The Japanese government is reportedly charting a bold new course for start-ups, allowing them to raise public funds via an issuance of cryptocurrency assets instead of traditional stocks. According to sources such as Nikkei.com, the system will apply specifically to Investment Business Limited Partnerships (LPS). Cryptocurrencies’ mainstream adoption in Japan may seem hesitant when compared to other nations’, as prior regulations appeared more cautious than innovative. However, there’s an apparent shift in the air, suggesting Japan’s digital asset ecosystem may indeed be maturing.
The Financial Services Agency (FSA), Japan’s primary financial regulatory authority, has pursued an active role in amending the tax code regarding cryptocurrencies, critically affecting local firms. Changes include a push to exempt businesses from a year-end “unrealized gains” tax on cryptocurrencies. Coupled with Prime Minister Fumio Kishida’s affirmation of Web3’s potential and Japan’s commitment to foster the industry, it’s clear Japan sees blockchain technology as more than a passing trend.
Yet, not everything is clear-cut. Cryptocurrency’s inherent volatility and the possibility of misuse remain concerns for many stakeholders. Strengthening this sector’s regulation, as we’ve seen from Binance‘s recent entry into the Japanese market after acquiring the local exchange platform Sakura Exchange Bitcoin (SEBC), is necessary for moving forward. But, without a suitable feedback loop from the government to interested parties, information transmission and understanding may become problematic.
Transforming the traditional funding model for start-ups to a cryptocurrency-based one is indeed a bold move. The new initiative removes many barriers to entry that start-ups typically face when trying to raise funds through traditional methods. However, it also brings its own set of challenges. On one hand, it opens up opportunities for more innovation and diversity in the nascent tech market, but on the other, it may expose investors to the all-too-familiar volatility and risks of cryptocurrency.
Japan’s turning of a new leaf in crypto regulation is certainly a conversation starter. From reconsidering taxes to granting start-ups the liberty to issue cryptocurrencies for funding, the country is making significant strides in crypto regulation. However, the approach comes with its own set of unique challenges. It’ll be essential for Japan to continue fostering open communication and drive regulatory clarity to assure the successful and responsible integration of these revolutionary digital assets into the Japanese economy.
Source: Cointelegraph
