The Japanese government plans to amend the LPS law to allow acquisition and holding of cryptocurrencies, with the goal of boosting domestic startups by simplifying investment procedures and supporting Web3 businesses.
On 16 February 2024, the Ministry of Economy, Trade and Industry announced that it had taken a Cabinet decision to change the law governing limited partnership funds (LPS). This is an important step to help support LPS development. According to Coinpost, among Japanese Web3 companies, this modification allows LPS to own and store cryptocurrencies as assets. This revision is expected to reduce the obstacles that Japanese venture capital (VC) companies face when trying to participate in projects that only issue cryptocurrency. This will make it easier for Web3 companies in Japan to raise capital. There is a general consensus among those involved in the industry that these new developments are positive.
A common structure for venture capital investments in Japan is known as a limited partnership fund (LPF). This structure is intended for investing in startups that are not listed on the stock exchange and the liability of the partners is limited to the amount of cash contributed. Currently, under current regulations, LPSs can only transfer shares and other similar instruments to investors. Cryptocurrencies are not included in this category. Web3 companies that are not permitted to issue existing stock have fewer funding options available to them due to these restrictions.
The statement was particularly well-received by pioneers in the Web3 space, such as Hiro Kunimitsu, CEO of Thirdverse, who noted the difficulties Web3 initiatives have encountered when trying to raise domestic venture capital funding under the existing regulatory framework. In a positive tone, he expressed hope that the newly enacted law would encourage the establishment of Web3 companies in Japan.
This legislative reform is expected to not only benefit LPS by increasing investment prospects, but also align with Japan’s larger goal of embracing Web3 technologies and enterprises. According to Japan’s Ministry of Economy, Trade and Industry, the bill is expected to be submitted to the 213th regular session of the National Assembly as part of efforts to increase Japan’s industrial competitiveness and foster the establishment of new companies. It would have been submitted.
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