Japan Cabinet Approves Bill Allowing VCs to Invest in Web3 Cryptocurrency Tokens

Japan’s cabinet has approved a bill that would allow limited liability partnerships (LLPs) including venture capitalist (VC) firms to invest in Web3 cryptocurrency tokens. Called the Industrial Competitiveness Enhancement Act, the measure is meant to advance the creation of new business and investment in Japan’s industries.

If the legislation passes, it would loosen Japan’s strict VC cryptocurrency investment rules and finally grant Web3 startup firms that only issue cryptocurrencies access to venture capitalist funding. Local media reported that the national cabinet approved certain revisions to the proposed measure such as adding cryptocurrency assets to the list of assets that can be acquired by investment business limited partnerships (LPS). Investment business limited partnerships are funds that typically invest in unlisted startups and companies.

Existing rules prevent LPS operators and VCs from holding cryptocurrency assets and have significantly limited capital access in the nascent Web3 cryptocurrency space. Given that the Japanese parliament has approved every government-proposed cryptocurrency legislation so far, lawmakers will likely approve the amendments. Once it is approved, the measure will grant Web3 startups and companies unprecedented access to capital.

In the meantime, VCs interested in investing in the Web3 crypto space have found ways around the country’s investment policies. Tokyo-based global investment bank and financial services group Nomura headquartered its cryptocurrency firm Laser Digital in Switzerland while Strategic Business Innovator Group (SBI Holdings) launched a fund in Singapore. The bank announced that it had partnered with engineering contracting startup Ginco to create an enterprise wallet solution for its cryptocurrency asset trust services in August 2023.

MUFG Bank, the latest bank in Japan and one of the largest financial institutions on the globe, has also considered creating crypto tools that would allow venture capitalist firms to invest in cryptocurrency tokens indirectly through trusts. According to bank officials, MUFG developed cryptocurrency services for several years before the government’s ban on bank crypto activities forced it to stop.

The government banned banks from taking part in cryptocurrency activities in 2018 after hackers stole more than half a billion dollars worth of crypto coins from cryptocurrency exchange CoinCheck. Four years before that, hackers made away with 850,000 Bitcoins worth $473 million ($22.3 billion today), which led to the collapse of the Mount Gox crypto exchange.

Japan is a leader in cryptocurrency regulation and one of the most forward economies in Web3 and blockchain technology. The East Asian nation has one of the largest volumes of real-world asset (RWA) tokenization compared to other nations, particularly in the real estate sector.

As Japan is taking steps to enable the entry of VCs into the Web3 investment arena, several North American companies, such as NextPlat Corp. (NASDAQ: NXPL) (NASDAQ: NXPLW), are already leveraging a number of Web3 applications to enhance their e-commerce services to clients.

NOTE TO INVESTORS: The latest news and updates relating to NextPlat Corp. (NASDAQ: NXPL, NXPLW) are available in the company’s newsroom at https://ibn.fm/NXPL

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