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Japanese Startups Can Now Raise Funds With Crypto

2 mins
Updated by Geraint Price
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In Brief

  • Japan's new law allows startups to issue crypto tokens instead of stocks, diversifying income sources.
  • The country's mature crypto regulations facilitate yen-backed stablecoins with $500 billion transaction volume.
  • Contrasting US regulations, Japan's rules for equity financing do not require tokens to be registered before sale.
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The Japanese will allow startups to issue crypto tokens instead of stocks when they seek public funding. The move intends to diversify the income streams new businesses can tap.

The new form of equity financing is subject to a law called the Limited Partnership Act for Investment. The Act sets out the conditions under which so-called limited liability partners can sell shares to unlimited liability partners.

New Regulations Boost Crypto Adoption

Japan has arguably the most mature crypto regulations in the world, having been home to Mt. Gox, once the largest Bitcoin exchange on the planet. It introduced new stablecoin legislation in early June to allow banks, money transfer agents, and trust companies to issue the tokens.

Interested in learning more about stablecoins? Read our handy guide here.

Danny Chong, of decentralized finance yield platform Tranchess, recently told BeInCrypto that yen-backed stablecoins are growing in popularity. They have accrued $500 billion in transaction volume so far. This comes as dollar-based stablecoins are enjoying a reputational boost due to the launch of PayPal’s PYUSD asset.

Crypto exchange Binance recently secured a license to operate in Japan after the government revised its requirements. The move came after regulators in the US accused the exchange of mishandling customer funds, among other things, a move which has put pressure on the company’s business and catalyzed its Asian expansion.

ICO Equity Financing Frowned Upon by US SEC

Japan’s new rules for equity financing contrast with those of their US counterparts. 

A judge recently ruled that Ripple Labs’ sales of XRP to raise funds from institutional investors violated US securities law. The US Securities and Exchange Commission (SEC) has repeatedly cracked down on projects that didn’t register tokens before selling them to raise funds.

What is an initial coin offering, or ICO? Find out here.

The agency has been criticized for issuing enforcement actions without creating a clear path for registration. While industry players have repeatedly requested and even proposed regimes to identify which tokens are securities, the agency maintains existing rules are sufficient.

US lawmakers have proposed several bills geared toward clarity, with some proposing the SEC and the US Commodity and Futures Trading Commission share oversight of the crypto industry.

Got something to say about Japanese startup and ICOs or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTokFacebook, or X (Twitter).

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...
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