WASHINGTON — The regulatory crackdown on Liberty Reserve is stoking fears that banks may soon begin severing relationships with digital currency providers and exchanges, effectively stifling their growth due to institutions' fears of potential prosecution.

Government officials targeted Liberty Reserve in part because it allowed users to anonymously exchange funds, a key aspect of many digital currency systems, including Bitcoin, the most popular virtual currency. That has led to widespread concerns that other systems, and the banks that assist them, might soon be in government's sights.

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