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September 28, 2020

Government has to carry out studies on how to properly regulate virtual currencies

Japan mulls regulating virtual currency

Japan mulls regulating virtual currency
Japan’s government plans to regulate trading of bitcoins and other virtual currencies amid the investigation of failed Tokyo-based bitcoin exchange Mt. Gox.
Japan | 08/10/2015

Japan’s government plans to regulate trading of bitcoins and other virtual currencies amid the investigation of failed Tokyo-based bitcoin exchange Mt. Gox.

F

inance Minister Taro Aso said in a press conference that the Japanese government plans to regulate trading of bitcoins and other virtual currencies. The Financial Services Agency (FSA) will likely introduce a system in which operators are required to register, obtain a license, confirm the identity of their clients and improve their internal management systems.

Taro also noted that the government has to carry out studies on how to properly regulate virtual currencies, as a response to an international trend of bitcoins being used for money laundering and extortion.

Mt. Gox CEO Mark Karpeles was recently arrested in Tokyo for manipulating transaction records in his company’s trading system to inflate the balance of an account under his name.

The investigation also revealed that Mt. Gox had already ran out of money six months prior to its bankruptcy filing in February 2014. The company has shut down all transactions and declared that about 850,000 bit coin–worth ¥48 billion at the time–had disappeared from the system.

The Japan Times reported that the company had about ¥3.8b ($30.65m) worth of balance sheet assets as of March 2013 and paid some clients using money from another customer’s account.

The U.S. Department of Homeland Security also seized $5m worth of Mt. Gox assets in May 2013 for illegally operating fund transfer services in the United States.

Court rules bitcoin not subject to ownership

On Wednesday, the Tokyo District court dismissed a lawsuit from a man in Kyoto who seeks to refund his bitcoins from Mt. Gox.

The plaintiff, who had around 458 bitcoins or ¥31 million in June 2014, challenged the bankruptcy protection filed by Mt. Gox in 2014 but Judge Masumi Kurachi ruled that virtual currencies, such as bitcoin, are not subject to ownership.

The Civil Code does not cover bitcoins as it only applies to proprietorship for tangible entities that occupy space and allow for exclusive control over them.

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