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Bitcoin 'Must Be Open To Regulation' Says... Regulator

03/07/2014 15:52 BST | Updated 03/07/2014 15:59 BST

Bitcoin is about to enter the mainstream - and the reason we know that is that regulators are starting to give nearly impenetrable speeches about it.

The latest to give it the old college try is Gareth Murphy, director of markets supervision at the Central Bank of Ireland.

Murphy says that as more mainstream institutions turn to Bitcoin, they have to open themselves up to regulation too.

As fears subside about the use of digital cash in the black market, he says, it has to be opened to scrutiny.

He made the speech at a major conference in Dublin where the future of the currency was debated.

"Unlike the previous financial crisis when a culture of indifference by parts of the financial services industry towards regulation prevailed, I would urge this industry to work actively to address the concerns of financial authorities rather than 'playing cat and mouse' and eventually, and inevitably, being drawn into the regulatory net," Murphy said.

Bitcoin has been much-maligned for its association with the online drugs market, most notably the now defunct Silk Road, and fears that hackers will be able to target holders of the currency.

It is also volatile, with its value 18 months ago just £8 and increasing to more than £645 late last year. It now trades at £352.

But now it is gaining credence as a viable alternative for the costly wire transfers of an estimated £350 billion in remittances to families in the developing world.

Murphy said financial regulators are mindful of the risks that consumers may rely on products or technologies that they do not fully understand.

"But consumers expect currencies to be a predictable and stable store of value - free from surprises, if you wish," he said.

"When consumers lose confidence in currencies, the related uncertainty leads to a drop in economic activity."

Murphy is understood to be the first policymaker from a central bank to address a conference on bitcoin.

The regulator also talked about digital currencies leading to a loss of tax and threatening economies, and testing the adequacy of anti-money laundering laws.

Supporters of the crypto-currency argue that the virtual money can be abused in just the same way as cash and credit card payments.