Japan’s Groundbreaking Regulatory Move: Start-ups Empowered to Fundraise Using Cryptocurrency Instead of Traditional Stocks

Japanese Government Relaxes Regulations to Allow Crypto Funding for Startups

In a significant move for the crypto industry, the Japanese government has announced a relaxation of regulations that now allows startups to accept digital assets as a form of funding, instead of traditional stocks. This development aims to foster a more supportive and inclusive environment for startups, while also aligning Japan with international standards in handling digital currencies.

According to a report by a Japanese media outlet, the regulatory shift is intended to diversify the financing options available to startups, ultimately paving the way for crypto-backed startups. The new system allows startups to receive investments in the form of crypto through a fund called the Investment Business Limited Liability Union (LPS). This fund consists of multiple benches dedicated to investing in securities issued by startups.

This recent development follows the approach taken by Japan’s primary financial regulatory authority, the Financial Services Agency (FSA), which proposed amendments to the tax code related to digital currencies. The FSA’s proposal focuses on exempting domestic companies from the current “unrealized gains” tax on cryptocurrencies, which is typically imposed at the end of each fiscal year. By aligning with other countries where taxes on crypto assets are only applicable when converted into fiat currency, Japan hopes to create a more favorable environment for fostering Web3 technologies and encouraging blockchain-based startups.

The Ministry of Economy, Trade, and Industry has expressed support for the FSA’s proposal, increasing its chances of acceptance. If implemented, this reform could have significant implications for the Japanese digital market, boosting startups and encouraging innovation in the blockchain sector.

The decision to embrace crypto as a legitimate form of investment for startups is expected to have broad implications for the digital currency market in Japan. By allowing startups to accept crypto investments, this change could increase accessibility and expand the pool of potential investors, attracting a more comprehensive range of stakeholders, including individual investors and cryptocurrency enthusiasts. This broader accessibility will promote greater startup funding democratization.

Moreover, startups receiving crypto investments will enjoy enhanced liquidity. They will have the flexibility to trade or utilize these assets for various purposes, providing them with additional capital for growth and expansion.

Additionally, the government’s decision is likely to stimulate the growth of the digital currency market in Japan. The increased demand for cryptocurrencies from startup investments could lead to a surge in trading volume and market activity. This, in turn, presents opportunities for existing exchanges and fosters the emergence of new platforms.

These recent developments in Japan signal a positive shift in the country’s approach to the crypto industry and its recognition of the potential of blockchain technology. With a more supportive environment for startups and increased accessibility to funding, the Japanese crypto ecosystem is set to flourish.

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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