A week after Mt. Gox collapse, Japan struggles to understand bitcoin

TOKYO Fri Mar 7, 2014 2:38pm IST

Mark Karpeles (L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014. REUTERS/Yuya Shino

Mark Karpeles (L), chief executive of Mt. Gox, attends a news conference at the Tokyo District Court in Tokyo February 28, 2014.

Credit: Reuters/Yuya Shino

Related Topics

TOKYO (Reuters) - A week after the collapse of Mt. Gox, Japan is still struggling to craft a response to the bitcoin phenomenon, saying the crypto-currency is not legal tender, though it might be taxable and subject to money-laundering controls.

In its first detailed response to the bankruptcy of the Tokyo-based company, once the world's biggest bitcoin exchange, the government issued a statement assessing how bitcoin is covered - or more often, not covered - by existing law.

The issue took on new prominence in Japan on February 28, when Mt. Gox sought Chapter 11-style bankruptcy protection, saying it had lost bitcoins and cash worth some half a billion dollars due to hacker attacks.

Bitcoin is not a currency, but could be taxable under some circumstances, the statement says. Although the government understands that bitcoin is not issued or backed by any government or central bank, "we have not grasped the situation in its entirety."

The authorities are monitoring the Mt. Gox bankruptcy process and, if necessary, will consider a response, said Chief Cabinet Secretary Yoshihide Suga.

Fewer than 1 percent of Mt. Gox's 127,000 creditors are Japanese, the company has said. Yet across the government, officials are wrestling with how to handle bitcoin.

"It's not money," said Finance Minister Taro Aso. "Does the Financial Services Agency have jurisdiction? The Finance Ministry? The Consumer Affairs Agency? The Ministry of Economy, Trade and Industry?" he asked at a regular news conference. "Opinions are divided."

The government statement, citing 18 sections of 11 laws and regulations, says bitcoin is not a currency or an asset within the purview of professional trading or asset management, while trading the virtual currency is not a banking or financial-instrument transaction.

But, generally speaking, bitcoin could be taxable if it meets certain conditions of income, corporate or consumption tax laws, the statement says. This leaves open the possibility that bitcoin could be treated as a commodity like gold, although the statement does not specify this.

Regarding money laundering, certain transactions - whether with bitcoin or not - require people to identify themselves, it notes.

The 6-page document is the government's official response to questions posed by Tsutomu Okubo, a member of the opposition Democratic Party of Japan and former managing director at Morgan Stanley.

(Additional reporting by Hitoshi Ishida, Kazuhiko Tamaki and Stanley White; Editing by Ian Geoghegan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Reuters Showcase

Sundar Pichai

Sundar Pichai

Google's Pichai to oversee major products and services  Full Article 

Fighting For Workers

Fighting For Workers

Ralph Nader urges Apple to reduce buybacks, improve wages - WSJ.  Full Article 

Cybercrime

Cybercrime

Hacker sentenced to 21 months in U.S. prison for $15 mln scheme.  Full Article 

Printed Instruments

Printed Instruments

3D printed instruments make sweet music in Sweden.  Video 

Tweet Debut

Tweet Debut

Britain's Queen Elizabeth sends her first tweet.  Full Article 

Artificial Intelligence

Artificial Intelligence

Google bolsters artificial intelligence efforts, partners with Oxford.  Full Article 

Future Uncertainty

Future Uncertainty

Ericsson flags North America slowdown.  Full Article 

Microsoft Earnings

Microsoft Earnings

Microsoft sales beat Street hopes, cloud profits up.  Full Article 

Looking To Sell

Looking To Sell

HP seeking buyers for corporate-networking business in China - WSJ.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage