Japan to allow VC investments in crypto and Web3 startups

Japan’s Ministry of Economy, Trade and Industry (METI) has approved a bill that paves the way for limited partnership (LP) firms in Japan to invest in and hold crypto assets.

The legislative change will reportedly increase domestic investments in medium-sized companies and startups engaged in the cryptocurrency space, leading to a surge in crypto and blockchain startups based in Japan.

Prior to these amendments, Japanese venture capital firms faced restrictions against investing in crypto assets, driving Web3 startups to seek financial backing from foreign investors.

Masaaki Taira, a member of the Japanese House of Representatives, heralded this development, highlighting its potential to boost the nation’s Web3 community and attract innovative ventures to the country.

Furthermore, Japan is taking careful steps toward the introduction of a digital yen, with discussions around its issuance slated for the spring of 2024. However, the decision to officially launch the digital yen will not be made until after a national discussion, expected no earlier than 2026.

The trial also included scenarios where a single user possessed multiple accounts with multiple intermediaries. Additionally, user convenience in initiating and scheduling payments was evaluated during this phase of the experiment to assess the CBDC’s ability to facilitate smooth payment transactions.

Earlier in 2023, Japan’s Finance Ministry created an advisory panel to look at the feasibility of issuing a central bank digital currency.

The launch of the panel coincides with the start of a CBDC pilot program following two years of proofs of concept (PoC). The BOJ, financial institutions and other private-sector participants will conduct simulated transactions under the pilot program in a test environment. However, the central bank does not plan to conduct actual transactions among retailers and consumers.

Additionally, three Japanese banks are set to develop a payment system that integrates their stablecoins on a public blockchain while satisfying legal requirements.

Japan’s financial regulator was also seeking feedback on allowing domestic distributors to handle stablecoins issued outside the country on the condition that they maintain sufficient collateral.

These steps are part of Japan’s efforts to promote the growth of its blockchain and cryptocurrency sectors in line with the government’s push for “new capitalism,” as stated by Prime Minister Fumio Kishida.

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