Bitcoin prices surged this week following Japan's decision to allow the cryptocurrency as a legal method of payment.
At the news earlier this week, the price of a bitcoin rose above $1,140 (£909) compared with below $1,000 last week, according to Coindesk’s price index . The move from Japan marks a major step in the adoption of Bitcoin more widely and helps it be seen as a valid part of the financial infrastructure - one likely to be examined and watched closely by other governments around the world.
Hopes for wider acceptance
Co-founders hope this move will ramp up Bitcoin’s adoption. Pavel Matveev, co-founder at bitcoin platform Wirex, said: ‘Japan’s recognition of consumers’ appetite for cryptocurrency payments is an important development and provides other governments with food for thought if they wish to compete in an increasingly globalised and digital world.'
However, Bitcoin stills faces a long journey to be widely accepted and even Japan's new law will mean bitcoin exchanges have to comply with anti-money-laundering and know-your-customer regulations. Bitcoin has suffered a number of major setbacks in moves to make the cryptocurrency more generally embraced.
For instance, the spectacular collapse of the Tokyo-based Mt Gox exchange in February 2014 which caught the attention of Japanese regulators and also the failure of a new exchange-traded fund (ETF) tracking the currency to gain regulatory approval from the US Securities and Exchange Commission (SEC) which had been concerned by the lack of regulatory oversight in the bitcoin spot exchange market. Massive volatility in prices and regulatory skepticism are both key barriers to institutional take-up for Bitcoin.