Wall Street Journal is reporting that Japanese lawmakers are now working to bring some sort of regulation to Bitcoin and virtual currencies, though they still have a long way to go.
Those familiar with a draft being prepared for a cabinet meeting this Friday say the government will reaffirm its position that Bitcoin is not a currency. On its own, such a position would merely further cement the Financial Services Agency’s (FSA) existing position that it is only responsible for oversight of currencies and as such, not Bitcoin.
The FSA and other government agencies are now weighing in on the matter more after lawmaker Tsutomu Okubo wrote to the government requesting clarification on the matter. By law, the government must respond in writing.
One official has said that “what we are considering is that bitcoin isn’t a currency, but that doesn’t mean it will automatically be categorized as a commodity”, although Reuters has speculated that it will.
Takuya Hirai, chief of the LDP IT strategy task force, has said that “Bitcoin trade needs to be regulated. It allows business transactions in complete anonymity. Transactions that cannot be traced even by authorities are problematic from the point of view of law and order.”
The widely diverging points of view, both on what should be done with Bitcoin as well as on the approach the government should be taking to tackling the issue, summate to a potentially long road ahead before anything gets done. Even more unhelpful is the popular indifference on the matter. The overwhelming majority of Japanese have no little or no involvement with cryptocurrency. Even within MtGox, headquartered in Japan, the vast majority of clients were not Japanese.
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One lawmaker has pointed out that the Consumer Affairs Agency has received zero complaints regarding the MtGox collapse.
Even for those involved with Bitcoin, there isn’t as much of an emotional impetus to get the ball rolling if they were unaffected by the failure of MtGox. Hiroshi Mikitani, a Japanese e-commerce billionaire and CEO of Rakuten, told Kyodo News: “They should not act hastily. As for whether we need regulations, they should first examine the situation a bit more and discuss it in depth.”
It is reasoned that Okubo’s standing out in calling for clarification stems from his background and familiarity with such issues, having been managing director at Morgan Stanley Securities. The shear magnitude of loss from the MtGox collapse and its ensuing burden on the legal system had motivated calls for controls but the government had preferred to stay out of it.
Indeed, Vice Finance Minister Jiro Aichi has said that Japan can’t do it alone and will need the cooperation of other countries toward regulation.
The difficulties encountered are reflective of the fact that no country has yet fully come to grips on how to deal with cryptocurrency. Perhaps the learnings from the process in Japan will serve as a stepping stone for others countries with a greater vested interest.
Those interested in some form of regulation will be disappointed in knowing that the fruits of the labor of talks thus far have been limited to the proposed taxation of Bitcoin.