Japan plans to regulate digital currency

Japan plans to regulate digital currencyJapan plans to regulate digital currencyAccording to an editorial published by the Japan Times on Monday, Japanese Finance Minister Taro Aso has said the government would consider new regulation on digital currencies, which might entail the launch of a registration or license system for digital currency exchange operators.

The editorial said Japan’s Finance Ministry, the Financial Services Agency and the National Policy Agency are slated to collaborate with other pertinent authorities to amend the anti-money laundering law and potentially the law on transaction in financial products with a goal of submitting related bills to the regular parliamentary session next year.

The government’s intentions follow the arrest earlier this month of Mark Karpeles, who ran the now-defunct Tokyo-based Mt. Gox Bitcoin exchange. Karpeles is accused of fraudulent activities, including manipulating data within the exchange to inflate its assets. He also faces new accusations of embezzlement.

The Japan Times editorial said Mt. Gox’s collapse early last year and the criminal investigation into the exchange’s activities highlight the need to protect users of digital currencies by ensuring safe and transparent transactions. Noting that Japan currently has no laws that regulate digital currencies, the editorial pointed to a March 2014 Cabinet decision in which the Japanese government took the position that Bitcoin is a “noncurrency” market product like precious metals, and not covered by financial regulations.

Earlier this month, a Japanese court ruled against a man seeking compensation over Bitcoins lost in the Mt. Gox collapse, stating the digital currency cannot be owned. The Tokyo District Court said Bitcoin was “not subject to ownership,” effectively dismissing the man’s lawsuit seeking repayment.

But faith in digital currencies in Japan has not been completely crushed. bitFlyer Inc., a Japanese-based Bitcoin exchange, announced this month it raised $4 million in its latest venture capital round.

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