Gov't to decide bitcoin trading rules on Friday

Who is Satoshi Nakamoto? Answer me that, and Bitcoins trustworthiness edges up a bit.

With the devaluation of currencies across the globe it's better to stick with precious metals and the currencies of financially sound countries than on some digital abstraction.

Actually the tax rules are that if you are a resident in Japan for tax purposes, it doesn't matter where you derived your income, you are supposed to declare the income and pay tax on it.

So overseas bitcoin transactions could easily be decreed taxable as well, since the Japanese tax system is based on voluntary tax declaration for things like this.

You don't get taxed for exchanging your money into another currency so why bitcoin?

Actually you ARE supposed to report income derived from exchanging one currency for another currency and then back again (or into another currency still, using the prevailing yen rates at the time of the transactions). If they apply the same rules, just buying bitcoins with yen itself won't be made taxable, but if you later sold your bitcoins back to yen for a profit (or to dollars) then that'd be taxable.

Not sure about other countries, but one annoying thing in Japan is that you are required to pay tax in yen, even though you might have made profit by exchanging euros for dollars or dollars for bitcoins (unless of course you did so at Mt.Gox, haha). They should accept taxes in the actual related instruments IMO, and change the money to yen themselves rather than demand it of the tax payer.

I digress... while in theory I think they could say "the same applies to bitcoin", of course I don't see how they could police that for bitcoins. While not to be encouraged, I imagine there is already probably very poor compliance on even straight currency transactions that go on within Japan, let alone overseas. I can't imagine the tax man comb through every bank account in Japan looking for such taxable exchanges. That'd be a nightmare...

You going to tax playstation points, xbox points and every other "points" system out there?

And this is exactly it. If it isn't bitcoins, people could start using something else as a form of money. The Japanese government is better at this stage at least to just reject this stupidity and say "risk your assets in bitcoin at your own peril, but please pay tax voluntarily on your profits".

This is not going to work, firstly they could only tax exchanges in Japan to which there are none. They could only technically tax Japanese residents and have to prove the transactions where done while in Japan.

You don't get taxed for exchanging your money into another currency so why bitcoin? You going to tax playstation points, xbox points and every other "points" system out there?

8 execs connected to Bitcoin have either jumped off buildings... or committed suicide... that seems rather dubious and like a movie... who is killing Bitcoin?

@isoducky

They are not going to peg their currencies with bitcoin. They will, however, sees it similar as stock investment and tax it as capitaal gain. If they peg with bitcoin, then that means they recognize that has as legit currency. Before that happens, I think bitcoin will need to do many work first such as if anyone transfer large sum of amounts, they will need to file reports to government agent, etc.

Another one bit the dust in Alberta, today. Domino effect?

Interesting to see a government tax bitcoins. I wonder which country will be the first to peg their currency to the bitcoin and how that would play out.

“The cabinet will decide on Friday how to treat bitcoin under existing laws, the people said, adding that banks and securities firms will not be able to handle bitcoin as part of their main businesses, suggesting it will be treated more as a commodity, like gold”.

Okay, let treat Digital Cryptocurrency Bitcoin as gold. The problem is gold can be used as deposit for to issue legal tenders but digital cryptocurrency has nothing value itself. Legal tender is becoming valuable piece of paper because of its value was guarantee by the Gold which was deposited in Reserve Bank’s vault. So Bitcoin can not be treated like gold because it’s virtual.

Bitcoin and other Digital Cryptocurrecy can not be stored in Reserve Bank’s vault like as Gold for deposit for to distribute Digital currency Bitcoin as legal tender.

Without financial institutions and securities firms’ involvement, digital cryptocurrecy will be same as Bitcoin today. To use like legal tender, digital cryptocurrecy must be issued by financial institution which has accumulated assets. Also Government must be recognized its Digital Cryptocurrency as Digital legal tender. So Government can tax on digital cryptocuurency’s transaction for trading.

However, financial institutions involvement will bring fees for their services and Government will collect tax on trade transaction which used Digital Cryptocurrency. It’s against the rule and idea of all supporters of digital cryptocurrency like Bitcoin users because they against financial business controlling by Bank and Government. They don’t want to pay transaction fee to Bank. For Government collecting tax on transaction with Digital currency, no one wants to pay tax to Government.

It’s interesting to know now Government wants to regulate Bitcoin and other Digital Cryptocurrency but its complicated matter. Any regulating on Bitcoin and other Digital Cryptocurrency won’t be favored by users.

you couldn't loan money into existence with Bitcoin. Considering the billions and trillions of taxpayer dollars swindled into propping up the current banking cashola system every single year, versus these bumps which are public, it seems to me making a case for a currency stability. it may end up saving us a lot from the criminal banks.

Once government starts taxing it, a lot less people will be using it.

Ostrich farms, bi coins an tulips are great investments.

All modern currencies are based on trust, the belief that they hold value and that others will accept them in payment. As long as e-currencies develop this, then there is nothing wrong with them.

The only thing I see them lacking is that there is absolutely no guarantee from anybody if a rightful holder of them gets "robbed" in some way.

