Japan To Let Startups Sell Digital Tokens To Venture Capital Funds
15 November 2023
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Japan is set to revolutionize its startup funding by allowing companies to raise capital via digital assets such as cryptocurrencies.
This radical change, expected to be brought into law by 2024, will offer startups involved in blockchain technology a broader range of assets to attract venture capital firms.
Currently, these firms are limited to investing in conventional assets like shares and stock options, and a few security tokens defined by Japanese law.
The proposed law change will see an expansion of the asset list to include a variety of tokens and crypto assets.
This is a significant move for Japan, where investment in this area has been limited.
Unlike traditional shares, blockchain-based tokens can be created quickly and without the need for intermediaries, making them an attractive funding method for companies involved in Web3 technologies.
Data from CB Insights reveals that worldwide, Web3 startups raised $15.1 billion in 2022, a 15-fold increase from 2018.
In Japan, companies like HashPalette have raised millions of dollars via token offerings.
But the current rules prevent limited partnerships from investing in tokens, hindering Japanese venture capital firms from capitalizing on the growth of Web3 companies.
Japan's planned law change will also see the removal of restrictions forcing limited partnerships to invest more than half their capital domestically.
This move anticipates that more investment opportunities will increase these firms' profits, providing more capital for domestic startups.
Simultaneously, the government is considering a tax revision for fiscal 2024 to exempt crypto assets and tokens from tax on unrealized gains, which has been a deterrent for potential investors. Read more here.
Japan’s Prime Minister says Web3 can transform the internet.
Crypto stablecoins allowed in Japan.
Japan looking to expand crypto and blockchain involvement.
How Are Zucoin And SplitChain Suited For Japan's New Startup Funding Model?
Japan's groundbreaking decision to allow startups to raise capital through digital tokens heralds a new era for platforms like Zucoin's Splitchain.
Splitchain could be applied as a pivotal tool for these startups to issue digital tokens efficiently and securely.
Enabling faster, more efficient transaction settlements by splitting data into multiple smaller pieces is inherent to Splitchain's system architecture.
This design significantly reduces congestion and speeds up transaction settlement times, a critical factor for startups and investors in fast-paced environments.
Zucoin's approach to transaction fees, where costs are minimized due to the efficiency of SplitChain, makes it an attractive platform for startups looking to maximize their funding potential.
The platform's emphasis on safety, with encryption, an increasingly decentralized structure, and in-built two-factor authenticated transactions, should align with the needs of venture capital firms investing in digital tokens.
The Zucoin wallet app's user-friendly interface simplifies the process of creating and trading digital tokens, currently the Zucoin token itself.
It's a key advantage for startups new to the world of cryptocurrencies.
Once Splitchain's smart asset features are made available for third-party integrations, this would open up the potential for the Splitchain platform to be used in all kinds of areas, not just as a store of value.
With Japan's proposed tax reforms, the cost-effectiveness and efficiency of cryptocurrencies become even more appealing for both startups and investors.
Zucoins and SplitChain's innovative approach aims to put them at the forefront of this new financial era, making them ideal for useful applications like Japan's shift towards digital token-based startup funding.
Ultimately, Zucoins' combination of speed, security, cost-efficiency, and user-friendliness makes it a prime candidate for supporting Japan's venture capital ecosystem in this transformative period.
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All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.