Bitcoin Has Had a Disasterous Week

We've just had 3^rd Bitcoin exchange robbery in a week, the suspicious death of the CEO of another exchange, the discovery the mysterious founder of Bitcoin, Satoshi Nakamoto, is actually a guy named Satoshi Nakamoto, and Japan has decided not to regulate it as currency.

I know what you are wondering why is Japan deciding not to regulate Bitcoin a bad thing?

Well, because if it is not currency, then it is subject to the VAT (sales tax) and the capital gains tax:

The Japanese government officially said Friday that it doesn't consider bitcoin to be a currency and has no plans at present to regulate it as a financial product.

As it tries to cope with the fallout from the bankruptcy of the Tokyo-based Mt. Gox exchange, the government said that the crypto-currency would be treated like other goods and services, with commercial sales of bitcoin itself and bitcoin-based transactions subject to sales tax. In addition, any gains on exchange rates will be taxed as well.

"Any bitcoin transactions are taxable when they fulfill requisitions stated by laws on income tax, corporate tax and consumption tax," the government said in its statement, which came in response to questions over how bitcoins will be regulated.

At the same time, the statement ruled out treatment of bitcoin as a currency or a financial instrument.

"Bitcoin are neither Japanese nor foreign currencies and its trading is different from deals stated by Japan's bank act as well as financial instruments and exchange act," according to a document released by Prime Minister Shinzo Abe's cabinet.

(emphasis mine)

I don't know if Bitcoin is done, but I think that a stake has been driven though the heart of the Randroid libertarian dream of completely unregulated and untraceable crypto currency.

Heh.