The Japanese Cabinet, this morning, declared that it does not consider Bitcoin to be a currency, reports Reuters.
Japanese government says it may tax Bitcoin deals and impose regulations on its handling by the financial sector – details of which have not yet been specified.
Not Our Job
There seems to be some reticence between Japanese authorities to address the matter of cryptocurrency. In today’s statement the cabinet said:
“Any bitcoin transactions are taxable when they fulfill requisitions stated by laws on income tax, corporate tax and consumption tax.”
Yet, later, in the same statement it is pointed out:
“There are no laws in Japan that clearly define bitcoin [sic].”
The Financial Services Authority (FSA), the Ministry of Finance and the Bank of Japan are all “passing the buck”, according to Wall Street Journal. The cabinet decision to label Bitcoin “Not a Currency” must have brought some relief to the FSA, an agency solely responsible for checking and regulating currency-based services only.
Capital Gains Tax
According to the BBC, banks and securities firms in Japan are prohibited from offering Bitcoin and related services to their customers. Said chief cabinet secretary Yoshihide Suga:
“If there are transactions and subsequent gains, it is natural…for the finance ministry to consider how it can impose taxes.”
Like most governments, Japan is being cautious and is apparently formulating ideas and laws in the popular wait-and-see approach. Several factors contribute to Japan’s nervousness, namely the recent collapse of Mt.Gox, a grossly mismanaged exchange venture, on Japanese soil, as well as, the long-running (and precarious) “Abenomics” plan.
Abenomics is the brainchild of Prime Minister Shinzo Abe and enacted by the Bank of Japan Chairman Kuroda’s monetary policy experiment that seeks to devalue the Yen in effort to pull Japan out of a 20 year deflationary quagmire.
Bitcoin and cryptocurrency present Japanese citizens with an alternative to the Yen.
The official currency of Japan is being aggressively devalued, and this is destroying pensions, saving and buying power, whilst the central bank seeks to manipulate the measure of Consumer Price Index (inflation rate) and stimulate export of Japanese manufacturing products.
The fact that the demand for Sony and Japanese brand vehicles has been usurped by Chinese and Korean brands such as Samsung, Hyundai and Huawei does not help nor does it bode well for what has been referred to by some Japanese as “crazy” monetary experiments.