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VC Crypto Investment Rules Could be Relaxed in Japan
Japan is considering allowing venture capital firms to invest in Web3 companies, marking a potential shift in the investment landscape. The Ministry of Economy, Trade, and Industry has announced plans to relax laws governing venture capital investments in crypto assets, potentially providing a major opportunity for Japanese Web3 startups.
Background on Limited Partnership Funds (LPS)
The Japanese Cabinet aims to change laws related to Limited Partnership Funds (LPS), which typically invest in unlisted companies and startups. Previously, the Limited Partnership Act of 1998 restricted LPS operators from investing in cryptoassets. However, the recent announcement suggests a forthcoming relaxation of this rule, potentially revolutionizing the fundraising options for Web3 firms in Japan.
Potential Impact on Web3 Startups
Under the current rules, startups in Japan can only offer VCs shares in their companies, as the law prohibits them from providing crypto to LPS investors. This restriction has forced many Web3 projects to seek funding from overseas VCs, creating a significant hurdle for domestic startups.
CEO’s Perspective
Hiro Kunimitsu, CEO of Thirdverse, highlighted the challenges faced by Web3 projects in Japan due to the inability of local VCs to invest in cryptoasset-related firms. He emphasized that the Cabinet’s decision could present a major opportunity for Japanese Web3 startups, potentially eliminating the need for overseas financing.
Government’s Plan and Legislative Process
The government’s move to relax VC crypto investment regulations has reportedly been in progress since last year, with plans to submit a bill to parliament for approval. Despite the need for parliamentary endorsement, past government-proposed crypto legislation in Japan has consistently received approval.
Other Developments
In addition to the potential changes in VC crypto investment rules, recent initiatives in Japan include the creation of a virtual city on a metaverse platform to attract tourists and promote local products. The financial regulator has also urged banks to increase scrutiny of crypto-related transfers to combat potential token-related fraud.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
