Japan refuses to recognise Bitcoin

<p>The virtual currency has been ignored by Japan.</p>

Japan's government has stated that some transactions using the virtual currency Bitcoin ought to be taxed, though it says it should not be recognised as a currency.

Bitcoin has been one of the largest stories in the currency world in the last 12 months, with worldwide governments split on how to deal with its rise.

Russia has banned the use of Bitcoin completely, while it is heavily regulated in China.

However, nations such as the US and the UK have been much more open to the virtual currency and there are a number of bricks-and-mortar locations where Bitcoins can be spent in these countries, although the vast majority of Bitcoin transactions are still carried out online. HM Revenue and Customs recently confirmed that it would not be charging any VAT on Bitcoin transactions. Singapore, in contrast, has imposed a tax on Bitcoin trading and stated that it should be seen as goods.

"If there are transactions and subsequent gains, it is natural…for the finance ministry to consider how it can impose taxes," said chief cabinet secretary Yoshihide Suga.

Bitcoin range

The market for Bitcoin is estimated to stand at more than £4 billion, although it is difficult to gauge how much of the virtual currency is out there because many of the people who have invested in Bitcoins do not speak about it in public.

Bitcoin hit the headlines last year when a man from the UK who had mined some of the virtual currency realised he had discarded the hard drive on which the virtual currency was stored. It was believed that the hard drive had ended up on a landfill site and there were media reports of intrepid treasure-hunters heading down to try and find it. It is thought that more than a £1 million worth of Bitcoins were on the hard drive when it was thrown away.

There was a blow for the rise in Bitcoin activity recently though, as the main exchange for the virtual currency – MtGox – closed down and later declared bankruptcy, resulting in the value of Bitcoin taking a sharp dive.

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