Subway accepts bitcoins

Sapan Shah, a 24-year-old graduate student at Lehigh University, has created a tourist attraction of sorts for bitcoin enthusiasts.

Since he began accepting the digital currency at his Allentown, Pa., Subway franchise two weeks ago, bitcoin fans have been coming from out of state to visit his sandwich shop, Shah told CNBC on Tuesday.

"Right now a lot of enthusiasts are coming in," he said on "Squawk on the Street.""Bitcoin enthusiasts are coming to show a lot of support for this. A lot of kids are coming two or three hours to drive. We're getting a lot of students from local areas who have studied bitcoin and understand it."

Subway did not endorse his decision to accept bitcoins, said Shah, who uses a tablet application to convert payments to U.S. dollars.

"This was just my idea, and [Subway] encourages operators to have innovative ideas," he added. 

Asked whether bitcoin represented a bubble since gaining more public exposure in recent weeks, Shah agreed that prices could be inflated. According to exchange mtgox.com, a bitcoin was worth $730 as of noon Tuesday after reaching a record high of $900 on Monday.

"My hope is that as it continues to grow and the volume increases, the volatility will decrease a little bit," he said. "It hasn't been a problem with our customers."

U.S. lawmakers are mulling how to regulate the currency. Many are concerned that it could be used to cover illicit activity online, such as the infamous Silk Road, a website that federal authorities shut down after learning it accepted bitcoins to pay for illegal narcotics.

The currency has also gained traction among notable investors, including Cameron and Tyler Winklevoss.