The Department of Justice said bitcoins can be "legal means of exchange" at a U.S. Senate committee hearing, boosting prospects for wider acceptance of the virtual currency.

"We all recognize that virtual currencies, in and of themselves, are not illegal," Mythili Raman, acting assistant attorney general at the Justice Department's criminal division, said at the hearing.

The Committee on Homeland Security and Governmental Affairs, which solicited comments in an Aug. 12 letter, scheduled the hearing "to explore potential promises and risks related to virtual currency for the federal government and society at large" after the Silk Road Hidden Website was shut down in October. The closing of the marketplace, where people could obtain drugs, guns, and other illicit goods using bitcoins, is helping fuel a rally in the virtual currency as speculators bet that the digital money will gain more mainstream acceptance.