Bitcoin companies have been urged by Senator Chuck Schumer to come up with ways to prevent criminals from utilising the virtual currency.
Speaking at a Senate hearing, Schumer, a Democrat from New York, said: “In order for the legitimate uses of Bitcoin to flourish, there must be a way to separate the wheat from the chaff.”
Schumer and other senators interviewed several witnesses who attended “The Present and Future Impact of Virtual Currency” hearing. They asked questions regarding the risks of Bitcoin, which include its lack of consumer protection and regulations as well as the use of the currency by criminals.
Introduced by a group of programmers known by the name of Satoshi Nakamoto in 2008, Bitcoin is used to pay for almost everything that can be bought on the internet. Based on data from Bitcoincharts, a website monitoring activity across different exchanges, there are presently 12 million Bitcoins in circulation.
Given its potential to reduce banking fees, Bitcoin is an attractive tender for those looking to trade online or in stores.
Meanwhile, some of those who attended the Senate hearing offered advice on how Bitcoin can beef up its protection.
Sarah Jane Hughes, a university scholar and commercial law fellow at the University of Indiana, advised Bitcoin merchants and exchanges to provide information relevant to a dispute resolution process and guarantees of redemption.
Mercedes Kelley Tunstall, partner at law firm Ballard Spahr LLP, suggested removing features that make transactions anonymous, while Senator Heidi Heitkamp of North Dakota noted that many tax issues surrounding Bitcoin transactions still need to be clarified.
“This is going to be a big challenge,” said Heitkamp. “This is going to become an increasing problem.”