Following a series of multimillion-dollar thefts and losses, federal regulators want to step up their oversight of virtual currency bitcoin. But bitcoin—a nationless digital money that uses cryptography to control its creation and transaction—doesn’t fit neatly in any regulatory box.

“There’s an incredible interest in regulating this at the federal level,” said Kenneth Russak, a commercial-finance specialist at Frandzel Robins Bloom & Csato.