By Monday evening, the value of a bitcoin unit soared past $700 on some exchanges. The total outstanding pool of bitcoin — which is created by a network of users who solve complex mathematical problems — is now worth more than $7 billion.
The Senate hearing Monday afternoon was the clearest indication yet of the government's desire to grapple with the consequences of this growth, and the recognition that bitcoin and other similar networks could become more lasting and significant parts of the financial landscape.
"The decision to bring virtual currency within the scope of our regulatory framework should be viewed by those who respect and obey the basic rule of law as a positive development for this sector," said Jennifer Shasky Calvery, the director of the Treasury Department's Financial Crimes Enforcement Network. "It recognizes the innovation virtual currencies provide, and the benefits they might offer."
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Ms. Shasky Calvery and the other officials at the hearing did say that basic questions still had to be answered about virtual currencies, including whether they can actually be considered currencies or whether they are more properly categorized as commodities or securities. The distinction will determine which agencies regulate the networks and how they are treated under tax law.
Ms. Shasky Calvery said that the Internal Revenue Service was "actively working" on its own rules for bitcoin.
The hearing followed other less visible steps taken by regulators and lawmakers to bring digital money into the mainstream.
New York State's top financial regulator, Benjamin M. Lawsky, said last week that he would hold a hearing to consider the creation of a BitLicense to provide more oversight for transactions. Earlier, the Federal Election Commission put out an advisory indicating that bitcoin could be legally accepted as political donations.
The general counsel of the Bitcoin Foundation, a nonprofit advocating the currency, said in his testimony on Monday that he was receiving a much more friendly response from both government and the financial industry.
"We have recently perceived a marked improvement in the tone and tenor taken by both state officials and bank executives," the general counsel, Patrick Murck, said.
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Bitcoin has experienced a remarkable ascent since it was created in 2009 by an anonymous programmer or collective known as Satoshi Nakamoto. The money, which is not tied to any national currency, has been popular with technophiles who are skeptical of the world's central banks. Only a finite amount of bitcoin will ever be created — 21 million units. Users have bid up the price on Internet exchanges, betting that the currency will be more widely used in the future.
There are significant questions about the wisdom of the digital money as an investment, given that bitcoin has no intrinsic value and has proved to be vulnerable to hackers. Many money managers have recommended that unsophisticated investors stay away.
Recently, though, bitcoin has been catching fire around the world, with exchanges in China particularly active. A growing number of prominent American investors have also bought stakes, including Michael Novogratz, a principal at the private equity and hedge fund giant Fortress Investment Group, as well as the Winklevoss twins, Cameron and Tyler.
The increasingly widespread ownership of bitcoin has shifted attention away from the criminal enterprises that have used digital money, but it was a focus at the Senate hearing.
Last month, the online marketplace Silk Road, where bitcoin was the primary form of payment, was shut down and its founder arrested after authorities accused it of being used to buy and sell drugs, weapons and pornography. The chairman of the Senate committee, Thomas R. Carper, Democrat of Delaware, said that a few days after the arrest, a similar site sprang up.
It can be harder to track criminals who use bitcoin, law enforcement officials said at the hearing, because they operate across international borders and often do not use established financial institutions that report transactions.
But Mythili Raman, an assistant attorney general at the Justice Department, also said that because every bitcoin transaction was recorded on a public ledger, it was possible for investigators to trace the movement of money between accounts.