Japan has from the very start been associated with bitcoin, partly because of the legend of the pseudonym Satoshi Nakamoto (who may or may not have any connection with Japan) and partly because of the well publicized collapse of one of the earliest and largest bitcoin exchanges, Mt Gox. Indeed, it was the collapse of Mt Gox in 2014 that led to the Japan Financial Services Agency, looking into the legality of all things associated with bitcoin.
Their research led them to the conclusion that the potential benefits of blockchain technology are substantial and that Japan should seek to become a regional leader in the development of the technology.
It is therefore not surprising that Japan is one of the first countries in the world to legislate to bring bitcoin exchanges under KYC/AML laws and at that same time recognise bitcoin as a form of payment. This legislative initiative is one of a series that Japan will enact as part of a program to upgrade their laws to deal, in a positive way, with bitcoin, other crypto currencies and blockchain technology in general.
Coindesk have a number of good articles on legal developments in Japan, read more here.