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Japan Advances Web3 Growth with Crypto-Friendly Investment Law

In a significant move to bolster the Web3 ecosystem, Japan has taken a strategic step by allowing limited partnership (LP) firms to acquire and hold crypto assets. This initiative is part of a broader effort to stimulate domestic investment in innovative startups, particularly those operating within the cryptocurrency and blockchain domains.

The Ministry of Economy, Trade and Industry (METI) in Japan has greenlit a bill aimed at fostering the growth of new businesses and industries through enhanced domestic investments. This move involves amending four key legislative acts, including the pivotal Act on Investment Limited Partnership Agreements. The amendment is succinctly captured in a statement that outlines the intent to “take measures such as the addition of crypto assets to the assets that can be acquired and held by investment limited partnerships (LPS).”

This legislative revision paves the way for LPs in Japan to channel investments into medium-sized enterprises and burgeoning startups engaged in the cryptocurrency sector, in return for a share of the venture’s profits. The anticipated outcome is a surge in the number of crypto and blockchain startups originating from Japan, bolstered by the conducive regulatory environment.

The amendments extend beyond the realm of cryptocurrencies, touching upon 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 collectively signal Japan’s commitment to nurturing innovation and propelling domestic investment.

Prior to this legislative overhaul, Japanese venture capital entities faced restrictions against investing in crypto assets, compelling Web3 startups in the country to seek financial backing from international investors. The recent cabinet decision, as announced by Masaaki Taira, a prominent member of the House of Representatives, marks a pivotal shift in Japan’s approach to crypto assets and venture capital investment.

Furthermore, Japan is diligently addressing the legal intricacies surrounding the potential issuance of a digital yen, slated for discussion in the spring of 2024. Despite the lack of an official confirmation from the Bank of Japan (BoJ) or the government regarding the launch of a digital yen, any decision on this front is expected to follow a national discourse, projected to commence no earlier than 2026. This comprehensive approach underscores Japan’s strategic vision to position itself as a leading hub for Web3 innovation and investment.

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