The Japanese government is preparing to start taxing transactions involving bitcoins and other virtual currencies.
The new guidelines proposed by the Japanese cabinet will call for defining the virtual currency as a commodity rather than a currency, according to the financial newspaper Nikkei.
Unlike conventional money, bitcoin is a digital currency that is bought and sold on a peer-to-peer computer network independent of central control. Over the past year, the total value of all the bitcoins minted is about $7 billion.
Nikkei said the following transactions will be subject to tax: gains from trading bitcoins on online exchanges, purchases made with bitcoins, and companies earning revenue from bitcoin transactions.
The new rules are expected to prohibit banks from handling bitcoins and securities firms will be barred from brokering bitcoin trades. The rules are