Japan has formed a new advocacy group for bitcoin businesses and, notably, it has the explicit backing of the nation's government.

The Japan Authority of Digital Asset (JADA) will be a bitcoin business-only group intended to establish standards and codes of conduct for its members.

Brainchild of Japanese member of parliament Mineyuki Fukuda (from the ruling Liberal Democratic Party) and his IT Committee, the organisation was formed after consultation with members of bitcoin's business community.

The latter included digital currency exchange Kraken, which the IT Committee invited to play a key role in setting up JADA after a number of meetings.

Japan's government has stated officially it does not intend to legislate for regulation of bitcoin, instead preferring to allow the nascent technology to flourish and determine its own way by regulating itself. To that end, JADA will propose guidelines and "softly monitor" its members, with no legislation required.

In effect, the government seems to want to demonstrate that progress is being made, despite its hands-off approach to regulation, after bitcoin's recent notoriety surrounding the collapse of Mt. Gox.

JADA is still in its formative stages, brainstorming policy and gathering members from the bitcoin community. It will launch formally next month.

This 'self-policing' method of getting bitcoin businesses to behave might serve as a model for other countries who are struggling to determine how digital currency activity could fit into existing or new legal frameworks. It allows the new technology to flourish in an open legal environment, while still maintaining checks and standards.

What makes JADA unique (perhaps globally, at present), is the fact it operates with the full endorsement and support of the national government, while remaining an independent body.

Fukuda has been a key proponent of bitcoin development in Japan, regularly meeting with members of the community and showing a personal interest in the underlying technology.

JADA and the government's IT Committee have consulted with Japan's Financial Services Authority (FSA) and consequently JADA is to be the official liaison between the business community and government departments overseeing finance, tax, consumer affairs and the police.

JADA is currently talking to bitcoin businesses in Japan, including ATM companies and exchanges, and working on membership policies. Consumer awareness, not just of bitcoin itself but also of responsibilities and risks surrounding it, is also a priority.

Ayako Miyaguchi

, Japan VP of Operations for Payward Inc. (Kraken's parent company) said she is impressed at the improvement in bitcoin's image in her home country, particularly in the media:

A documentary broadcast last week by Japanese national broadcaster NHK was "not bad", Miyaguchi said. The crew had spent roughly two weeks in San Francisco interviewing bitcoin businesses, including Kraken, about the challenges they face, including interaction with banks and governments.

This follows an earlier, more negative NHK documentary broadcast in February that dedicated 15 minutes to an introduction to bitcoin, followed by 15 minutes on Silk Road, the online drugs marketplace.

Miyaguchi said that while bitcoin's media image in Japan may  have started out negative, thanks to Silk Road and Mt. Gox, it also led to 90% of Japanese becoming aware of bitcoin.

"In Japan, the negative often turns out positive", she said, referring to years of stories disparaging the non-Japanese attributes of Facebook and iPhones before they eventually became market leaders in the country.

Additionally, banks once thought putting ATMs in convenience stores was a risky proposition, she added, and now they practically beg to place their machines there.

While JADA couldn't monitor 100% of bitcoin businesses' actions, Miyaguchi said the same was true of regular businesses regulated by government legislation.

JADA would offer resources, advice and information on best practices, in order to prevent something like Mt. Gox occuring again.

"There's a lot we can do to avoid that kind of situation," Miyaguchi said.

Bitcoin would never become popular in Japan without the endorsement of those in power, she added. In Japan, trust and relationships are considered the most important aspect of business, so progress is usually slow. Once that trust is established, though, acceptance can be swift.

Some in the country have said that Japan doesn't need bitcoin, that its existing e-cash methods work well and people still prefer paper cash over credit cards, which are usually paid off in full each month.

"Japan doesn't always need a practical reason for something to become wildly popular," said Miyaguchi. "People lined up for six hours outside Krispy Kreme when they opened here... Were they any better than the donuts people could get at other places? Not really."