Different governments have taken different stances on Bitcoin. For example, Bangladesh has outlawed it and Germany considers it “private money.”
Within the US, different states have different standpoints, as each state possesses respective laws.
Japan has decided to take an interesting stance on it.
Mt Gox, which was based in Japan, went bankrupt in February 2014, reportedly losing some 850,000 bitcoins (332,100,000 USD as of today). This was the first time most Japanese people heard about Bitcoin. Now it’s a familiar term in the country.
Since then, many companies have launched bitcoin related services.
In March of 2014, the Japanese government made a cabinet decision on the legal treatment of Bitcoin. The decision did not rule bitcoin as currency nor as a bond; this prohibited banks and securities companies from dealing with bitcoins.
An 8 Consumption Tax will be levied on sales of Bitcoin because of existing laws. However if bitcoins are purchased from consumers (even if you purchase it through exchange), no consumption tax will be levied.
The Japanese Government ultimately ruled that it is not necessary to regulate sales, purchases, and/or exchanges of bitcoins.
Japan has recognized Bitcoin’s great potential, and, in a gallant act of confidence, has asked members within the bitcoin industry to form a self-regulatory authority.
It is called the Japan Authority of Digital Assets (JADA). JADA is supported by Liberal Democratic Party of Japan (LDP)’s IT committee, and is currently in discussion with Japanese government offices. There is no specific governmental office that regulates JADA.
I met So Saito, the legal council to JADA, at the NYC Bitcoin Center, where he came to speak about Bitcoin regulation in Japan.
“LDP would like to make Japan the most Bitcoin friendly country,” says So Saito.
JADA’s purposes include:
- make AML and security guidelines
- audit exchanges pursuant to the above guideline
- research the bitcoin business
- have discussions with governmental offices
- have discussions with digital currency companies and digital currency related organizations
- hold digital currency events
- help new digital currency companies
- provide consultation regarding digital currencies
They have announced that they would would like to cooperate with US companies.
JADA is in constant discussion with the National Tax Authority (NTA), police agency, and other governmental offices. They are currently discussing the possible removal of the8 consumption tax with the NTA.
The core members of JADA include bitFlyer (exchange), Kraken Japan (exchange), and CoinPass (settlement).
The chief of JADA is Mr. Yuzo Kano, the CEO of bitFlyer. bitFlyer has recently acquired 236K USD in funding. Mr. Kano left his previous job as a trader to found his company after the failure of Mt Gox.
“I believe that starting members will become 10-15 companies although we are still discussing this,’ says So Saito.
JADA is also currently busy drafting guidelines regarding AML/KYC, security and consumer protection especially discussion on level of requirements.
In trying to develop a fully-functioning agency, So Saito outlines one of the main challenges.
“The Bitcoin industry is still quite young and there are many new startups. If we require high standards for entry to JADA, small companies may not be able to join. However, if we require low standards, others (consumers, banks and so on) will not trust JADA, and Bitcoin. Balance is always important.”
“Bitcoin,” he adds, “has huge potential and many new companies enter the industry. I expect more than 100 companies will be members of JADA in three years.”
Visit JADA’s website here.
Which government is correct? It seems as if Bitcoin integration will generally be a trial and error process; different governments can learn from each other in deciding how they will treat it.
In all parts of the world people are working to make Bitcoin work. Different cultures bring with them their own inherent methodologies and cultural codes that, over time, will help to reveal the best way of approaching this new technology.
I'm a curious renaissance man that loves to teach and learn. I write a lot and I'm intrigued by cryptocurrencies.