.S. Congress is talking about them. Regulations, ahoy?

Now Congress is Concerned About Bitcoin

Senators Thomas Carper and Tom Coburn, of the Senate Comittee on Homeland Security, have revealed that they’re going to be looking into Bitcoins and similar crypto-currencies, examining all aspects of the technology including–and this is key–the regulations that may or may not apply to them.

According to the Washington Post, the senators wrote to Homeland Security head Janet Napolitano to set out their plans, noting that “Virtual currencies appear to be an important emerging area” that “demands a holistic and whole-government approach to understand and provide a sensible regulatory framework.” Separately the New York Department of Financial Services has revealed it is investigating Bitcoin, having subpoenaed 22 companies who have a big role in the emerging currency.

Last week a Texas federal judge ruled that Bitcoin was a genuine currency, and that the currency and transactions and should subject to U.S. securities laws and the justice system. Thai authorities recently seemed to have banned all Bitcoin activities thanks to the fact the nation’s laws are too old-fashioned to deal with the technology and its implications.

Apart from what may, or may not be, legitimate concerns about money laundering using Bitcoins, the chief problem that the U.S. legislature seems likely to come across in its investigation is that the tech behind Bitcoin is complex and highly mathematical (and we know science, logic, and math aren’t Congress’s strong point). Furthermore the definition of “worth” embedded in the crypto-currency itself is far removed from traditional concepts of currency. Some proponents of future crypto-currency technology suggest that inherent worth in future Bitcoin competitors could come from computing more meaningful problems, something like the folding@home medical initiative, that would move the currency far beyond the notional valuelessness of small green pieces of paper.

[Image via Flickr user: Zach Copley]

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