Japan is looking to ease restrictions on venture capital (VC) investments in the crypto space, aiming to allow VCs to support startups in the Web3 sector that solely deal in cryptocurrencies. As reported by local media outlet Coinpost, the Japanese Cabinet has greenlit revisions to the Act on Strengthening Industrial Competitiveness.
The proposed changes include adding crypto assets to the list of assets that investment business limited partnerships (LPS) can hold. Typically, LPSes are investment funds focused on unlisted companies and startups.
These legal adjustments are now awaiting debate in the legislative body after submission.
Previously, LPS operators were barred from holding crypto assets. If the revisions are approved, VCs could directly invest in cryptocurrencies, potentially transforming how Web3 companies in Japan secure funding. Presently, startups can only offer VCs equity shares due to regulations preventing them from providing LPS investors with crypto assets.
The government aims to present a bill to parliament later this year to formalize these changes to VC crypto investment rules. While parliamentary approval is still required, crypto-related legislation proposed by the government has historically been successful in Japan.
This initiative unfolds against a backdrop of increased scrutiny on “unlawful” crypto transactions via exchanges. Japan’s financial regulator, the Financial Services Agency (FSA), has urged banks to intensify monitoring efforts as part of its crackdown on fraudulent crypto activities.
