Japan to Allow Investment Funds Hold Digital Assets Directly

Prime Minister Fumio Kishida’s administration in Japan has taken significant steps towards permitting venture capital firms and investment funds to directly hold digital assets. The cabinet approved the text of a bill on February 16th, aiming to amend the country’s industrial competitiveness enhancement act to accommodate this change.

The proposed bill seeks to include cryptoassets in the list of assets that can be acquired and held by investment limited partnerships, a vehicle commonly utilised by venture capital firms to secure capital for investments. This move signifies a significant shift in Japan’s regulatory landscape concerning digital assets.

Fumio Kishida’s economic agenda prioritises support for the growth of web3 firms, referring to a decentralised version of the internet underpinned by blockchain technology. Japan, historically perceived as having stringent regulations in the digital-asset sector, is now taking steps to ease some of these rules, particularly in token listings and taxation.

The government intends to submit the bill for debate in the current session of the Diet, Japan’s parliament. If approved, this amendment would broaden Japan’s investment sector, allowing for increased exposure to digital assets. Investments in web3 startups often involve clauses that allocate tokens to backers, with cryptocurrencies serving as a means to exit investments earlier than traditional routes like stock market listings.

The proposed legislation reflects Japan’s evolving approach to digital assets, aligning with global trends towards embracing blockchain technology and cryptocurrencies in investment practices. As Japan moves towards accommodating digital assets within its regulatory framework, stakeholders anticipate further developments that could shape the country’s position in the rapidly evolving digital economy.