Japan Considers Easing Financing Rules: Venture Funds Can Invest in Startups Using Cryptocurrencies

Introduction

Japan is poised to revamp its financial regulations, allowing startups to raise capital through both traditional shares and cryptocurrencies.

New Financing Pathways for Startups

The renowned Japanese publication, Nikkei News, recently reported that Japan is on track to relax restrictions on startups’ fundraising methods. The new provisions aim to let these companies accept digital assets when securing funding from venture capital funds, streamlining the capital acquisition process for emerging crypto ventures.

（Image via Cryptonica）

Optimizing Startups’ Access to Funds

The proposed rule changes would apply to funds operated by Limited Partnership for Investment (LPS), established by multiple venture capital firms to invest in startups. The Japanese government is planning to present amendments to the LPS act to the National Diet in 2024. If passed, cryptocurrencies would be included as viable investment targets.

Analysts predict this shift would make it easier for individual investors and venture capital firms to invest in startups. Consequently, there would be an uptick in available capital for both Web3 companies and those wishing to penetrate the crypto sector, thereby improving their financing ease.

（Image via Cryptopolitan）

Japan Proposes Cryptocurrency Tax Law Amendments

Japan’s proactive approach doesn’t stop at fundraising. With the ongoing evolution of the crypto sector, Japan continuously adopts measures to keep pace. As per current Japanese regulations, companies holding cryptocurrencies are obliged to pay taxes on unrealized gains at the end of each fiscal year.

However, a notable move by Japan’s Financial Services Agency (FSA) on August 31 proposed changes to the cryptocurrency tax laws. The recommendation suggests waiving taxes on unrealized crypto gains by domestic companies at the year’s end. This initiative is expected to bolster the inclination of Japanese enterprises towards holding cryptocurrencies.

Conclusion

These proposed changes reflect Japan’s dynamic approach to embracing the world of cryptocurrencies and ensuring its startups and businesses have the tools they need to thrive in the digital age.

Keywords: Japan, financing regulations, startups, cryptocurrencies, Nikkei News, venture capital funds, Limited Partnership for Investment, LPS act, Web3 companies, Financial Services Agency, tax laws