The United States government is taking a new and early approach to spur commercial development of space. The Federal Aviation Administration (FAA) has started issuing companies licenses to own land on the moon.

In a letter to space technology company, Bigelow Aerospace, the FAA says it intends to modify its licensing regulations to "encourage private sector investments in space systems by ensuring that commercial activities can be conducted on a non-interference basis," according to Reuters.

Under such license, the company that develops inflatable space habitats, will have exclusive rights to a territory and related areas on the moon, where it can set up an inflatable habitat and perform mining and exploration.

However, this initiative was met with hesitation by the US State Department, which reminded the FAA that the US is a signatory to the 1967 United Nations treaty, which governs activities on the moon.

The UN Outer Space treaty requires countries to authorize and supervise non-government entities operating in space.

"We didn't give (Bigelow Aerospace) a license to land on the moon. We're talking about a payload review that would potentially be part of a future launch license request. But it served a purpose of documenting a serious proposal for a US company to engage in this activity that has high-level policy implications," George Nield, associate administrator for the FAA's Office of Commercial Transportation who wrote the letter told Reuters.

The letter was written in coordination with US departments of State, Defense, Commerce, as well as NASA and other agencies involved in space operations.

Bigelow Aerospace plans to test a space habitat at the International Space Station this year, and then operate free-flying orbital outposts for customers, including government agencies, research organizations, businesses and even tourists. In 2025, it intends to launch a $12 billion project of a series of bases on the moon.