All MT. Gox users who want to deposit and withdraw fiat currencies (trading them for bitcoin) on the exchange will have to have their accounts verified using a photo ID and document - such as a utility bill - proving legal residence.

Actual bitcoin deposits still do not need verification, and neither do withdrawals "at this time".

The move comes days after authorities shut down another digital currency outfit, Liberty Reserve, and arrested its founder over claims that it was used by crooks to launder more than $6 billion.

Last month MT. Gox had its own brush with the law when the US Department of Homeland Security served payments start-up Dwolla with a court order telling it to stop processing transactions linked to the bitcoin exchange.

Since then another link in and out of bitcoin has been cut off, with OKPay dropping wire transfers to and from all exchanges, including MT. Gox.

Earlier this year the US Treasury confirmed that it classifies exchanges as 'money services businesses', meaning they are required to abide by AML rules and register with state and federal authorities.

In a statement on its Web site about the new verification system, MT. Gox says: "The Bitcoin market continues to evolve, as do regulations and conditions of compliance for Mt. Gox to continue bringing secure services to our customers.

"It our responsibility to provide a trusted and legal exchange, and that includes making sure that we are operating within strict anti-money laundering rules and preventing other malicious activity."

The firm says that it has doubled its verification support staff and can process requests within 48 hours. However, it will be the loss of anonymity, rather than administrative hassle, which concerns many users of the currency.