To prevent Bitcoin scam repeat, Japan passes virtual currency law

Once one of the largest, most established exchanges for the cryptocurrency, MtGox collapsed in 2014 after a suspected theft worth nearly half a billion dollars, which hammered the digital currency’s reputation. Japanese lawmakers passed a bill late yesterday stipulating that all “virtual currency” exchanges must be regulated by the country’s Financial Services Agency.

The new law defines a virtual currency as something with an “asset-like nature” that can be exchanged for goods and services. Digital currency exchanges must now register with the financial watchdog and verify the identity of customers opening accounts. The new legislation aims to “tackle issues of money-laundering and protect users”, Japan’s Financial Services Agency said in a statement. Critics of the virtual currency movement say its anonymity and lack of regulation make it ideal for use by criminals. Other G7 countries have either introduced, or are in the process of trying to introduce, similar legislation, after voicing support for “appropriate regulation” of virtual currencies at a 2015 meeting. Japan’s new law comes after prosecutors last year charged France-born MtGox head Mark Karpeles, with embezzlement, amid fraud allegations over the disappearance of hundreds of millions of dollars worth of the virtual currency.

MtGox shuttered after admitting 850,000 coins -- worth around $480 million at the time -- had disappeared from its digital vaults. The exchange, which once said it handled around 80 percent of global Bitcoin transactions, filed for bankruptcy protection soon after the cyber-money went missing, leaving a trail of angry investors calling for answers.