US officials told a Senate committee that Bitcoin – the digital currency that can be traded anonymously and freely worldwide – should be considered a legitimate currency, despite its documented criminal uses.
“This is a huge moment in my opinion, legitimacy is the one thing that Bitcoin is lacking,” Alistair Cotton, Currencies Direct’s head of corporate dealing, told City A.M. yesterday.
“For it to be adopted it has to be recognised as a legitimate form of currency. Regulation and becoming accepted by the traditional banking system and regulators is crucial.”
Mt Gox, one of the currency’s largest exchanges, has seen Bitcoin jump a number of times in recent weeks due to the digital currency’s rising popularity in China, the shutdown of the Silk Road website, the Cypriot banking crisis and fears over the security of traditional currencies.
In the past week alone Bitcoin has risen from $350 to its current high.
Last month the FBI shut down the anonymous online marketplace Silk Road, which took payments in Bitcoin and was used to trade drugs and criminal services.
Cotton said that the Silk Road shutdown actually helped Bitcoin: “The FBI seizing some one and a half per cent of the total supply of bitcoins has had an effect in driving the price upwards.”