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Bitcoin investors cash in as US says it could embrace the virtual currency

A positive US senate committee hearing on the digital currency has raised its value, and hopes it will keep on rising if criminals are shut out

PUBLISHED : Wednesday, 20 November, 2013, 2:55am
UPDATED : Wednesday, 20 November, 2013, 9:19am

Thousands are cashing in on the soaring value of bitcoins after the US signalled it could embrace the red-hot digital currency.

The value of a single bitcoin leapt to a record US$720 yesterday, thanks to the positive noises coming out of Washington. Three days ago one unit of the currency was worth US$430.

Among those coining a small fortune is British ex-banker Joseph Lee, who spotted bitcoin's early potential. Today he sits on a US$200,000 profit from a US$100 investment. "The reward for this is a lot of money,'' he says.

Lee, who spoke at a bitcoin conference in Singapore last Friday, has made the most of buying and selling the virtual money in different currencies.

Investment professional Chen Yuetian, who works for a Beijing-based venture capital firm, bought his first bitcoin for HK$1,615 on October 29; a week later he bought a second for HK$3,116. "I have made many investment decisions before, but nothing has grown as fast as this," said Chen.

By last night the value of his investment in two virtual coins stood at HK$14,000, rich pickings for a currency that only began circulating in 2009 yet now looks set to gain legitimacy after a US Senate hearing on Monday discussed regulating trade in it.

Virtual currencies are a headache for authorities, who are concerned they could be exploited by organised criminals as they circulate independently of government controls.

The US Senate Committee on Homeland Security and Governmental Affairs met on Monday to discuss potential regulation of bitcoin. The hearing, however, proved to be more of a fact-finding mission. To bitcoin investors, it was the most bullish development yet.

"Whether or not virtual currencies prove to be a boom or a bust, I think it's clear that some folks just want a chance to try and play by the rules," Senator Tom Carper said.

Hong Kong-based bitcoin compliance specialist Anthony Hope said the bitcoin community needed to disassociate itself from criminal networks.

"This is the opportunity for the community to close the gate on illegal activity while the currency is still young - all along bitcoin can be cleaner than cash."

He added: "The Senate committee hearing should bring a sense of cautious optimism to bitcoin entrepreneurs."

Bobby Lee, founder and CEO of BTC China, the largest bitcoin exchange on the mainland, said the hoped-for regulation would stamp out lawbreaking.

"If bitcoin makes illegal activity easier, then we should regulate it, so that law enforcers can still carry out their duties," Lee said. "That's the only way for bitcoin to have long-term success."

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