The government backed money, while it can be printed in huge amounts at the whim of an unelected central banker, does at least have some level of guarantee behind it (even though it doesn't always amount to much, but I'd still take a bank account in Cyprus than an non-empty bitcoin account at Mt Gox anyday.)

I'd like to see more advance cryptocurrencies will some kind of built in protections developed. Then I might be interested.

The reality is that Bitcoin is traded more like a commodity, used for speculation. Its value is too volatile to be used as a pricing mechanism and there are relatively few commercial transactions, as opposed to speculative ones.

Don't know about that - maybe in terms of amounts transferred but not when it comes to number of transactions, Apparently SatoshiDice, one gambling site, was averaging over 10,000 transactions per day at one point last year, and that's just one site.

“We still have not had a clear grasp of the situation,”

And this could be applied to anything the Japanese do.

And so it begins, governments trying to once again control EVERYTHING. This will be interesting to watch as I see it next to impossible to control something that by design was designed to avoid central government control. Now we will see how robust bitcoin is or isn't. This will be the first true test of this currency. Sitting back in comfy seat with popcorn in hand...

Interestingly, the UK tax authorities have declared that Bitcoin will be treated as a currency for tax purposes, rather than a commodity. This does not mean that the financial regulator or government will back it, but that the tax department (HMRC) sees it as a currency. Quite the reverse of Japan's point of view.

The reality is that Bitcoin is traded more like a commodity, used for speculation. Its value is too volatile to be used as a pricing mechanism and there are relatively few commercial transactions, as opposed to speculative ones.

Does this make it the new tulip mania (valueless), or more akin to internet stocks in the late 1990s (misunderstood value)?

But are e-currencies fundamentally any different to other currencies? Nearly all currency is "electronic", even if a tiny proportion exists as paper or metal. They are not backed by gold and governments, through their central banks, show a remarkable propensity to create more currency when it suits them.

All modern currencies are based on trust, the belief that they hold value and that others will accept them in payment. As long as e-currencies develop this, then there is nothing wrong with them.

Mt.Gox and Flexcoin appear to be the victims of bank robberies - a problem that banks have faced since the emergence of the first bank.

The government wants bitcoin transactions to be taxable, the Nikkei and Yomiuri newspapers said, but it remains unclear how the authorities could do this, given that one of the attractions of using bitcoins is that transactions are anonymous.

Exactly.

The Japanese bureaucracy is big enough as it is without tax-payer-funded attempts to regulate free people from doing whatever it is that they choose to do with their money. The government should just come out and say "hey kids, you're on your own if you want to engage in this".

But perhaps they could announce that they will apply taxes to capital gains on bitcoins exchanged back into cash. For gains made overseas, they should just treat it like any overseas income is treated. As with overseas income, the government just has to rely on the good faith of tax-payers to report earnings, and look out for any big incoming funds transfers. Otherwise they are powerless.

Its value has soared in the last year

And crashed a few times too, it might be added.

Flexcoin, a Canada-based bitcoin bank, said on Tuesday it was closing after it lost $600,000 worth of the online currency - all the bitcoins it stored - to hacker theft. Flexcoin had said last week it was not affected by Mt Gox’s closure and had “not lost anything.”

I can't be convinced that there are not other dominoes just waiting to fall, and surely no government will be prepared to backstop any of these exchanges which are facilitating offline anti-government financial transactions. User beware.

Now that there's a bit of money in bitcoin, the 1% wants a piece of the damn pie, taxing and most likely not offering any protection if something goes wrong, so just plaguing the system overall.

I guess there's a domain yet to be explored regarding virtual currencies and offering insurance for it.

Posted on this on an earlier thread. Arguments for and against aside, I seriously don't know how they imagine doing this. As somebody has just pointed out, government control will bring some legitimacy to Bitcoin. However, is trying to tax what is essentially still a niche service good policy? Are they going to charge at this like a bull at a gate? Invest millions to tax this only to receive a couple of millions in revenue? What form is this taxation mechanism going to take? Tax at source (the bitcoin exchanges)? Wouldn't that be a court case in the making (unjust taxation on a particular sector that is prejudicial to that industry only)? Moreover, I don't imagine the Japanese bureaucracy having the brains to do this. Cannot really imagine the NTA or any of the ministries wasting the skills of their best IT experts to go after such a small revenue basis. This sounds like knee-jerk policy that hasn't been thought out that well.

Finally, I couldn't help laughing at the "studying the bitcoin phenomenon with interest" soundbite from the Bank of Japan. For those not familiar with Japanese bureaucratic doublespeak, this little nugget translates as follows: "The BoJ is willing to sit back and smirk while the good-intentioned folks at the FSA actually try and do something, and the idiots down at the Ministry of Finance let Mad Taro drive the policy bus over the proverbial cliff."

Merely to give the impression that they understand (and can control) the situation, I fully expect an irrelevant knee-jerk reaction from Japanese politicians to the Mt.Gox problem.

Expect an uptick in the value of a Bitcoin if the government gets its way -- taxing something adds to its legitimacy, and really there's no such thing as bad publicity for a thing like this.

If not for the extremely high value of the stolen Bitcoins, the conspiracy theorist in me might almost speculate that the recent theft was arranged as a form of free advertising. Everyone whose bitcoins didn't get stolen will probably profit.