Japan to frame bitcoin rules after Mt. Gox collapse

By Nicel Jane Avellana

Mar 05, 2014 09:26 AM EST

In what is seen as the first step of the government's action to regulate bitcoins, Japan will be coming up with rules this week on how to treat the virtual currency in the wake of the closure of Tokyo-based Mt. Gox, Reuters reported.

Sources told the news agency that the cabinet will be meeting on Friday, March 7, to talk about how bitcoins should be approached under the country's current laws. They also said that banks and securities companies will be barred from dabbling with the digital currency as part of their primary operations. This would seem to indicate that the bitcoin will be placed in the same category as gold or any other commodity, the report said.

Japan is also mulling issuing a potential tax for transactions in bitcoin but as to how they would be able to achieve this still remains a big question since bitcoin transactions are anonymous, which also serves as one of the lures for using the digital currency, the report said.

Takuya Hirai told reporters, "We haven't yet thoroughly grasped the situation, but some kind of regulation is needed from the perspective of consumer protection, and we will also discuss (bitcoin) from the perspective of imposing asset tax." Hirai heads an IT panel in the Liberal Democratic Party, Japan's ruling party, Reuters reported.

While the Bank of Japan has said that it was looking into bitcoin closely, the Financial Services Agency or FSA and the Finance Ministry have already declared that bitcoin does not fall under their jurisdiction Chief Cabinet Secretary Yoshihide Suga has also said that the affected ministries will be getting in touch with each other when it comes to developments about the digital currency, the report said.

Japan has been trying to come to terms with its strategy about the bitcoin after Mt. Gox, which became the world's dominant bitcoin exchange at one point, lost bitcoins and sought bankruptcy protection, the report said.

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