On idiocy and Bitcoin, no they're not going after it. Silk Road is the target.
There’s been a LOT of morons out there spouting total crap about bitcoin. First, as of right now NO SENATOR OR CONGRESSPERSON HAS MENTIONED TAKING DOWN BITCOIN!!!!!! Quite frankly, with the distributed nature, it’d be impossible barring finding algorithm weaknesses and exploiting them. Second THEY ARE TARGETING SILK ROAD. Thats who they’re after right now.
Another point, Bitcoin isn’t money laundering. There’s a trail/trace of every transaction. Where the money came from, where it went to, who owned it along the way. Even more easily accessible than a bank record. So it *IS* traceable, but only to a PRIVATE KEY. Receiving doesn’t necessarily indicate knowledge though (similar to receiving stolen goods, you can do it knowingly or not). So how do they map a bitcoin address to a person, they need your wallet.dat file, thats where the private keys are. Thats what allows you to spend the coins you receive. So how do they get those files? Good old fashioned door busting of course! Or ISP subpeonas and the like to get data.
Bitcoin just changes the method of tracing cash from dyes and marking and noting serial numbers, to bitcoin addresses/public keys and matching those public keys with held private keys.
Sen. Schumer MAY BE trying to make an argument under the constitution, but in the same way that bartering can be done, and Visa, and others, so can bitcoin. If he suceeds he can likely only criminalize these other also valid forms of commerce. I have NOT seen a single sourced article about this though, so it’s all gossip. Show me on the senates site or similar where he’s doing it and I’ll believe it.