Japan opens up Web3 investments for local VCs

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Japan aims to increase strategic domestic investments into Web3 startups by allowing limited partnership (LP) firms to acquire and hold crypto assets. 

The Ministry of Economy, Trade and Industry (METI) in Japan approved a bill to promote the creation of new businesses and industries via increased domestic investments by amending four key acts, including the Act on Investment Limited Partnership Agreements. A rough translation of the revision reads as follows:

“We will take measures such as the addition of crypto assets to the assets that can be acquired and held by investment limited partnerships (LPS).”

The amendment allows LPs in Japan to invest in medium-sized companies and startups dealing with cryptocurrencies in exchange for a proportionate share of the venture’s profits. Consequently, the Web3 community in the region expects a rise in the emergence of crypto and blockchain startups originating in Japan. 

Related: Japan’s regulator suggests ‘stopping’ P2P transfers from fiat to crypto

The other amendments in the Industrial Property Information and Training Center Act, the New Energy and Industrial Technology Development Organization Act and the Industrial Competitiveness Enhancement Act further support Japan’s intent to promote innovation and catalyze domestic investment.

Before the bill’s approval, Japanese venture capital firms were prohibited from investing in crypto assets. As a result, the Web3 startups in Japan often eyed support from overseas investors. Masaaki Taira, a Japanese politician who is a member of the House of Representatives, announced the development:

“Cabinet decision has been made! Measures will be taken to add crypto assets to the list of assets that can be acquired and held by investment limited partnerships (LPS).”

In addition, Japan is also working on resolving the legal issues related to issuing a digital yen in the spring of 2024. A report published on Jan. 26 said that neither the Bank of Japan (BoJ) nor the government had officially confirmed the launch of the digital yen and that any decision around it would be taken after “a national discussion,” which will happen no sooner than 2026.

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