Nations weigh options to regulate Bitcoin trading

A man checked a graph showing recent fluctuations on bitcoin exchange rates against the US dollar at the Tokyo bitcoin weekly meeting on Thursday.
Yuya Shino/Reuters
A man checked a graph showing recent fluctuations on bitcoin exchange rates against the US dollar at the Tokyo bitcoin weekly meeting on Thursday.

Authorities around the world are grappling with how to regulate virtual currency in the wake of the implosion of Mt. Gox, a prominent trading platform for bitcoin.

In Tokyo, where Mt. Gox is based, Japan’s top government spokesman, Yoshihide Suga, said Wednesday that agencies including the Financial Services Agency, the Finance Ministry and the police were collecting information on the bitcoin trade in Japan, with an eye toward regulatory action.

“Once we assess the situation, we will respond as necessary,” Suga told a news conference. “At the moment, we are still in the information-gathering stage.”


Japan’s new interest in bitcoin came as authorities elsewhere were taking steps.

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In the weeks before the collapse of Mt. Gox, federal prosecutors in New York sent a grand jury subpoena to the company, according to people briefed on the matter. The prosecutors, who had already criminally charged the founder of a popular website where bitcoins could be bought, have formed a broader partnership with the Internal Revenue Service and other federal agencies to crack down on companies using bitcoin exchanges to filter tainted money and support drug trafficking.

New York state’s top financial regulator, Benjamin M. Lawsky, has also signaled an interest in regulating the virtual currency. And the Commodity Futures Trading Commission is examining its potential authority over bitcoin exchanges that have a US presence, a person briefed on the matter said, as is the FBI in New York.

Mt. Gox — its name is derived from Magic the Gathering Online Exchange, showing its origins as a gaming platform — was one of the earliest bitcoin exchanges. It stopped trading on Monday after having halted user withdrawals earlier. An unverified document that circulated on the Internet Monday night pegged Mt. Gox’s losses at 744,000 bitcoins, or 6 percent of the 12.4 million bitcoins currently in circulation.

Yet the shutdown has not curbed enthusiasm. The price of bitcoins rose about 8 percent on Wednesday, to $577, according to the virtual currency monitoring site CoinDesk.


Shortly before going offline, bitcoins were trading on Mt. Gox at just more than 20 percent of what they were selling for elsewhere.

“There were a lot of people who were trying to buy bitcoin at what appeared to be discounted prices,” said Gil Luria, a managing director at Wedbush Securities. “A lot of the demand was going to Mt. Gox, and once Mt. Gox completely shut down, that level came back into all the other exchanges.”

Another large exchange, BTC-e in Bulgaria, posted a notice Tuesday saying it would have to move to a new platform “in order to cope with an increased number of client requests.”

Bitcoin was created in 2009 by an anonymous programmer or collective of programmers known as Satoshi Nakamoto.