Japan has approved a proposal allowing venture capital firms in the country to make direct investments in projects exclusively focused on cryptocurrencies.
This decision follows an announcement by the Ministry of Economy, Trade, and Industry on February 16, 2024, stating that the Cabinet has decided to include crypto assets (virtual currency) in the list of assets that investment business limited partnerships (LPS) can acquire and retain.
Japanese venture capital entities can now directly invest in crypto assets, signifying a significant departure from previous restrictions.
These updated regulations are poised to boost the financial backing and involvement of Japanese venture capital firms in projects exclusively centered on cryptocurrencies.
This shift reflects an increasing recognition of the significance and potential of digital assets within the Japanese investment sector.
To solidify these changes, the Japanese government plans to submit a draft amendment to the parliament, with discussions and potential implementation expected as early as 2024.
Japan has been a major player in the cryptocurrency market, with a positive outlook for the industry. While it has never banned the use of cryptocurrencies, Japan cautioned its nationals in the use of cryptocurrencies.
The Financial Services Agency (FSA) of Japan has advised the public to exercise caution when dealing with cryptocurrencies, particularly in light of the potential risks associated with unlawful activities and cybersecurity breaches.
The FSA has also implemented strict regulations to ensure that crypto exchanges operate transparently and securely, providing greater protection to investors.
In April 2017, the Payment Services Act (PSA) recognized Bitcoin and other virtual assets as legitimate property.
Since then, the country has established AML/CFT responsibilities, KYC checks, and record-keeping standards to ensure that crypto exchanges operate transparently and securely.
In addition, the FSA lifted the ban on the domestic distribution of foreign-issued stablecoins in 2023, as Statista projects that the market volume of cryptocurrencies in Japan is projected to grow by 8.02% between 2024 and 2028, reaching US$2613.0 million in 2028.
