Japan lays down the Bitcoin law: Treat it like gold

Summary:Will treating Bitcoin as a commodity under existing laws help regulate the currency?

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Following the collapse of Bitcoin exchange Mt. Gox, Japanese regulators are laying down the law -- and considering treating the digital currency in the same manner as gold.

According to Reuters, the Asian country will set out Bitcoin-based regulations this week. On Friday, regulations will thrash out how to integrate the digital currency within existing laws -- although banks and securities firms will not be permitted to treat Bitcoin in the same manner as standard currency.

Instead, the idea of treating Bitcoin as a commodity -- such as gold -- has been floated.

If Bitcoin assumes a commodity status in Japan, this paves the way for the crypto-currency to be taxable and regulated under law, but kept as a separate entity from the Yen.

Tokyo-based Mt. Gox closed its doors last week unexpectedly , filing for bankruptcy protection after admitting that several years of lax security and hacking led to the theft of 750,000 Bitcoins deposited by users and approximately 100,000 Bitcoins belonging to the company, which is worth over $500 million in today's trading standards.

Once the world's dominant Bitcoin trading post, Mt. Gox's demise left millions of users out of pocket, frustrated and angry, as few of the Bitcoin were kept in "cold storage" -- offline and out of reach by hackers. Instead, the company's online "hot wallet" was cleaned out, leaving Mt. Gox insolvent and with more debt than assets.

The rising popularity of the digital currency is a lucrative prospect for cybercriminals who have long targeted such trading posts. On Tuesday, Bitcoin "bank" Flexcoin closed its doors, posting a notice on the firm's website which said hackers stole 896 Bitcoin -- worth approximately $606,000 -- from the firm's hot wallet. As Flexcoin "does not have the resources, assets, or otherwise to come back from this loss," it has been forced to close.

In China this week, BTC China announced the introduction of Litecoin trading to the company's platform thanks to "popular request." To reassure users amidst the Mt. Gox fiasco, the Bitcoin exchange said it is "committed to providing a safe and secure platform."

Topics: Tech Industry

About

Charlie Osborne, a medical anthropologist who studied at the University of Kent, UK, is a journalist, freelance photographer and former teacher. She has spent years travelling and working across Europe and the Middle East as a teacher, and has been involved in the running of businesses ranging from media and events to B2B sales. Charli... Full Bio

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