The disruptive nature of bitcoin has made the digital currency industry skeptical of collaborating with government.

But, as the digital currency becomes a potentially mainstream one, the risks of fraud and theft are just too high for the industry to ignore. This was underlined by Thursday’s announcement of the Blockchain Alliance, a collaboration between bitcoin trade groups, digital currency companies, and federal regulators and law enforcement. The alliance is working with several federal agencies including the FBI, Secret Service, and Commodity Futures Trading Commission. The alliance hopes to bring on board other law enforcement and government agencies around the world.

The Coin Center, a trade group focused on public policy issues related to cryptocurrency, is at the center of the effort. But the group emphasizes that the Blockchain Alliance (which takes its name from the underlying technical structure of digital currencies) will keep the federal government at arm’s length, focusing less on regulating the currency or catching criminals and more on strategies to keep the currency safe.

“To be clear: The Blockchain Alliance is not a backdoor for the government to get information about companies or their customers,” Coin Center Executive Director Jerry Brito wrote in a blog post. “The protection of privacy and civil liberties is paramount. The discussions between industry and government through the Blockchain Alliance will not be about particular investigations or targets.”

While freedom remains top of mind for cybercurrency advocates, industry officials emphasize that the new collaboration could help bitcoin and other digital currency build their reputations.

“It’s no secret that bitcoin has perception issues, which is a roadblock to mainstream adoption. Having an open dialogue with law enforcement and policymakers will help reduce anxiety about this transformative technology,” said Perianne Boring, president of the Chamber of Digital Commerce, in a news release [PDF].

There’s a lot of ground for the industry to catch up on: Another group in the digital currency space, the Bitcoin Foundation, has faced a variety of scandals and has been forced to restructure itself at least once since launching in 2012. (And that’s not even getting into the dramatic downfall of the Mt. Gox currency exchange, which involved one of the foundation’s board members.) The foundation, which is not taking part in the Blockchain Alliance, has recently changed its position to supporting the underlying technology that the digital currency uses.

Coin Center’s Brito says that the alliance’s formation offers a teaching opportunity for law enforcement that could help burnish the industry’s reputation.

“Educating law enforcement and regulators directly about this technology will reduce their fear or anxiety about it, and make them less likely to overreact to it,” Brito added in his blog post.

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