U.S to Bitcoins: It is a "legal means of exchange"

In a U.S. Senate committee trial, the U.S Justice Department referred to Bitcoins as a "legal means of exchange."

Days after the reported hacking of Inputs.io's Bitcoin wallet, wherein hackers allegedly managed to steal $1.18 million worth of Bitcoins, the hearing scheduled by the Committee on Homeland Security and Governmental Affairs came in just in time.

According to a letter from Peter Kadzik, principal deputy assistant attorney general, the trial is meant "to explore potential promises and risks related to virtual currency for the federal government and society at large" after the Silk Road Hidden Website was closed down in October.

"The FBI's approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services." He added, "Like any financial service, virtual currency systems 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."

During the hearing, Mythili Raman, the acting assistant attorney general at the Justice Department's criminal division said that they recognize that Bitcoins, a virtual currency, are not illegal.

Jerry Brito, a senior research fellow at the George Mason University's Mercatus Center who also testifies in front of the committee during the hearing, said that the trials about Bitcoins will boost up the view that this virtual currency is an acceptable means of transacting.

"Whether a virtual currency is a security under the federal securities laws, and therefore subject to our regulation, is dependent on the particular facts and circumstances at issue," SEC Chairman Mary Jo White said in a letter. "Regardless of whether an underlying virtual currency is itself a security, interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation."

On the other hand, Chairman Ben Bernanke of the Federal Reserve said that the agency has no plans of regulating the virtual currency.

He said in a letter, "Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market."