Japan's Top Regulators Suggest Mt. Gox Intervention Unlikely

Top Japanese financial organisations distanced themselves from Mt. Gox on Monday amid growing requests from customers for action.

Feb 24, 2014 at 8:54 p.m. UTC
Updated Sep 11, 2021 at 10:23 a.m. UTC

With no timeline issued yet from Mt. Gox as to when it will once again allow the transfer of funds to third-party services - and signs of communication from the notoriously tight-lipped Japan-based company appearing less likely, the exchange's global customers began to turn to Japanese financial authorities on Monday for potential recourse.

However, the country's financial authorities are reportedly distancing themselves from any potential responsibility, should the troubled exchange default on its service obligations.

reported 24th February that Japan's Financial Services Agency (FSA), which oversees the country's banking, insurance, securities and exchange sectors, does not view the supervision of digital currency exchanges as part of its obligations.

Speaking to the Journal, representatives from the FSA said:

"Bitcoin isn't a currency; it works as an alternative to currencies, like gold. The FSA is in charge of currency-based services. Therefore, bitcoin exchanges are not a subject to our regulatory oversight."

The news comes just hours after CEO Mark Karpeles resigned from the board of directors at Bitcoin Foundation, a move that caused a modest price recovery occurring on the network to stutter, and amid increasingly vocal protests from users.

Major financial agencies follow

While the news from the FSA is undoubtedly disheartening for exchange users, other government and private entities could still step in to provided relief if and when it's needed. Though, many of these organisations are currently taking a similar position as the FSA.

The Journal revealed that Bank of Japan, Japan's central bank, has stated it is "not in a position" to regulate bitcoin exchanges. Likewise, Japan's Ministry of Finance, a cabinet-level government financial entity, adopted a similar sentiment in correspondences with the media outlet.

The Ministry of Internal Affairs and Communications, which has jurisdiction over IT issues, was less clear in its stance, saying.

"We are not in a position to make any judgments on this matter."

The future of Mt. Gox

Despite the fact that Mt. Gox had previously suggested a relationship with the FSA, the agency told the report it has not issued the troubled exchange any operational advice in recent weeks, suggesting that intervention in the event of its potential failure is unlikely.

Still, despite the fact that fear of a Mt. Gox default is spreading, sources close to Mt. Gox suggest that the exchange may be near a solution.

Former BitInstant CEO Charlie Shrem indicated on reddit today that "good news [is] on the horizon for people who have funds stuck in MtGox", though he did not elaborate on the announcement.

Image credit: Japan skyline via Shutterstock

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