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
A staff of a China Mobile shop explains a function of the iPhone 5s to a customer in Beijing January 17, 2014. REUTERS/Kim Kyung-Hoon/Files

Apple revenue lags Street's view despite strong China growth

Apple posted a smaller-than-expected 6 percent rise in quarterly revenue on Tuesday, but revenue surged 28 percent in greater China despite stiff competition in its third-largest market.  Full Article 

TECH SHOWCASE

Privacy Lawsuit

Privacy Lawsuit

Google must face U.S. privacy lawsuit over commingled user data.  Full Article 

New Launch

New Launch

China's Xiaomi announces latest flagship Mi 4 smartphone.  Full Article 

Class Action

Class Action

Google must face class action over kids' in-apps purchases.  Full Article 

Black Hat Conference

Black Hat Conference

Talk on cracking Internet anonymity service Tor canceled.  Full Article 

Nano-Printing

Nano-Printing

Monet masterpiece shrunk down to the size of dust mite.  Video 

Losing Steam

Losing Steam

With sales sputtering, Apple's iPad looks to IBM alliance  Full Article 

N.Y. Forgery Trial

N.Y. Forgery Trial

Zuckerberg to testify at N.Y. forgery trial - prosecutors  Full Article 

Management Changes

Management Changes

BlackBerry names ex-Sybase executive as chief operating officer.  Full Article 

Reuters India Mobile

Reuters India Mobile

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