Japan to regulate Bitcoin trades, impose taxes

March 9, 2014 Leave a comment

March 5, 2014 2:00 am JST

Japan to regulate Bitcoin trades, impose taxes

TOKYO — The Japanese government will set rules for trading bitcoins, defining the virtual tender not as a currency but as a commodity akin to gold.

Gains from trading bitcoins on online exchanges, and purchases made with them will be subject to Japanese tax. Banks will be prohibited from handling them, and securities firms will be barred from brokering Bitcoin trades.

Since its origin in 2009, Bitcoin has occupied a legal gray zone. But the cryptocurrency has arguably become too big for regulators to ignore. The value of bitcoins in circulation worldwide at one point reached 1 trillion yen ($9.75 billion).

Japan will become the first major economy to attempt to regulate the virtual currency and may prompt others to move in the same direction. Last week, Mt. Gox, a Tokyo-based Bitcoin exchange, filed for bankruptcy, drawing attention to the issue of protecting users.

An opposition lawmaker has asked the government’s position on Bitcoin’s legal status. In the days ahead, the cabinet will issue a response that will become the basis for guidelines that would also apply to any similar virtual currencies that may come later.

Significantly, the guidelines will call for taxing Bitcoin transactions. Purchases made in bitcoins will be subject to Japan’s consumption tax, which is set to rise to 8% on April 1. Trading gains will be taxed, and companies will need to pay tax on revenue earned from Bitcoin transactions. But enforcement could prove difficult, as tax authorities will have to track down users.

Given Bitcoin’s potential use in money laundering and other crimes, regulating it poses an international challenge. Thus far, major economies’ approach has been inconsistent. China has banned financial institutions from processing Bitcoin payments. Russia says using bitcoins as a currency is illegal. Meanwhile, a federal court in the U.S. state of Texas has ruled that Bitcoin is a currency. Any attempt to introduce common rules would likely take time, experts say.

(Nikkei)

 

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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