Currently, Japanese venture capital firms and limited liability partnerships (LLP) cannot invest directly in cryptocurrency owing to regulatory restrictions. Their investments are limited to conventional ones. According to the Nikkei newspaper, there are plans to update the LLP law, which could mean many more Japanese startups issue digital assets for fundraising.
At the end of August, we reported that MUFG was looking to set up crypto trusts to hold tokens. One of the primary targets is institutional investors operating through limited liability partnerships precisely because LLPs cannot hold tokens directly.
Globally, most web3 firms raise capital via tokens. So the restriction prevented Japanese venture firms and institutional investors from participating in the blockchain boom (and bust). This might partly explain why the likes of SBI and Swiss-based Sygnum set up a joint venture fund in Singapore to invest in web3. Nomura incorporated its digital assets subsidiary, Laser Digital, in Switzerland.
There’s also a requirement that LLPs invest at least half of their assets domestically. Now that restriction may be dropped as well.
Meanwhile, MUFG is collaborating with various web3 startups and initiated a study group on the topic. Members and partners include wallet provider Ginco and sports fan token firm Financie, which also provides an Initial Exchange Offering (IEO) support business for token issuers.