Local government employees and cryptocurrencies: Important points to keep in mind

Introduction: Essential Bitcoin Basics for Civil Servants

Among local government employees, interest in cryptocurrencies such as Bitcoin is increasing. While they are gaining attention as a new asset management method, there are numerous legal restrictions and professional considerations specific to civil servants. This article provides a clear explanation of the legal knowledge, risk management, and practical safety measures that local government employees must understand before starting to invest in cryptocurrencies.

1. Basic Concepts of Bitcoin and Its Relevance to Civil Servants

Bitcoin, born in 2009, is the world's first decentralized digital currency. It does not require a central authority, enabling transactions to be conducted globally 24/7, 365 days a year.

From the perspective of local government employees, two points are noteworthy. First, Bitcoin can function as a “new option for asset formation,” and second, “careful consideration of the relationship with their duties is necessary.” While it presents an attractive investment opportunity, maintaining credibility and complying with laws are extremely important.

2. Legal Frameworks Civil Servants Must Comply With

Restrictions Under Civil Service Laws

Local Public Service Law and National Public Service Ethics Law apply. These laws permit investments that do not constitute conflicts of interest, but attention must be paid to the following:

• The trading activities do not interfere with the primary duties
• They do not constitute acts that damage the trustworthiness of the civil servant
• They do not violate internal regulations of the relevant municipality

Taxation Obligations

Income from cryptocurrencies is classified as miscellaneous income. It is calculated separately from salary income, and the following rules apply:

• If annual gains exceed ###, a tax return is mandatory
• Not only gains from sales but also exchanges from one cryptocurrency to another are taxable
• Even if losses occur, it is important to keep detailed records

Confirm Internal Regulations of the Affiliated Organization

Regulations regarding side jobs, investments, and secondary employment vary by municipality. Before starting cryptocurrency trading, be sure to check with the HR department or labor management division. Violating regulations could lead to disciplinary action or salary reductions.

3. Benefits and Risks of Cryptocurrency Investment

Expected Benefits

• Potential hedge against inflation and exchange rate fluctuations
• Diversification of assets through participation in global markets
• The potential to benefit from technological advancements

Main Risks Faced

• Volatility: Large losses can occur in a short period
• Cybersecurity risks: Loss of assets due to attacks on exchanges or wallets
• Regulatory changes: New regulations domestically and internationally may alter rules

Risks Specific to Civil Servants

• Loss of social credibility if inappropriate trading is discovered
• Criticism from colleagues or citizens
• Disciplinary suspension or salary reduction

4. Practical Guidelines for Safe Trading

Criteria for Choosing Reliable Exchanges

Always select trustworthy exchanges for buying and selling cryptocurrencies. Recommended evaluation criteria include:

• Registered as a cryptocurrency exchange with the Financial Services Agency (FSA) in Japan
• Multi-factor authentication and multi-signature wallet support
• Comprehensive Japanese-language customer support
• Transparent fee structures
• Clear policies on user protection

Protecting Assets Through Wallet Management

If planning to hold long-term, consider transferring assets to a personal wallet outside the exchange. This isolates assets from exchange system failures or attacks.

Key points when choosing a wallet:

• Strong backup features and security measures
• Simple and secure user interface
• Support for multiple cryptocurrencies for diversified management

Daily Management and Record-Keeping

• Record all buy and sell transactions in detail
• Regularly organize transaction statements and profit/loss calculations in preparation for tax filing
• Establish a system to promptly consult supervisors or relevant departments in case of issues

5. Conservative Investment Strategies for Local Government Employees

Strict Diversification

Concentrating all assets in Bitcoin alone is extremely risky. Limit cryptocurrency holdings to a portion of total assets, maintaining balance with cash deposits and other investment products.

Use Surplus Funds

Only allocate surplus funds that do not affect living expenses or emergency reserves. This is a fundamental rule.

Medium- to Long-Term Perspective

It is recommended to adopt a strategy of holding assets for several years rather than short-term trading for quick profits. This approach helps maintain a stable mental state, avoiding overreaction to short-term price fluctuations.

6. Frequently Asked Questions and Answers

Q: Can I trade cryptocurrencies anonymously?
A: No. In reality, identity verification is mandatory at exchanges, and all transaction records are stored. Since transactions are traceable, tax evasion will inevitably be detected.

Q: Will trading interfere with my main job?
A: As long as you manage yourself properly and adhere to internal regulations, there should be no problem. However, avoid trading during work hours or excessive interest, and manage trading only during your off time.

Q: What should I do if I incur losses?
A: It is important to record losses for tax purposes. Keeping detailed records may allow you to offset future gains.

7. Future Trends in the Cryptocurrency Market and How Civil Servants Should Engage

The cryptocurrency market, including Bitcoin, is expected to continue growing. Flexibility in adapting to changing times will contribute to effective asset formation for local government employees.

However, the key is to prioritize “safety and compliance.” Fulfilling your responsibilities while rigorously managing yourself and acquiring new financial knowledge will lead to successful asset management.

Utilize a safe and trustworthy trading environment, and through continuous learning, achieve stable cryptocurrency management free from trouble.