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Web3 Investment Horizon Expands for Japanese Venture Capitals

Web3 Investment Horizon Expands for Japanese Venture Capitals

Key Takeaways

  • Japan has amended legislation to allow local limited partnerships to invest in Web3 startups by holding crypto assets.
  • This move aims to stimulate domestic innovation and support the emergence of new businesses in the cryptocurrency and blockchain sectors.
  • The initiative reflects Japan's broader strategy to enhance its competitive edge in the global digital economy, encouraging growth and investment in the burgeoning Web3 space.

Japan has set the stage for a significant shift in the cryptocurrency environment by enabling local limited partnership firms (LPs) to delve into Web3 startups through strategic investments.

The Ministry of Economy, Trade, and Industry (METI) of Japan has introduced a bill aiming to "expand strategic domestic investment."

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How to Avoid Major Crypto Investment Risks? (Beginner-Friendly)

How to Avoid Major Crypto Investment Risks? (Beginner-Friendly) How to Avoid Major Crypto Investment Risks? (Beginner-Friendly)

One act of the bill includes a revision of the Limited Partnership Act for Investment, which is poised to transform the investment framework for Japanese venture capitals (VCs), allowing them to incorporate cryptocurrency assets into their investment portfolios.

Before the bill, Japanese VCs faced a ban on crypto asset investments, compelling Web3 startups to seek financial backing from international sources. 

A translated statement from the revision highlights this shift:

Measures will be taken to add crypto assets to the list of assets that can be acquired and held by investment limited partnerships (LPs).

With this regulatory evolution, Japanese LPs now have the green light to channel investments into medium-sized enterprises and burgeoning startups within the crypto and blockchain realms, securing a stake in these ventures' profits.

The amendments of the bill extend beyond this act, also touching upon the enhancement of industrial competitiveness, industrial property rights, and support for business development activities.

This development is anticipated to catalyze the growth of Web3 startups in Japan, marking a departure from the previous reliance on foreign investment due to regulatory constraints. These changes underscore Japan’s commitment to fostering innovation and amplifying domestic investment in cutting-edge technologies.

Another significant moment for Japan's blockchain environment and Web3 startups happened in September 2023, when the Financial Services Agency proposed crypto tax changes, alleviating tax burdens for domestic firms.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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