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No Federal regulation for Bitcoin

Bitcoin has been dealt another blow with news that the US Federal Reserve can’t see the virtual currency being regulated any time soon.

Related: MtGox Bitcoin exchange goes offline

Janet Yellen, the new chair of the Federal Reserve, admitted to Congress that there is no way that it could oversee the virtual currency.

"To the best of my knowledge there's no intersection at all in any way between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate," Yellen said, according to CNET. "So the Federal Reserve simply does not have authority to supervise or regulate Bitcoin in any way."

She also added that the currency would be particularly difficult to regulate because Bitcoin has “no central issuer or network operator to regulate.” In terms of what Congress can do to help, Yellen stated, “it would certainly be appropriate I think for Congress to ask questions to what the right legal structure would be.”

Bitcoin took a turn for the worse this week when one of the largest exchanges, MtGox, shut down following a large-scale theft caused by hackers exploiting transaction malleability.

The theft, thought to be worth some £230 million, has resulted in authorities in its home country of Japan investigating the company as well as law enforcement from the US getting involved.

US authorities also issued subpoenas to several other Bitcoin exchanges in order to try and understand the problems that brought an end to MtGox earlier on this week and the FBI is among the interested parties.

Related: MtGox’s disappearance now being investigated by Japanese authorities

The week’s news hasn’t had a disastrous effect on the wholesale price of Bitcoin, which has hovered around $570 [£341] for most of the week and at the time this article was written the price was $574 [£344].