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Japan has approved a bill to add crypto assets to the list of allowed investments for domestic venture capital and investment funds. The move represents a major step in embracing innovation in digital assets by the Asian tech powerhouse.
Japan has already introduced a stablecoin framework and outlined plans to promote Web3 technology. The country also maintains a strict stance on user protection in this area.
A newly approved bill would allow venture capital firms to invest in and acquire crypto assets.
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The purpose of the revised Industrial Competitiveness Enhancement Act is to “promote the creation of new businesses and investment in industry” and to “intensively support mid-sized companies and emerging companies” (according to a person involved).
The Ministry of Economy, Trade and Industry (METI), which approved the amendment, specified that it covers the addition of crypto assets to the list of permissible holdings under investment business limited partnerships (LPs).
Japanese VC firms previously faced virtual currency bans
Previously, Japanese VC firms faced a ban on crypto-related investments, often forcing local Web3 startups to raise funds from overseas backers. Industry players hope deregulation will free up domestic capital and spur innovation.
The series of amendments also adjusts the legal treatment of cryptocurrencies for other entities such as the Industrial Property Information and Training Center and the New Energy and Industrial Technology Development Organization.
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This development is in line with Japan’s approach of encouraging blockchain innovation through regulation rather than restrictions. The country is preparing to introduce a digital yen on a trial basis as early as next spring, and efforts to introduce it are likely to accelerate further.
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