Japan Seeks to Monitor Illegal Bitcoin Activity
- Japan seeks to monitor for illicit bitcoin activity
- Ministry of Economy looking into ways this can be done
With the fear that criminal organizations could be using bitcoins for illicit activities like drug trading or money laundering, Japan’s Ministry of Economy is setting out to investigate how they can monitor illegal bitcoin activity on the web, reports Kyodo News International.
The Ministry is expected to work hand-in-hand will other ministries and agencies in the country, of which include the Financial Services Agency and National Police Agency, people familiar with the matter said.
Japanese Prime Minister Shinzo Abe will also reportedly have his administration define bitcoin as a “value-added electronic record,” like a credit card.
The Japanese government is poised to warn citizens of risks involved with bitcoin transactions and trading, though it does not have any plans to impose regulation that could stifle innovation in the sector.
In addition to this news, there is a possibility the Japanese government may impose a consumption tax on purchases of bitcoin — which according to Kyodo, would be classified as an investment vehicle.
The government is unlikely to impose taxes on capital gains realized from bitcoin transactions, however.
In the United States, the contrary is applicable. Taxpayers must treat bitcoin as property, and must keep track of capital gains/losses incurred from the use of the digital currency.
Prime Minister Abe’s Liberal Democratic Party has reportedly established a committee to discuss these issues — with the conclusion that Japan should use digital currency to “bolster foreign investment and business in Japan” in what would be a stab at helping the economy.
Japan is home to disgraced bitcoin exchange Mt. Gox, which collapsed earlier this year in a downfall that saw losses exceeding $700 million USD belonging to investors.