Known as Geek’s Gold, the online transactions are anonymous and not traceable.
Drug dealing, cyberfraud, prostitution, gun-running and other major crime profits are being ploughed into the internet currencies.
Drug pedlars are using high street bitcoin ATM machines to deposit cash from deals, and there are 77 such ATMs in Britain.
Bitcoin, the world’s most popular crypto currency, is a computer code without physical form.
But the value of a single bitcoin has soared from £714 in January to a record high of £8,300 last week.
The total value of bitcoins in existence is currently £130billion.
Gangsters are not only hiding money from the police, they are also making fortunes from the rise in the value of virtual currencies.
Detective Chief Superintendent Mick Gallagher, head of Scotland Yard’s Serious and Organised Crime Command, said gangs have turned to crypto currencies in the last 18 months.
“At the moment, it feels like there is significant growth,” Mr Gallagher said.
There is no regulation although leading internet currency firms and online exchanges would prefer it to be regulated and they cooperate with police.
But others, based in eastern Europe and south-east Asia, refuse to help police.