The revision of the laws in Japan for the crypto and Web3 world

In a significant move to embrace the burgeoning world of crypto and Web3 technologies, Japan is considering allowing some venture capital firms to invest directly in startups operating in these sectors.

The proposed revision of the laws in Japan for the crypto and Web3 world

This proposed overhaul of existing laws could potentially open up a number of opportunities for both local entrepreneurs and investors, marking a pivotal moment in Japan’s journey towards the future of finance and technology.

In a groundbreaking decision, the Japanese Cabinet has approved a proposal that aims to add cryptocurrencies to the list of assets that local limited partnerships can acquire or hold.

This announcement, made by the Ministry of Economy, Trade and Industry on February 16, highlights Japan’s intention to promote innovation and support the growth of its startup ecosystem.

According to a statement released by the ministry, the approved revision, which involves changes to the Law on Strengthening Industrial Competitiveness, aims to expand strategic investment initiatives to provide vital support to local startups and medium-sized enterprises.

As part of these amendments, venture capital firms will have the opportunity to invest in projects that exclusively issue cryptocurrencies, as reported by local news agency Coinpost.

The bill, having received cabinet approval, has now been submitted to the legislative body for deliberation, demonstrating the government’s commitment to promoting regulatory frameworks that facilitate innovation and investment in emerging sectors.

The venture capital process in Japan

In Japan, limited partnerships traditionally serve as vehicles for investing in unlisted companies, a common practice for venture capitalists seeking to back early-stage startups.

However, prior to this proposed overhaul, Japanese venture capital firms were not allowed to invest in cryptocurrencies, which posed a significant barrier to funding crypto and Web3 projects in the country.

Hiro Kunimitsu, founder and CEO of Gumi Inc, a major Japanese video game development company that has ventured into blockchain investing through gumi Cryptos Capital, highlighted the challenges Japanese crypto projects face in obtaining funding from venture firms foreign capital.

Kunimitsu highlighted the transformative potential of allowing Japanese VCs to invest directly in these projects, seeing it as a significant opportunity for the thriving Web3 startup ecosystem in Japan.

The move is in line with Prime Minister Fumio Kishida’s vision of promoting a “new capitalism” in Japan, with a focus on promoting the country’s Web3 industry.

In line with this goal, the Japanese Cabinet had already approved an overhaul of the tax regime in December, paving the way for potential tax exemptions on unrealized profits from cryptocurrencies, a measure aimed at incentivizing innovation and investment in the digital asset space .

Conclusions

The proposed overhaul to allow some VCs to invest directly in crypto and Web3 startups signals a broader shift in Japan’s approach to embracing disruptive technologies and positioning itself as a hub for innovation in the global landscape.

By creating an enabling regulatory environment and providing targeted support to emerging sectors, Japan aims to leverage its technological prowess and entrepreneurial spirit to drive economic growth and competitiveness in the digital age.

This legislative initiative not only reflects the evolving nature of the financial and technological landscape, but also highlights Japan’s determination to remain at the forefront of innovation in an increasingly digitalized world.

As the government continues to engage with stakeholders and refine regulatory frameworks, a new era of collaboration and growth opens up, where crypto and Web3 startups can thrive and contribute to Japan’s economic renaissance in the 21st century.