Bitcoin took a further step away from legitimacy Friday when the Japanese cabinet approved a document saying the popular cryptocurrency is not, in fact, a currency and banks should not provide it as a product to customers.
The move puts Bitcoin outside the purview of Japan's Financial Services Agency, which had also previously ruled that Bitcoin is a commodity, rather than a currency. The statements come on the heels of the massive collapse of the Tokyo-based Bitcoin exchange Mt. Gox, which resulted in the loss of nearly half a billion dollars last week.
See also: Bitcoin Exchange Mt. Gox Files for Bankruptcy
"Bitcoin isn't a currency," the document read, according to The Wall Street Journal. As a commodity, the Japanese government decided, Bitcoin should be taxable when used to make purchases and when purchased on an exchange.
"If there are transactions and subsequent gains, it is natural ... for the finance ministry to consider how it can impose taxes," Japan's chief cabinet secretary, Yoshihide Suga, said according to the BBC.
At least one Tokyo lawyer disagreed with the cabinet's decision. So Saito told the Journal that "Bitcoin was invented as a currency and works as a means of settlement" and should be treated as such.
While increasingly popular with the Internet-savvy set, Bitcoin hasn't had much luck with global authorities. In February, Russia outlawed its use completely. China, too, has restricted Bitcoin as a means of payment. While legal in the U.S., Federal Reserve Chair Janet Yellen told Congress that the Fed had no "authority to supervise or regulate Bitcoin in any way,” calling it merely a "payment innovation."
Bitcoin has also been the target of official suspicion due to its role in illegal activity. With its user anonymity and ease of exchange, Bitcoin was the primary way drugs and other illicit products were bought and sold in the erstwhile online black market Silk Road.
Beyond Friday's announcement, it is not yet clear how or if Japan will regulate Bitcoin use. "We are now sorting things out under the current law and mulling what the government can do," Suga said.