Japan Says Bitcoin Not Currency Amid Calls for Regulation

Japan’s government said Bitcoin isn’t a currency amid calls for its regulation a week after the bankruptcy of Mt. Gox, the Tokyo-based exchange that was once the world’s biggest. There is no law to define Bitcoin and relevant ministries are gathering information on it, Prime Minister Shinzo Abe’s cabinet said in a statement in response to questions from an opposition party lawmaker. Bitcoin transactions can be taxed, according to the statement obtained by Bloomberg News. Japan isn’t the only country grappling with the regulation of Bitcoin amid reports of hacking into exchanges including Mt. Gox and concern that the virtual currency can be used for money laundering. In the U.S., states are wrestling with how digital-currency businesses could be regulated as money transmitters, while Russia has said Bitcoin is illegal under current law and Finland plans to treat it as a commodity. The Japanese banking law doesn’t allow lenders to broker Bitcoin transactions or set up accounts for customers to store the digital assets, according to the statement. At the same time, current rules don’t prevent brokerages and asset managers from managing clients’ Bitcoins, it said. “Japan’s government is falling behind the curve as Bitcoin grew rapidly over the past five years,” said Weizhou Yang, an analyst at Mizuho Securities Co. in Tokyo. “Banks shouldn’t take risks to dabble in Bitcoin business. On the other hand, getting Bitcoin into funds may broaden the investment product base.”

DPJ’s Okubo

Democratic Party of Japan lawmaker Tsutomu Okubo, a former vice finance minister, called on the government to rectify the lack of regulation last week. Officials from the Finance Ministry, Financial Services Agency and Bank of Japan have said they’re not in a position to oversee Bitcoin. “The authorities’ stance that they don’t have responsibility is disgraceful,” Okubo, who also used to work at Morgan Stanley, said in a telephone interview on Feb. 26. “We need to establish a legal system.” Finance Minister Taro Aso said today that the government hasn’t decided whether to regulate Bitcoin. Earlier this week Aso, who also oversees the banking regulator, said it wasn’t clear yet whether Mt. Gox’s failure was a crime.

Hacker Theft

Mt. Gox filed for bankruptcy on Feb. 28, saying 850,000 Bitcoins were missing and may have been stolen by hackers. The coins are valued at more than $550 million, based on an index of current prices compiled by Coindesk. Fewer than 1 percent of its creditors are from Japan, the exchange’s lawyers said. Flexcoin, a Bitcoin bank based in Alberta, Canada, was forced to shut down this week after hackers stole 896 units of the digital currency, the Guardian newspaper reported March 5. Bitcoin was introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto and has no central issuing authority. Dorian S. Nakamoto, a physicist identified by Newsweek magazine as the creator, yesterday denied involvement in the digital currency before leading reporters on a multi-vehicle car chase and entering an Associated Press bureau. Singapore’s finance minister said last month that the central bank didn’t recognize Bitcoin as legal tender. China has stopped financial institutions from dealing in it, even as trading continues. Danish regulators are drafting a proposal for lawmakers in an effort to protect consumers and businesses from losses. Source :  http://www.bloomberg.com/news/2014-03-07/japan-says-bitcoin-is-not-a-currency-amid-calls-for-regulation.html