Japan Moves to Boost VC Investments in Web3 Companies Through Cryptocurrency Acquisition Bill
Japan’s government plans to amend LPS laws to allow cryptocurrencies acquisition and holding, aiming to simplify investment processes and support Web3 businesses, boosting domestic startups.
The announcement that a cabinet decision has been made to alter the law that governs Limited Partnership Funds (LPS) was made by the Ministry of Economy, Trade and Industry on February 16, 2024. This is an important step that will help to support the development of Web3 enterprises in Japan, according to Coinpost. Because of this modification, LPS will be allowed to take possession of cryptocurrency and keep them as assets. It is anticipated that the modification would reduce the obstacles that Japanese venture capital (VC) firms face when attempting to participate in projects that solely issue cryptocurrencies. This will make it simpler for Web3 enterprises in Japan to get financing. There is a general consensus among those working in the industry that this new development is positive.
A typical structure for venture capital investments in Japan is known as a restricted Partnership Fund (LPF). This structure is intended to invest in startups that are not listed on any stock exchanges, and the liability of the partners is restricted to the amount of cash that they have contributed. As of right now, the rules that are in place only allow LPS to transfer stocks and other comparable instruments to its investors; cryptocurrencies are not included in this category. Web3 enterprises, who are not permitted to issue conventional shares, have fewer funding choices available to them as a result of this limitation.
The statement has been especially well received by pioneers in the Web3 field, such as Hiro Kunimitsu, CEO of Thirdverse, who brought attention to the difficulties that Web3 initiatives had when attempting to obtain domestic venture capital financing under the existing regulatory framework. With a positive attitude, he stated his hope that the newly enacted law will encourage the establishment of Web3 companies in Japan.
It is anticipated that this legislation reform would not only be beneficial to LPS by increasing the prospects for investment, but it will also be in line with Japan’s larger aim to embrace Web3 technology and enterprises. The measure, which is part of efforts to boost Japan’s industrial competitiveness and foster the establishment of new businesses, will be presented to the 213th regular session of the National Diet, according to the Ministry of Economy, Trade, and Industry, which has indicated that it would be filed.
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