Japan’s Web3 Investments Open to Local VCs

Japan has taken a significant step towards increasing investments in Web3 startups by allowing limited partnership (LP) firms to acquire and hold crypto assets. The Ministry of Economy, Trade and Industry (METI) in Japan has approved a bill to promote the growth of new businesses and industries through domestic investments by amending four key acts, including the Act on Investment LP Agreements. The amendment specifically states that crypto assets can now be included among the assets that can be acquired and held by investment limited partnerships.

This new legislation enables LPs in Japan to invest in medium-sized companies and startups involved in cryptocurrencies, in exchange for a share of the venture’s profits proportional to their investment. As a result, the Web3 community in Japan expects to see a surge in the number of crypto and blockchain startups originating from the country. The other amendments made to acts such as the Industrial Property Information and Training Center Act, the New Energy and Industrial Technology Development Organization Act, and the Industrial Competitiveness Enhancement Act further emphasize Japan’s commitment to promoting innovation and encouraging domestic investment.

Previously, Japanese venture capitalists were prohibited from investing in crypto assets, which often led Web3 startups in Japan to seek support from overseas investors. With this new development, LPs in Japan can now invest directly in crypto assets, providing a boost to the local startup ecosystem. Masaaki Taira, a member of the House of Representatives in Japan, shared the news, stating that crypto assets will now be added to the list of assets that can be acquired and held by investment limited partnerships.

In addition to facilitating investment in crypto assets, Japan is also working on resolving the legal issues associated with the launch of a digital yen by spring 2024. Neither the Bank of Japan (BoJ) nor the government has officially confirmed the introduction of a digital yen. Any decision regarding this matter will be made after a national discussion, which is not expected to occur until 2026 at the earliest, according to a report published on January 26.

Japan’s decision to allow LPs to invest in crypto assets marks a significant milestone in the country’s efforts to promote innovation and increase domestic investment. With the emergence of more crypto and blockchain startups, Japan aims to position itself as a leading player in the Web3 space. The government’s ongoing discussions regarding the digital yen demonstrate their commitment to exploring the potential of digital currencies and finding suitable solutions within the legal framework.