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Bitcoins swell ahead of US Senate hearing

Bitcoins have surged in value with the news that a US Senate Committee has been told the virtual currency is legitimate by the FBI.

The BBC reports that the currency rose to over $600 [£372] earlier today in advance of a Homeland Security and Governmental Affairs Committee hearing that is exploring the currency.

The media coverage as well as the committee hearing has helped the currency gather value over the past couple of weeks after it had stood at $200 [£124] at the end of October and it now stands at $619 [£384]

The committee will look at the “promises and risks” that bitcoin could provide for the “government and society at large” and the committee is seeking viewpoints from a variety of different stakeholders on the currency.

It will hear from representatives from the Department of Justice [DoJ] as well as the Securities and Exchange Commission [SEC] with submissions from the FBI and US Federal Reserve also sought.

A letter written to the committee by the FBI highlighted virtual currencies as offering “legitimate financial services” but that they can easily be “exploited by malicious actors”.

A hearing was scheduled following the government shutdown of Silk Road in October and subsequent arrest of its owner Ross Ulbricht with much of the money he made held in the virtual currency.

The FBI has hit a stumbling block in unravelling the 600,000 bitcoin fortune built up by Ulbricht, which has a street value of some £49.7 million and rising as the currency gets more popular.

Each coin is encrypted and held separately meaning the FBI is finding it incredibly difficult to recover the money with just 173,991 bitcoins having been seized in connection to the case so far.

Silk Road, the site that kick-started this hearing, was hosted on the deep web and allowed users to trade in items such as illegal substances out of the reach of the law – for a time – and its customers used bitcoins to buy and sell items.