NEW YORK (AP) — The United States is set to exchange virtual currency for bitcoin as part of a program aimed at expanding the acceptance of digital currencies, officials said Wednesday.
Avalon Exchange Inc., based in Denver, Colorado, said it has received approval from the Treasury Department to begin accepting bitcoin and other virtual currencies, according to a release.
The move comes amid increasing interest in digital currencies such as bitcoin and blockchain technology that allows for decentralized systems.
The currency is created and distributed on a network by computer software.
The Treasury Department has approved the exchange, saying it can facilitate the exchange of virtual currencies between the U.s. and foreign governments and private-sector entities.
The U.N. General Assembly passed a resolution in October calling for global adoption of blockchain technology, which could be used to make digital assets more resilient to hacks and fraud.
The resolution also called for governments to establish a network of “smart contracts” that could facilitate digital asset trading and transfer.
AvaVault, a U.K.-based exchange, announced in February that it would accept bitcoin.
The U.C.L.A. and California-based exchanges also are accepting the currency.
In addition to Valor, the U of S and U of A exchange have partnered with the Uptown Exchange in Los Angeles, the New York-based exchange announced.
A report by the Federal Reserve Bank of Chicago said that as more people move from traditional currencies to digital assets, they will need to move into physical assets.
The Federal Reserve is currently monitoring bitcoin as a payment method, the report said.
The central bank will issue guidance on bitcoin as it considers a possible regulatory environment for virtual currencies in the coming months, according a Fed statement.
The Fed declined to comment on how it might approach the regulatory environment in which bitcoin may be used.