A decision by Japanese authorities is helping the country cement its place as a driving force for bitcoin, at a time when China is turning its back on virtual currencies.

On Friday, Japan's Financial Services Agency (FSA) officially recognized 11 companies as registered cryptocurrency exchange operators. The registration places several requirements on the companies, such as building a strong computer system and checking the identity of users to prevent money laundering. These regulations are intended to protect investors from fraud and other abuse, while supporting financial technology innovation.

One of the registered companies is bitFlyer, which has more than 800,000 users, according to the firm. The company's CEO, Yuzo Kano, said the new rules cements Japan's position as the epicenter for bitcoin.

"Japan has been exploding with demand for both bitcoin trading as well as virtual currency services," Kano said in a press release Friday.

"The FSA's approval for bitFlyer to operate as a Registered Virtual Currency Exchange, and the agency's openness and forward thinking regulation could not come at a better time for the blockchain space."

Blockchain is a digital leger that is dispersed across networks. It is used in the cryptocurrency space to securely record every transaction between users.