U.S. authorities are investigating the use of Bitcoin and other virtual currencies for possible use for tax evasion and other financial crimes.

Digital currencies are a "significant emerging threat," Victor Lessoff, director of the IRS' cyber threats unit, told the Financial Times.

"Clearly the increasing use and misuse of cyber-based currency and payment systems to anonymously transfer illicit funds as well as hide unreported income from the IRS is a threat that we are vigorously responding to,"

Forbes Columnist: ‘Who the Hell Cleared This?’

In addition to cracking down on virtual currencies, taxpayers might be required to disclose to the IRS if they are using PayPal accounts to transfer money virtually, Lessoff told the Times.

Government authorities have already closed Liberty Reserve, a virtual payment network, charging that it was built and intended for money laundering and other financial crimes.

"Liberty Reserve has become a financial hub of the cyber-crime world, facilitating a broad range of online criminal activity," the indictment states.

"Unlike traditional banks or legitimate online payment processors, Liberty Reserve did not require users to validate their identity information, such as by providing official identification documents or a credit card. Accounts can therefore be opened easily using fictitious or anonymous identities."

Some observers say that description sounds like Bitcoin and wonder if that virtual currency could be next to be shut down. Owners of the virtual coins can complete anonymous, almost untraceable transactions with other Bitcoin users. That ability has made the peer-to-peer network a magnet for websites involved in illegal activities such as drug selling and gambling.

However, handling Bitcoin may be a challenge for authorities, according to The Washington Post. Because it lacks a centralized network, there are no operators to arrest. It's not clear who would be arrested. The origins of Bitcoin are mysterious. It's believed to have been created by a programmer named "Satoshi Nakamoto," but that name is believed to be a pseudonym.

In May, the Department of Homeland Security seized the U.S. dollar accounts of Mt. Gox, the world's largest Bitcoin exchange, at Dwolla, a mobile payments company, because Mt. Gox failed to register with Treasury's Financial Crimes Enforcement Network (FinCEN).

According to the seizure warrant, Mt. Gox "is engaged in a money transmitting business but is not registered as required with FinCEN," and the contents of the account were seized and are subject to forfeiture.

In response to the increasing attention, Mt. Gox, the world's largest Bitcoin exchange, announced it would strengthen its identification procedures for users depositing or withdrawing traditional currencies, The Wall Street Journal reported.

Although the best known, Bitcoin is not the only virtual currency. Others include Litecoin, Freicoin and Ripple, according to The Journal. A few technology companies, such as Amazon, have their own virtual currencies, although they can typically only be used for their own merchandise.

Forbes Columnist: ‘Who the Hell Cleared This?’