Japan Approves Venture Capital Investment in Cryptocurrency Projects

Japanese flag and cryptocurrencies

Japan’s Ministry of Economy, Trade and Industry has approved a proposal allowing investment business limited liability partnerships (LPS) to include cryptocurrency assets in their acquired and held assets. This significant shift enables Japanese venture capital (VC) firms to invest directly in projects issuing only cryptocurrencies, reducing barriers for Web3 startups. The amendment, expected to be submitted to parliament, signals a progressive approach to fostering innovation and investment in the cryptocurrency space.

More Crypto Opportunities for VCs in Japan

Japan‘s Ministry of Economy, Trade and Industry announced on the 16th that it has approved a proposal allowing investment business limited liability partnerships (LPS) to include cryptocurrency assets in their acquired and held assets. This amendment marks a significant shift, enabling Japanese venture capital (VC) firms to invest in projects that issue only cryptocurrencies. The initiative aims to lower the barriers for Japanese Web3 companies to fundraise and operate, garnering widespread approval from the industry.

LPS, a form of investment business association formed to invest in venture companies, operates with limited liability, allowing investments to be limited to the amount contributed. Previously, when startups received investment from LPS, they were restricted to issuing shares and unable to receive cryptocurrencies.

Previous Limitations

According to a tweet by Hiro Kunimitsu, CEO of Thirdverse, the previous legal framework often required Web3 projects to seek funding from foreign VCs, serving as a significant barrier to entry. He expressed hopes that the recent cabinet decision would pave the way for the emergence of many Web3 startups in Japan.

The amendment also benefits LPS, as it expands their investment opportunities. With more investment recipients, as Web3 companies grow, they are more likely to benefit from the government’s Web3 policy.

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

Amendment of Industrial Competitiveness Enhancement Act

The Nikkei newspaper reported on the rule change last September, indicating the government’s intention to submit a revision to the LPS Act to the Diet in 2024.

The Ministry of Economy, Trade and Industry explained that the “Law to partially amend the Industrial Competitiveness Enhancement Act to promote the creation of new businesses and investment in industries” containing the aforementioned provisions is scheduled to be submitted to the 213th Ordinary Diet Session currently in session.

Author: Jinka

Jinka is a self-trained crypto journalist, passionate about happenings in the industry.