Bitcoin soars

The value of Bitcoin skyrocketed Monday, coinciding with Senate hearings into the regulatory environment surrounding the virtual online currency.

As of 7:04 p.m. the Coindesk Bitcoin Price Index valued the currency at 1 Bitcoin to $675.61, an increase of more than 50 times its value 12 months ago. As recently as late October, Bitcoin was valued at less than $200.

The dramatic increase in price highlights the volatility of the stateless, regulation-averse, encryption-based currency. It also coincided with hearings at the Senate Homeland Security Committee, in which legislators, regulators, law enforcement and interest groups grappled with how to deal with the new currency.

During Monday’s hearing, Bitcoin was primarily characterized as a new technological frontier for criminal activity in need of regulatory innovation. “Regulation both at home and abroad is going to catch up. Because it has to,” said Jennifer Shasky Calvary, director of FinCEN, the Treasury Department’s Financial Crimes Enforcement Network.

Acting Assistant Attorney General Mythili Raman lauded the efforts of law enforcement to bring down the illicit online networks—like the contraband marketplace Silk Road—that run on Bitcoin, saying big busts show that Bitcoin “is not in fact anonymous and it is not in fact immune to investigation. And that is an important message to send.”

Whatever course the regulators take, it’s clear this is just the beginning. For every weakness revealed by recent events like the bust of the online contraband marketplace Silk Road, there is an anecdote pointing to what a mammoth task the U.S. government faces as it seeks to impose a regulatory regime on the so-called “Dark Web.” Not long after it was shutdown, for example, the Silk Road was reborn online, an apt illustration of the game of whack-a-mole that awaits law enforcement on the dark web.

On the other hand, as George Mason U. law professor Jerry Brito noted at Monday’s hearing, virtual currencies are not particularly new. “They’ve been around for years,” he said, citing World of Warcraft gold as his first example. And as FinCen Director Jennifer Calvary said, “Cash is probably still the best medium for laundering money.”

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