Japan says any bitcoin regulation should be international

Thu Feb 27, 2014 5:14pm EST
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By Sophie Knight and Takaya Yamaguchi

TOKYO (Reuters) - Any regulation of the bitcoin crypto-currency should involve international cooperation to avoid loopholes, Japanese vice finance minister Jiro Aichi said on Thursday.

Commenting on the closure this week of Tokyo-based Mt. Gox, once the world's biggest exchange for the bitcoin virtual currency, Aichi said the ministry would respond to the problems "if necessary", after finding out exactly what happened.

"It's not just the Ministry of Finance; many other agencies are related," Aichi told a news conference. "As for its legal position, a currency (under Japan's jurisdiction) would be coins or notes issued by the Bank of Japan. At the very least, we can say bitcoin is not a currency."

U.S. Federal Reserve Chair Janet Yellen, appearing on Thursday before a Senate committee, said the Fed has no jurisdiction over bitcoin but that Congress should consider ways to regulate such virtual currencies.

The Mt. Gox website and Twitter feed went blank on Tuesday after weeks of turmoil. It suspended withdrawals on February 7 following a series of cyber attacks, leaving customers unable to recover their funds.

A document circulating on the internet saying that more than 744,000 bitcoins - worth around $423 million at current rates - were missing from Mt. Gox was created by a Tokyo-based consulting firm, said Ryan Selkis, a blogger who initially leaked scans of the document. Selkis, who uses the handle "twobitidiot", said in an email that the "Crisis Strategy Draft" had been written by consulting firm Mandalah in meetings with Mt. Gox CEO Mark Karpeles.

A director at Mandalah told Reuters the firm had never been contracted by Mt. Gox to do "strategic planning" but declined to comment further.

On Wednesday, Karpeles had sought to assure investors that he was working with others to solve the problems. "As there is a lot of speculation regarding Mt. Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues," he said in a statement posted on the Mt. Gox website.   Continued...

A physical bitcoin created by Mike Caldwell is seen in a photo illustration in Sandy, Utah, in this file photo taken September 17, 2013. REUTERS/Jim Urquhart/Files