Japan is seeking to relax its venture capital (VC) crypto investment rules, allowing VCs to invest in Web3 startups that only issue cryptocurrencies.
Japan is seeking to relax its venture capital (VC) crypto investment rules, allowing VCs to invest in Web3 startups that only issue cryptocurrencies. According to local media outlet Coinpost, the Japanese Cabinet has approved revisions to the Act on Strengthening Industrial Competitiveness.
As part of the proposed amendments, the Cabinet seeks to add crypto assets to the list of assets that investment business limited partnerships (LPS) can acquire. LPSes are typically funds that invest in unlisted companies and startups.
The legal reform has been submitted to the legislative body and will be debated on.
Previously, LPS operators were prohibited from holding crypto assets. If approved, the move would allow VCs to invest directly in cryptoassets, potentially revolutionizing the way Web3 firms raise funding in Japan. Under existing rules, startups can only offer VCs shares in their companies, as the law blocks them from giving LPS investors crypto.
The government plans to submit a bill to parliament later this year to formalize the changes to the VC crypto investment rules. Lawmakers would still need to approve the amendment, but no government-proposed crypto legislation has failed to receive parliamentary approval in Japan so far.
This move comes amidst great scrutiny over “unlawful” crypto transactions to exchanges. The Financial Services Agency (FSA), Japan's financial regulator, has requested banks to strengthen monitoring as it attempts to clamp down on fraudulent crypto transactions.
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