Japan lays down the Bitcoin law: Treat it like gold

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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TOPICS: Tech Industry
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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."

Topic: Tech Industry

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  • The Japanese approach is sensible...

    ...and likely to be copied by other governments. It's increasingly clear that governments are adapting to new economic practices as they always have, making it highly unlikely that Bitcoin is going to undermine either regulatory or tax regimes to any significant degree.

    The experiment continues.
    John L. Ries
    • Less a few players

      "Autumn Ratke a 28-year-old American CEO of bitcoin exchange firm First Meta was found dead in her Singapore apartment on Feb. 28. Local media are calling it a suicide"

      Seems the experiment is unraveling...
      William.Farrel
      • That's tragic

        It's clear that a some people lost a lot a money on the recently departed Bitcoin bubble, but life should go on, just as it did for the high rollers who lost their shirts in 1929, and the millions of people who lived through the Great Depression (it took a long time, but things eventually got better).

        Everybody makes mistakes. The wise learn from their own and those of others.
        John L. Ries
  • And another one bites the dust.

    http://www.edmontonsun.com/2014/03/05/canadian-bitcoin-bank-flexcoin-shuts-after-hacking-theft
    Arm A. Geddon
  • Japan: "Treat it [bitcoins] like gold"

    Commodities, both hard and soft, have substance and can generally be held in one's hands. Gold is a hard commodity, along with being a precious metal. Agricultural products are soft commodities. And while carbon emissions, which cannot be held in one's hand unless stored in a container, are also now treated as commodities. CO2 is indeed real and can be measured both in emissions and in the atmosphere. As well as in the ocean as organic carbon, dissolved CO2 and CO3.

    Treating bitcoins as a commodity makes no sense. A borderless fiat money/currency makes more cents (pun intended). Each nation can decide if and how it wishes to participate in the bitcoin market, thus, giving legitimacy to bitcoins as either fiat money or currency.

    If bitcoins are to be treated as gold, then I say fool's gold (credit to Owl:Net).
    Rabid Howler Monkey
    • It's as reasonable as any

      The only other thing that immediately comes to mind is treating it as foreign currency. Regardless, it makes more sense to adapt existing rules for something at least vaguely related than to try to write new rules from scratch.

      I wonder what would happen to the price of pork bellies if they couldn't be traded on the exchanges.
      John L. Ries
      • I guess Bitcoins could also be treated like securities

        Stocks likewise have a limited supply and they're not necessarily redeemable for a certain amount of cash. But at least with stock, you get to vote in corporate elections and the company might pay you a dividend.
        John L. Ries
  • lets get the definitions right

    its a pyramid market, plain and simple, its the digital equivalent of Amway !!

    The ONLY 'value' in bitcon is in how much money some sucker if willing to pay you for it.

    Its not a currency, gold is not a currency, trading in something does not make that something a currency.

    A currency also has its own value, a US Dollar has the value of 1 US dollar, bitcoins do not have its own value, it is valued in US dollars.

    Just as gold is not valued in 'gold's', gold is valued in a currency, it is not itself a currency, replace the word gold with bitcoin, (or chickens).
    Aussie_Troll