Breaking Barriers: Japan’s Startups Embrace Cryptocurrency Capital

Japan has relaxed regulations to permit startups to raise investment funds through cryptocurrencies. With this, the Japanese government now allows startups the flexibility to secure capital using crypto assets in addition to conventional stocks. 

This recent regulatory shift marks a significant turning point in Japan’s cryptocurrency stance, which had previously imposed stringent limitations on the utilization of digital assets. The primary goal of this reform is to welcome a growth-oriented environment for domestic businesses. 

Moreover, this policy aims to expand startup funding avenues, aligning Japan’s cryptocurrency approach with global standards. Japanese startups stand to gain fresh prospects and opportunities as this forward-looking framework comes into effect.

Although the right to issue stablecoins remains limited to regulated institutions, such as banks and remittance service providers, the crypto industry has warmly received this change. 

Under the newly proposed framework, startups can now attract investments in cryptocurrency through the Investment Business Limited Liability Union (LPS), which consists of several specialized divisions supporting securities issued by participating businesses. 

This move follows the FSA’s August 31 proposal, which, if enacted, would free local businesses from the existing “unrealized gains” tax on crypto assets, typically imposed at the end of each fiscal year. 

Japan’s new approach is anticipated to simplify investment processes for individual investors and venture capitalists, benefiting virtual currency startups, particularly those in the Web3 sector. This shift may lead to increased venture capital inflow and enable startups to secure larger funding. 

In addition to these tax reforms, Japan has set higher expectations for crypto exchanges in combating money laundering. It includes the resumption of Binance’s services in Japan from August, facilitated by the acquisition of local exchange Sakura Exchange BitCoin. 

Besides, reports indicate the government’s contemplation of tax changes that would eliminate factors discouraging investment in virtual currencies and tokens. 

Yen-backed stablecoins are gaining traction, with an impressive transaction volume of $500 billion. Danny Chong from the decentralized finance yield platform Tranchess highlighted this trend. This growth in popularity co-occurs with the increased reputation of dollar-based stablecoins, boosted by PayPal’s PYUSD asset launch.

Moreover, crypto exchange Binance recently obtained a license to operate in Japan following revisions to government requirements. This decision followed regulatory scrutiny in the United States, where Binance faced allegations of mishandling customer funds, prompting the exchange to expand its presence in the Asian market.

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