Bitcoin is currently the most widespread virtual cryptocurrency; but the currency continually comes under fire in recent times as suspicions of its use for criminal activities such as money laundering and drug trafficking. As well as increased attention from regulatory agencies in the US and abroad and it’s recent recognition as actual money has led to a great deal of more scrutiny.

Now to get some support from the US law makers, members of the Bitcoin Foundation met on Monday with representatives of at least seven U.S. regulators amid growing attention to the world’s most popular virtual currency by law enforcement agencies and government financial institutions.

Bitcoin Foundation’s general counsel Patrick Merck answered questions from the Federal Reserve, the U.S. Treasury Department, the Federal Deposit Insurance Corporation (FDIC), IRS, the Office for Regulation of currency (OCC), the FBI and Secret Service and attempt to allay the fears of the federal government relative to the U.S. virtual currency.

The meeting, observers say, is against a background of ever-increasing interest in the U.S. government to the world of virtual currency and attempt to extend its jurisdiction to the market.

“The federal government has taken an active interest in understanding Bitcoin,” says Marco Santori, chairman of the Foundation’s Regulatory Affairs Committee. “As such, the goal of these initial meetings is education about the Bitcoin protocol specifically and distributed finance in general. The Foundation is committed to establishing itself as the first resource for government policymakers.”

Illegal marketplace

Bitcoin, which is now worth more than $1.4 billion, is lately often subject of criminal investigations. The Department of Homeland Security, a committee of the U.S. Senate, has launched an investigation into Bitcoin. The government is concerned about the anonymous nature of the currency including primary currency on the digital black market Silk Road.

The criticism of Bitcoin is that it can be used for money laundering, but also used for tax evasion and drug sales. Virtual coins can be sent without a trace is left to regulators or law enforcement agencies.

Approval for market participants

With the development of the industry of virtual currency, international regulators have begun to pay more attention to this market. In March, the U.S. Treasury announced that it intends to take control of services to help pay off a virtual currency that is not tied to any of the real world currencies. Regulators believe that the administrators of these systems are subject to the laws against money laundering, so they have to report to regulators as well as other money transfer systems.

In some states, including California and New York, companies using Bitcoin received warnings from authorities that they may be violating the law on money transfers. For example, last month the Department of Financial Services of New York sent a request about two dozen companies from the requirement to provide detailed information about their activities. The service is also under scrutiny in other countries including ban in Thailand.

Industry participants and virtual currencies previously demonstrated their willingness to appease regulators. The Washington meeting was to help regulators, policymakers and law enforcement officials better understand the Bitcoin protocol and distributed finance so they can make better decisions and develop new methodologies for identifying and interceding illicit activity.

The digital currency is currently only recognized by Germany as official currency. Patrick Murck, general counsel for the Bitcoin Foundation, hoped the Federal meetings would clear up misunderstandings.

“We view this as the beginning of a conversation about the appropriate role of government and law enforcement in this emerging space. Our hope is that this is the beginning of an open and transparent dialog between good-faith stakeholders to find common ground and develop public-private partnerships,” he said.