Japan's Ministry Of Finance Unveils Web3 Initiative For Local VCs
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Supporting Web3 Adoption

Japan is actively encouraging the growth of Web3 startups by making a deliberate push to enhance domestic investment. Japan’s Ministry of Economy, Trade, and Industry (METI) recently approved a pivotal measure to encourage the achievement of this objective.

The law significantly changes four fundamental pieces of legislation, emphasizing the Act on Investment Limited Partnership Agreements. These modifications aim to facilitate domestic investments by allowing limited partnership (LP) entities to acquire and hold crypto assets.

Limited partners can now invest in and hold cryptocurrencies as part of their portfolios. The updated bill’s text reflects the Ministry’s commitment to supporting innovation and new business creation.

Specifically, the amendment intends to widen the area of assets that investment LPs can acquire and hold to include cryptocurrency assets. This forward-thinking attitude is consistent with the global movement to embrace the promise of blockchain and decentralized technologies. By adopting these moves, Japan hopes to put itself at the forefront of the growing digital asset landscape.

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Latest Amendment

Furthermore, this shift allows LPs to actively participate in financing enterprises involving digital currency while retaining a proportional stake in the resulting earnings. As a result, the local Web3 community forecasts an increase in the number of cryptocurrency and blockchain firms in Japan.

This strategic decision is consistent with Japan’s goal of promoting innovation and local investment. In addition, the legislation is expected to significantly impact the cryptocurrency sector, adding to the country’s technical and economic diversification.

Furthermore, the amendments in parallel with the Act on Investment Limited Partnership Agreements demonstrate Japan’s commitment to creating an environment conducive to technological progress and economic growth. These amendments would affect the Industrial Property Information and Training Center Act, the New Energy and Industrial Technology Development Organization Act, and the Industrial Competitiveness Enhancement Act,

These legislative changes encourage further investment in the fast-rising cryptocurrency sphere and act as cornerstones for Japan’s broader aim of encouraging innovation across all sectors.

Removing Prohibition On Venture Capitals

Before these amendments, venture capital firms were prohibited from investing in cryptocurrency. This limitation pushed Japan-based Web3 businesses to seek funding actively from international investors.

While speaking on the matter, Masaaki Taira, a member of the House of Representatives, noted that the move is pivotal for Japan’s blockchain and crypto industry. He added that the Cabinet decided to improve investment limited partnerships (LPS) by including crypto assets on the list of authorized holdings.

One of the side benefits of this landmark achievement is that it will allow venture capital companies to participate in cryptocurrency and promote a more self-sufficient ecosystem for Web3 enterprises. The decision is consistent with the worldwide trend of incorporating digital assets into traditional investment portfolios.

Simultaneously, Japan is working to address legal issues around the prospective launch of a digital yen in the spring of 2024. According to a January 2024 report, neither the Bank of Japan (BoJ) nor the government has formally announced the implementation of the digital yen. Meanwhile, any decision on its adoption would be subject to a complete national discourse scheduled for 2026.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.

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