Japan cabinet approves bill allowing Japanese VCs to invest in crypto projects

February 19, 2024 03:35 AM PST | By Invezz

Japan cabinet approves bill allowing Japanese VCs to invest in crypto projects — Image source: Invezz

Expanding investment horizons for Japanese VCs

Under previous regulations, Japanese venture capital firms faced limitations in investing in projects centred on crypto assets, such as virtual currencies and non-fungible tokens (NFTs). This regulatory barrier often forced Web3 startups in Japan to seek funding from overseas investors, posing significant challenges for early-stage ventures as highlighted by Hiro Kunimitsu, the former CEO of Gumi Inc., in a tweet on X.

素晴らしい〜！！㊗️

これは簡単に解説しますと、これまでの日本のルールだとVCが暗号資産に投資できなかったのです。プロジェクトによっては株式は発行せずに暗号資産の発行だけといのもあります。(AstarやOasyなど)… https://t.co/In6iNagzXm — 国光宏尚元gumi (Hiro Kunimitsu) (@hkunimitsu) February 16, 2024

However, with the recent approval of the bill, Japanese VCs can now participate in these projects through investment business limited partnerships (LPS), thereby streamlining the funding process for Web3 startups.

The decision to expand the scope of assets that LPS can acquire and hold to include virtual currencies aligns with the government’s efforts to promote the development of Web3 technologies and enhance Japan’s industrial competitiveness. Advocacy from the Japan Crypto Asset Business Association (JCBA) played a pivotal role in driving this regulatory reform, as the association’s recommendations underscored the potential benefits of allowing LPS to engage in activities related to virtual currencies and NFTs.

By enabling Japanese VCs to invest in Web3 projects, the government aims to stimulate innovation, facilitate job creation, and bolster economic growth in Japan. This legislative reform is expected to attract more investors to the Web3 sector, catalyzing the emergence of a dynamic ecosystem for blockchain-based innovations in the country.

As Japan embraces the opportunities presented by Web3 technologies, the stage is set for a new era of entrepreneurship and technological advancement.

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