Web3 Investment: Japan Considers Relaxing Crypto Investment Rules for Venture Capital Firms
Japan is reportedly planning to ease regulations on venture capital (VC) investments in Web3 companies, a move that could have significant implications for the country's startup ecosystem. The nation's Ministry of Economy, Trade, and Industry, in collaboration with media outlet CoinPost, announced that the cabinet has approved a proposal to allow VC firms to hold cryptocurrencies.
Currently, VC investments in Japan are governed by Limited Partnership Funds (LPSes), which typically invest in unlisted companies and startups. However, until now, these funds were not permitted to hold crypto assets. Last year, the ministry expressed its intention to allow LPS operators to invest in security tokens but excluded cryptocurrencies. The latest announcement indicates a shift in the government's stance, with the cabinet agreeing to include crypto assets in the list of permissible assets for LPS investments.
This development could potentially revolutionize the fundraising landscape for Web3 firms in Japan. Under the existing rules, startups could only offer VC firms shares in their company, as the law prevented them from providing crypto assets to LPS investors. CEO of Thirdverse, Hiro Kunimitsu, highlighted that this restriction posed a significant barrier to entry for Web3 projects, forcing them to seek funding from overseas VCs. However, with the proposed relaxation of rules, Kunimitsu sees this decision as a major opportunity for Japanese Web3 startups.
Reports suggest that this move has been in the works since September of last year, and the government intends to submit a bill to parliament sometime in 2022. While parliamentary approval is still required for any proposed amendments, it is worth noting that no government-backed crypto legislation has been rejected in Japan thus far.
In other news related to the crypto industry in Japan, the city of Kochi recently unveiled plans to create a virtual city on a metaverse platform in an effort to attract tourists and promote local products. Additionally, the top financial regulator in Japan has urged banks to heighten scrutiny of crypto-related transfers amid concerns over token-related fraud.
Overall, Japan's potential relaxation of crypto investment rules for VCs represents a significant development in the country's efforts to foster innovation in the Web3 space. If approved, it could open up new avenues of funding for Japanese startups and position the country as a hub for Web3 innovation.
Analyst comment
Positive news: VC crypto investment rules could be relaxed in Japan, allowing venture capital firms to invest in Web3 companies. This could revolutionize funding for Japanese Web3 startups, providing a major opportunity and removing a major barrier to entry. This move is likely to have a positive impact on the market, promoting growth and innovation in the crypto sector.
