Judge Masumi Kurachi stated that, due to their intangible nature and reliance on third parties, bitcoins cannot be covered under existing law.
Kurachi's comments, reported by The Japan Times, came during a lawsuit bought against bankrupt bitcoin exchange Mt Gox by an unnamed Kyoto resident.
Representing himself in court, the plaintiff had demanded repayment of 458 bitcoins, today worth $128,144, that were held in his account when the exchange shuttered last year.
It is unclear what impact this ruling will have on other Mt Gox claimants, as thousands of creditors undergo a lengthy process to divide up the exchange's remaining assets, last valued at $11.5m.
They've been told by Payward CEO Jesse Powell, who is assisting the claims process, to expect only a fraction of their original funds back.
Once the biggest bitcoin exchange in the world, Mt Gox filed for bankruptcy protection in Japan and the US in February 2014 after claiming 750,000 BTC had vanished from its customer wallets.
Though CEO Mark Karpeles maintains the missing coins were targeted by hackers following a transaction malleability bug, others suggest evidence points to insider involvement.
Five days ago, Karpeles was arrested by Tokyo Metropolitan Police on suspicion of manipulating trades on the exchange and misappropriating customer funds.
A police official at the arrest said some of the lost bitcoins may have never existed. Unofficial reports even claim the exchange ran out of money six months before its collapse.
In an Reddit AMA on Saturday, a user claiming to be the first employee of Mt Gox, Ashley Barr, claimed his statement – alongside other ex-colleagues – had lead to the arrest:
"We learned that Mark only had one bank account, shared with Mt Gox's customer deposits. That was the nail in the coffin."
The 30-year-old denies the allegations against him.
Broken bitcoin image via Shutterstock.
