Japanese firms are increasingly looking to tap into the growth potential of bitcoin and other cryptocurrencies as the government exempted virtual currencies from consumption tax.

In March 2017, the Japanese National Diet approved the 2017 tax reforms bills which include an exemption from consumption tax for the transfer of virtual currencies, effective 01 July 2017, DLA Piper reported.

In addition, the Japanese Diet also passed a bill that recognizes bitcoin and other digital currencies as a form of payment method, effective 01 April 2017.

Nikkei Asian Review reported that a number of Japanese firm are establishing exchanges for bitcoin and other digital currencies to meet the growing demand in the country.

SBI Holdings announced last year its plans to set up SBI Virtual Currency Inc, which will provide exchange services for digital currencies. Earlier this year, GMO Internet revealed its intention to enter digital currency space with GMO Wallet Co., Ltd.

"We didn't even have minimum guidelines" back in 2014, when the bitcoin exchange Mt. Gox collapsed, "so users will now feel more secure," an SBI Virtual Currencies representative told Nikkei.

Nikkei reported that Kabu.com Securities and Money Partners Group are also planning to enter this emerging sector. According to the Japan Cryptocurrency Business Association, nearly 18 companies are planning to apply for a license, which includes over ten firms entering this market for the first time, as well as existing exchanges such as bitFlyer.

BTC/USD is soaring higher and has crossed the 1400 mark. It is currently trading at 1420 levels at the time of writing (Bitstamp).