Feb 25 2014
News about the failure of a world-leading Bitcoin exchange service underscores the need for the U.S. to adopt clear rules of the road for the emerging industry, Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.) said.
The remarks came after the troubled Tokyo-based Mt. Gox online exchange for Bitcoin traders suddenly ceased operations.
“The disturbing news today from Japan is a reminder of the damage potentially ill equipped and unregulated financial actors can wreak on unsuspecting consumers,” Carper said in a Feb. 25 statement. “U.S. policymakers and regulators can and should learn from this incident to protect consumers.”
Carper said his staff is working closely with relevant federal agencies to determine what lessons can be learned to help ensure that a similar problem does not happen in the U.S.
Clear rules of the road are needed for entrepreneurs, investors and consumers, he said.
Bitcoin is a leading form of virtual currency, which is digital money without government backing that can be circulated over the Internet.
Carper Staff Report Expected
Carper's staff is expected to complete a report on the issue in the spring, an aide told Bloomberg BNA Feb. 25.
The price of Bitcoin reached a new peak on Nov. 27, surpassing $1,000 on the Mt. Gox exchange. However, the volatile currency has since been plagued by set backs, including a decision in China to ban its use by financial and payment institutions (235 DER EE-5, 12/6/13).
The abrupt Mt. Gox shut down followed reports of a massive attack on the web site that resulted in the theft of more than 700,000 bitcoins.
Bitcoin Vows to Rise Again
According to a notice posted on the Mt. Gox web site, a decision was made to close transactions “for the time being” in order to protect the site and its users.
“We will be closely monitoring the situation and will react accordingly,” the notice said.
Mt. Gox previously reported that some “unusual activity” on its site was under investigation.
The Bitcoin Foundation, a Seattle-based nonprofit organization that promotes the currency, said the Mt. Gox situation was certainly not the end of Bitcoin, even if it marks the close of a chapter.
“As our industry matures, we are seeing a second wave of capable, responsible entrepreneurs and investors who are building reliable services for this ecosystem,” Jinyoung Lee Englund, a spokeswoman for the foundation, said in an e-mailed statement.