Japan is Planing to Regulate Digital Currency

As international calls grow for tightening control of digital currencies due to the risk of their abuse for money laundering and terrorist financing, the Japanese government declared it was weighing legal regulation over cryptocurrencies.

According to Japantimes the government is exploring new regulations on virtual currencies in response to a report in June by the Financial Action Task Force, an international anti-money laundering and terrorist funding watchdog, which called for closer monitoring of virtual currency exchanges. The FATF’s Guidance for a risk-based approach to digital currency recommended that all exchanges be registered and licensed so that they would be subject to the same kinds of scrutiny as other financial services and money transfer businesses, and urged governments to require operators of digital currency exchanges to confirm the identity of clients, keep digital records of transactions and report any suspicious behavior to authorities.

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Following this month’s arrest of Mark Karpeles, founder and chief executive officer of the bankrupt Tokyo-based firm Mt. Gox, Finance Minister Taro Aso said the government would consider new regulations on virtual currencies such as the introduction of a registration or license system for operators of digital currency exchanges.

The Government argues the planned regulations should aim to protect digital currency users and will settle rules and systems to ensure safety and transparency of digital currency transactions and in turn enhance their reliability and serve to promote their potential.

The Finance Ministry, the Financial Services Agency and the National Police Agency are expected to work with other relevant authorities to amend the anti-money laundering law and possibly the law on transaction in financial products, with a view to submitting related bills to the regular Diet session next year.

Some countries are starting to impose regulations on digital currencies. The Japanese government said it will be coordinating their planned regulations with other countries’ moves, but plans to introduce regulations before the end of 2015.

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