Japanese official reveals plans for national regulation of Bitcoin after Mt Gox shutdown

Days after popular virtual currency exchange service Mt Gox shuttered its business down without any public explanation, a top official of the Japanese government told The New York Times' the DealBook that the country is currently reviewing on how it will be regulating Bitcoin trading. Concerns from the Japanese government about the virtual currency was expected considering Mt Gox's headquarters is based in Tokyo.

DealBook said Japan currently has no laws that regulate the use of Bitcoin, and that authorities in the country seemed to have rather wanted to wait out on how the rest of the world will regulate the use of virtual currencies. Financial regulators reportedly said that they viewed Bitcoin prior to the Mt Gox shutdown as a traded product and declared it out of its jurisdiction, DealBook said. It is also to note that a likely reason on why Japan adopted a laissez-faire attitude towards Bitcoin is because of the latter's slow adoption in the country.

Tokyo resident and early Bitcoin investors James MacWhyte said, "There just hasn't been the need for Bitcoin in Japan as there's been elsewhere. No one has lost their pensions, the government hasn't shut down, bank fees are reasonable, and electronic money is so fast and easy to use. But that could change."

The Japanese government's spokesman, Yoshihide Suga, revealed to reporters present at a news conference on Wednesday that relevant authorities, which include national law enforcement and the country's Financial Services Agency and Finance Ministry, are in the process of collecting information about Bitcoin trading in Japan and are looking to take steps to regulate virtual currency trading.

DealBook said weeks before Mt Gox shut its business down, the virtual money exchange had several run-ins with the law over its lax security measures. According to people who were briefed on the mater, Manhattan federal prosecutors slapped a grand jury subpoena to the company in its efforts to sanction Bitcoin-based companies that are being used for illegal activities such as drug trafficking.

Although Japanese authorities will be threading into unfamiliar territory with regard to Bitcoin regulation, an unnamed pundit who is informed of the thinking of the Financial Services Agency said that an easy alternative is to introduce Bitcoin under the Payment Services Act, which will enforce new limits of trading in Bitcoins, including the size of the transaction.

Tags

Mt Gox shutdown, Bitcoin, Bitcoin regulation

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