Japan backs off Bitcoin regulation -- for now

Japan has decided to not regulate Bitcoin just yet, despite some calls in the government to do just that.

Japan's Liberal Democratic Party, which leads the country's government at the moment, decided that it would rather hear more arguments on whether the cryptocurrency should be regulated before it makes a final decision on the matter, according to Reuters, which spoke with members of the party. It's still possible that the currency will be regulated at some point.

Japan has become ground zero for the kerfuffle surrounding Bitcoin after last year's attack on Mt. Gox. That service, which called Japan home, had been the biggest Bitcoin exchange in the world until 850,000 bitcoins were stolen from it. Mt. Gox is now in bankruptcy. While 200,000 bitcoins were eventually recovered, 650,000 are still missing, costing its former users $400 million at current exchange rates.

Whether to regulate Bitcoin is something most countries around the world are now considering. The issue many governments have with the currency is that it's designed to not be traced and can sometimes be used for illegal purposes. Bitcoin, however, also has become a desirable way to make legal transactions, and many large-scale online retailers have embraced the currency.

The US government finds itself in an odd position with Bitcoin. US regulators are reportedly working on a rule book that would govern how Bitcoin can be exchanged within the country's borders. At the same time, US Marshals are planning to hold an auction to sell off the bitcoins seized in the underground black market Silk Road. A similar confluence has occurred in China where the government has banned the use of Bitcoin in banks due to its lack of traceability, but will allow for personal exchanges between users.

It's not clear when Japan might make a move on Bitcoin. The country says that it will listen to both sides of the argument and make a decision eventually. Until then, it's not stepping in.