TOKYO — Japan is drawing up a plan to regulate Bitcoin, officials said on Wednesday, including clauses the Nikkei business daily said would tax Bitcoin transactions and ban banks and securities firms from handling the digital currency.
The guidelines, which clarify how Bitcoin should be dealt with under Japanese law, come after the collapse of a prominent Bitcoin exchange last week.
An opposition lawmaker had petitioned the government to clear up, among other issues, whether Bitcoin should be treated as a currency. Treating them as a currency could strengthen the case for regulation under more stringent banking or other laws.
The Japanese government seems to be leaning toward treating Bitcoin as a general commodity, the Nikkei said. Any gains from trading Bitcoin in Japan are to be subject to local taxes, together with any purchases made with Bitcoin, the paper said. For companies, revenue from Bitcoin transactions would also be taxed.
The guidelines being drafted would also bar banks and securities firms from handling Bitcoin, the Nikkei said.
Japan’s top government spokesman, Yoshihide Suga, said that talks on Bitcoin guidelines were in progress but that details had not been set. A spokesman at Japan’s Financial Services Agency also said guidelines were being drawn up. “Various government agencies are doing their best to put the guidelines together,” Mr. Suga said.
The government is required by Sunday to address a petition lodged by Tsutomu Okubo, a lawmaker in the opposition Democratic Party and a former managing director at Morgan Stanley. Mr. Okubo filed an open letter last week in Parliament, urging officials to clarify their stance on Bitcoin regulation.
Bitcoin Believers
While regulators debate the pros and cons of bitcoins, this volatile digital currency inspires the question: What makes money, money?
By Channon Hodge, David Gillen, Kimberly Moy and Aaron Byrd on Publish Date November 24, 2013.Nations have been grappling with how to regulate Bitcoin, a popular virtual currency traded on the web, free of central control. United States regulators have shown interest in setting ground rules for it.
The regulatory scrutiny has come amid hacking attacks and scandals that have cast doubt on Bitcoin’s potential to become an alternative to fiat money. Flexcoin, an online bank specializing in Bitcoin, said on Tuesday that it was closing after hackers plundered its digital currency reserves. That heist totaled about $600,000 at the current average market price.
In Japan, action has in part been prompted by the collapse of Mt. Gox, long a dominant trading platform for Bitcoin based in Tokyo. Mt. Gox abruptly halted all trading and filed for bankruptcy protection, saying it had lost half a billion dollars’ worth of Bitcoins, leaving hundreds of thousands of users in the lurch.
The proposed guidelines, however, could ease fears that had arisen among some technology start-ups that the Mt. Gox debacle, together with a string of other hacking attacks and scandals, would bring heavy regulations that would force small operators out. But by banning banks and brokerage firms from handling Bitcoin, Japan’s proposed regulations appear to swing in the opposite direction.
Karl-Friedrich Lenz, a law professor at Aoyama Gakuin University in Tokyo, said that although the proposed guidelines would bring some welcome clarification, they could also leave Bitcoin trading to untested upstarts, with little additional protections for users.
“If banks and securities firms can’t handle Bitcoins, Japanese consumers will be stuck with illegal shadow banks like Mt. Gox, and their risk will be much higher as a result,” he said in a note.
Colin Moreshead and Makiko Inoue contributed reporting.
An earlier version of this article misspelled the surname of a Japanese politician in one instance. He is Tsutomu Okubo, not Okuba.