Regulators in Japan are considering officially recognising bitcoins and other digital currencies as valid methods of payment.
The Japan Financial Services Agency (FSA) is reportedly in the process of deciding whether to make legislative revisions to regulation that currently regards virtual currencies as objects rather than traditional forms of payment.
Under the new proposal, consumers will be able to purchase goods and services using bitcoin and other digital currencies, and also use them as an alternative to legal tender through purchases or trades.
The new definition will be submitted during the current session of the Diet, Japan’s legislature, which concludes on 1st June this year.
In 2015, the FSA’s Financial System Council penned a report proposing the creation of a legal framework for the regulation of virtual currencies and the exchange of operators. Among the recommendations, the Council proposed a mandatory registration of all virtual currency operators with the FSA. If the planned amendment is approved, all digital exchanges and other services, such as wallet providers, will therefore have to register with the agency.
Exchange operators must also meet certain criteria, such as maintaining a specified amount of capital, and managing customer assets separately from corporate assets. In addition, the FSA will mandate checks on operators, conducted by public accounting or auditing bodies.
The 2014 collapse of the Tokyo-based bitcoin exchange Mt. Gox, and the arrest of its CEO Mark Karpeles last summer, was included in the report as an example of why it would be important for exchanges to provide information to regulatory agencies, as well as to their customers.
Karpeles was arrested in Tokyo, accused of tampering with corporate data to inflate his own bank account. Japanese papers reported that he had transferred ¥20mn (approx. £130,000) of clients’ money to his personal savings. Karpeles still pleads innocence, arguing that hackers had been the cause of the loss of 850,000 bitcoins in 2014 – later announcing that 200,000 bitcoins had been ‘found’ in cold storage.