The New York State Department of Financial Services (DFS) has confirmed it is considering new rules for virtual currencies.
It has already sent out subpoenas to 22 bitcoin-related firms and believes new legislation should be brought in at some point.
Included in these companies are BitInstant, Coinsetter, Dwolla, Andreessen Horowitz, Google Ventures and Winklevoss Capital Management and each have been asked questions relating to money laundering and investment strategies.
In a memo posted on its website, the DFS has confirmed it is running an inquiry into the appropriate regulatory guidelines for bitcoin and other virtual currencies available.
The watchdog has warned firms engaging in money transmission are already required to post collateral to safeguard customer money. They must also complete periodic safety and soundness examinations to ensure compliance with money laundering laws.
However, new rules could also be introduced specifically targeting virtual currencies as they have "unique characteristics". The proposals are designed to stop the financial product turning the industry into a "virtual Wild West".
By Gary Cooper