The US Attorney General has raised the prospect of applying money-laundering and know-your-customer controls to virtual currency transactions as a means to clamp down on illegal activity.
Testifying before a US House Committee on the Judiciary, Attorney General Eric Holder, said that the emergence of digital currencies such as Bitcoin poses challenges for law enforcement given its appeal to the criminal fraternity.
He says his office is working with financial regulators to get to grip with the issues and the Department is "committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals' ability to move funds anonymously".
As virtual currency systems develop, Holder told the Committee, it will be "imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls".
Holder's intervention in the debate comes after various US state departments have proposed the imposition of tighter controls and licenses for Bitcoin businesses, raising fears that over-regulation might cripple the nascent industry.
In a recent Florida speech to bankers, Jennifer Shasky Calvery, director of Treasury's Financial Crimes Enforcement Network, noted: "The idea that illicit actors might exploit the vulnerabilities of virtual currency to launder money is not merely theoretical."