Cabinet to mull bitcoin regulation ‘if necessary’

Kyodo

The Abe administration decided Tuesday to consider taking steps to regulate bitcoin trading, if necessary, after obtaining more information about the digital currency.

But the Cabinet of Prime Minister Shinzo Abe did not say whether it will immediately seek a legal system to regulate bitcoins, which are used as a means of payment among Internet users, indicating it is still struggling to decide how to deal with the issue.

The administration outlined its stance in response to a written inquiry from an Upper House lawmaker. It is the second time it has taken a formal position on the virtual currency, following its decision earlier this month to treat bitcoins as a noncurrency market product, such as a precious metal.

The clarification came amid growing worries over the bitcoin market in the wake of the recent bankruptcy of Tokyo-based bitcoin exchange Mt. Gox.

According to Tuesday’s Cabinet decision, bitcoin exchanges such as Mt. Gox are not subject to registration and reporting obligations under current legislation.

In an attempt to prevent money laundering, financial institutions in which bitcoin exchanges hold accounts are required to report to the Financial Services Agency when they suspect proceeds of crime have been deposited.

The administration also said banks are not allowed to purchase bitcoins.

Mt. Gox filed late last month for civil rehabilitation proceedings with the Tokyo District Court after suddenly shutting down all transactions.

The exchange, which is believed to have had between several hundred thousand and a million users, said it was illegally accessed in early February and consequently lost about ¥11.4 billion worth of bitcoins.