Mark R. Warner

I'm pleased to co-chair this hearing on the present and future impact of virtual currency. My friend Senator Merkley and I appreciate the work Senator Heller has done. Senator Kirk will be joining us as well. We're going to do this a little different: Because this is a joint subcommittee hearing, I will chair the first panel, and Senator Merkley will chair the second.

The uses of virtual currencies have proliferated in recent years. My hope for this hearing is to educate members of the Senate and the public about virtual currencies, including the potential and drawbacks. I also hope to explore how regulators are keeping up with this technological innovation to protect consumers.

I've been following this development of bitcoins for the last two months. I'm only just starting to wrap my head around the potential upside, downside, regulatory issues, monetary policy issues, taxation issues, and consumer protection issues that this innovation represents. I'll point out to the witnesses that back in 1982 I had the opportunity to be part of a venture in an entirely  new industry, at that point what was the cutting edge of an industry called cellular telephones. All of the experts at that point thought it would take the world 30 years to build-out a wireless network. And at the end of the first five years, maybe about 30% of Americans would use cellular phones. Luckily for me, the experts were wrong, and now these devices transform our lives.

Getting it right from all the regulatory, financial, and consumer points around virtual currencies could pose great challenges as well as great opportunities. And my hope is that this will be the beginning of an effort to hear about the potential and significant ramifications around monetary policy, around taxation.

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Think about all of these notions with  21 million bitcoins that could be created. As we see acceptance, the FEC has allowed political contributions to be made in bitcoins. This is a development that's already in process. But if this becomes a standard currency or tool, it could radically and dramatically transform the role of central banks and monetary policy. It has enormous security concerns, which is why I am very, very interested about this topic as a member of the Intelligence Committee. I'm concerned as well about the potential abuse of this development. But I think, as we see now, somewhere between 10 to 12 million bitcoins have been mined. And, based on the reactions yesterday from Senator Carper's hearing, where I believe bitcoins spiked at over $700 per unit, we're talking about a currency that already is being monetized. We as policymakers have to catch up.