Japan's Bitcoin industry is experiencing explosive growth again, and more than 10 companies will launch new exchanges

More than 10 Japanese companies are reportedly setting up bitcoin exchanges to meet rising demand for the cryptocurrency as the country passes sweeping legislation to become a more bitcoin-friendly region.

Japan’s cryptocurrency industry is expected to grow exponentially with more than a dozen new exchange platforms seeking to enter the market to trade Bitcoin and other virtual currencies, according to Nikkei.

The fervent interest from these companies vying for space in the bitcoin ecosystem comes as the Japanese government made major changes to the legal status of bitcoin, triggering a surge in demand for the cryptocurrency among investors, traders and ordinary Japanese citizens.

In March 2016, the Japanese Cabinet passed a bill recognizing Bitcoin and other digital currencies as digital equivalents of currency.

On April 1, 2017, Japanese law officially recognized Bitcoin as a legal payment method. At the end of last year, Japanese officials decided to cancel the 8% consumption tax on Bitcoin, which will take effect in July this year.

Japanese retailers have taken notice and are taking action to accept Bitcoin. Some notable partnerships between retailers and Bitcoin companies could see 260,000 retail stores accept Bitcoin as payment by this summer.

A regulated industry = boom

Last year, Japan’s legislature passed a bill that would allow Japan’s financial regulator, the Financial Services Agency (FSA), to oversee cryptocurrency exchange operators.

Exchanges are now required to obtain a special license to operate in the country. As previously reported, this license includes minimum capitalization and operating requirements for exchanges.

The Nikkei report cited the Japan Cryptocurrency Business Association (JCBA) as saying that 18 companies are planning to apply for the license. These companies include existing Bitcoin trading platforms such as Japan's largest exchange BitFlyer. However, it is said that 10 of the 18 companies are new to the industry.

One of the 18 businesses seeking licenses is a bank-backed digital currency exchange that was established last year. Japanese financial giant SBI Group has established SBI Virtual Currency Co., Ltd., a digital currency exchange that offers trading between the Japanese yen and the Bitcoin and Ethereum cryptocurrencies.

The report also lists web hosting company GMO Internet Group as launching its own digital currency exchange.

Internet foreign exchange trading firm Money Partners and securities firm Kabu.com Securities are reportedly planning to enter the cryptocurrency space.

The report also states that none of Japan’s three largest banks have plans to start trading digital currencies. However, it is worth noting that these three banks – Mitsubishi, Mizuho and Sumitomo Mitsui Bank – are investors in Tokyo-based Bitcoin exchange BitFlyer.

The report also said:

“Cryptocurrency is still small in Japan. However, it could be used as a cheap way to settle payments and transfer funds in the future.