Japan's government said Bitcoin is not a currency but that some transactions using the virtual unit should be taxed.
"If there are transactions and subsequent gains, it is natural...for the finance ministry to consider how it can impose taxes," said chief cabinet secretary Yoshihide Suga.
Japan also said banks cannot provide bitcoin as a product to customers.
The government is trying to determine the total volume and value of bitcoins in circulation around the world.
China ban
Some estimates put the global market for Bitcoins, a virtual currency created, or 'mined' through complicated computer algorithms, at about $7bn (£4.2bn).
Countries and their tax authorities have been grappling with how to regulate it, with some seeing it as a route for tax evasion or money laundering.
Russia has declared transactions illegal, China has banned its banks from handling Bitcoin trades, and there have been calls for the US to do the same.
Singapore has imposed a tax on Bitcoin trading and using it to pay for services, after classifying it as goods, rather than a currency.
Last month leading Bitcoin exchange, Tokyo-based MtGox, filed for bankruptcy after losing an estimated 750,000 of its customers' Bitcoins.
Source: BBC News
