They need to “embrace” it now in case it get huge. There are 2 major aspects to it that our government hates
1) anonymity (the same “problem” as cash but extended to long-distance purchases)
2) they don’t (currently) tax it
It’s been very hard to start taxing internet sales because people have become accustomed to tax-free purchases. They need to get taxes into digital currencies before a large percent of the population get used to them.
It will be the “perfect currency” if they can modify it so a % of each transaction is sent to the IRS and the details reported to the NSA. That may not be what they are saying now, but you know that’s what many people in government are thinking and why they are pushing digital currency supporters to begin these hearings on a positive note.
3) The government cannot create new bitcoins at will. Bitcoin is the antithesis of the Federal Reserve and its incestuous relationship with the U.S. Treasury.
1) anonymity (the same "problem" as cash but extended to long-distance purchases)
2) they don't (currently) tax it The word "embrace" is very apt here.
I was just explaining to a friend who was surprised that bitcoins got a warm reception from Democrat-controlled Senate, that it's an old strategy of Embrace, extend and extinguish [if necessary) utilized by Microsoft for many years.
By "embracing" bitcoins they hope to tax it and regulate it, thus rendering anonymity aspect and associated "threat" moot. It's already in the process of being done in Germany and considered by several Asian states.
Once it's done, it will be mostly dead, because the anonymity is really the only thing that gives it any value. Paypal, Square and expansion of conventional credit card companies into e-transfer, with all the convenience and inherent protections and without inherent speculative aspect of bitcoin, will have much more appeal for 99.99% of the people.
Actually, not much different than the current strategy of "legalizing" marijuana, "medical" or "recreational" - essentially taxing and "regulating" it and "protecting" the "market" from illegal marijuana. It also allows for the expansion and increased funding of / spending on the state drug enforcement agencies.