Bitcoin boom brings new scrutiny from Washington. Bitcoin and other cryptocurrencies rallied to all time highs this past week, attracting new attention from U.S. regulators. Professional and amateur investors are flocking to the digital currencies as they explode in value. That's left lawmakers and regulators scrambling to understand the technology behind digital currencies and their implications on financial markets.
“It’s something that they’re just trying to get their arms around,” said a lobbyist representing financial services companies. “The reality is the speed at which the technology is evolving is much more than what regulators are able to keep up with at this point in time.”
Investors find bitcoin, the most prominent cryptocurrency, and other digital currencies attractive because of their underlying technology, known as blockchain. Instead of verifying transactions through third parties like banks, bitcoin transactions are verified quickly and cheaply on a digital public ledger that updates roughly every ten minutes.
The value of trades is public but the identity of parties is private. Traders have looked to cash in on the skyrocketing value of digital currencies as commodity prices and bond yields falter. Several regulated exchanges have begun listing or preparing to trade bitcoin derivatives, bets on the future performance of the currency, this week.
The surge in digital currencies has put the traditional financial sector and policymakers on edge. Regulators have warned investors that digital currencies are subject to federal financial regulations, and to tread carefully with their trades.
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This is quite expected with the recent rally enjoyed by Bitcoin and also other major cryptocurrencies (those in the top 10 of the list). The recent introduction of Bitcoin Futures can also be one of the many reasons why Washington regulators are keeping a close eyes on the many developments around Bitcoin. Now, we can finally say that even if there is no formal decree from the government, Bitcoin is here to stay and is now becoming legit. The time has really come for Bitcoin to take on the center stage.