But Peter Vessenes, chairman and executive director of the Bitcoin Foundation, was unfazed by the Liberty Reserve crackdown.
"The U.S. put out guidance recently through the Financial Crimes Enforcement Network, and we've been following up on that guidance and crushing bad actors," he said in an interview with CNBC Asia. "We're seeing a bit of a sweep right now," he said.
"There's nothing to indicate that good players who are working hard to stay regulated have anything to worry about."
And there's the rub: The techno-libertarian fantasy of an unfettered digital currency is losing its veil of anonymity and is dependent upon ensuring the appeasement of government regulators. It's enough to make a cryptotarian anarchist blanch.
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However, bitcoin holders also seem to have taken the Liberty Reserve bust mostly in stride; trading volume surged significantly on the news, but nowhere near the mid-April levels when bitcoin exchange rates swung by hundreds of dollars in a few hours, after the Cyprus financial crisis shook faith in banking institutions and made bitcoin an overnight sensation. The exchange rate, while volatile by currency standards, has steadied between $100 and $140 for most of the time since that dust settled, and was around $128 Friday, just 6 percent off May highs, according to data on bitcoincharts.com.
"The $64 billion question is: Are these new safeguards window dressing, or will they effectively handle the problems?" asked Stoltmann. "It's such a new phenomenon, we just don't know."
A truly transparent bitcoin market, with a spotlight on the identity of all transactors, would seemingly be of little interest to criminals. But then, who does want that? At a time when people are increasingly wary of stores and websites collecting their personal information, Vessenes says it's on the consumer to scrutinize the party on the other end of a transaction, and to be suspicious if they don't want to pry.
"As a consumer, I stay away from companies that have questionable know-your-customer policies," he said. "They're suspiciously light on how much information they want about you."
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So if anonymity is gone and a hypervigilance about identity sharing is required or advisable, what is bitcoin's remaining appeal?
For one, as a currency of limited quantity—about half of the 22 million bitcoins that can ultimately be "mined" through complicated computer data crunching are currently on the market—it is appealing as a hedge against inflation, said Tyler Moore, a Southern Methodist University computer science professor who has studied bitcoin exchanges. On the other hand, when holders become convinced that value is bound to rise, they tend to hoard their treasure.
Moore, who has studied hacker breaches of bitcoin accounts, notes that a downside of the digital currency is that having no central governing authority for a currency means having no recourse when one's account is raided.
He sees a regulated bitcoin as a feasible, if ironic, solution to keeping the currency viable, given the exchanges cooperate. And then, he says, "criminals will shift to a currency the authorities aren't keeping a close eye on."
