TOKYO â€" Japan is drawing up a plan to regulate Bitcoins, officials said 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 Bitcoins 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 or not Bitcoins should be treated as a currency. Treating them as a currency could mean regulation under more stringent banking laws.
The Japanese government seems to be leaning toward treating Bitcoins as a general commodity, the Nikkei said. Any gains from trading Bitcoins in Japan are to be subject to local taxes, together with any purchases made with Bitcoins, the paper said. For companies, revenue from Bitcoin transactions will also be taxed.
The guidelines being drafted would also bar banks and securities firms from handling Bitcoins, 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 to address the petition lodged by Tsutomu Okubo, a lawmaker in the opposition Democratic Party and a former managing director at Morgan Stanley, by Sunday. Mr. Okuba filed an open letter last week in Parliament, urging officials to clarify their stance on Bitcoin regulation.
Nations have been grappling with how to regulate Bitcoins, the 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 Bitcoins, said Tuesday that it was folding 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, based in Tokyo and long a dominant trading platform for Bitcoins. Mt. Gox abruptly halted all trading and filed for bankruptcy protection, saying it had lost half a billion dollars’ worth of the virtual currency, leaving hundreds of thousands of users in the lurch.
Tsutomu Okubo, a lawmaker in the opposition Democratic Party and a former managing director at Morgan Stanley, had sent an open letter to the government urging officials to clarify their stance on Bitcoin regulation.
The proposed guidelines, however, ease fears that had risen among some technology start-ups that the Mt. Gox debacle, together with a string of other hacking attacks and scandals, might bring heavy regulations that would force small operators out. But by banning banks and brokerages from handling Bitcoins, 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.
