The Japanese cabinet has approved a proposal to add cryptocurrencies to the list of assets that local investment limited partnerships can acquire or hold, the Ministry of Economy, Trade and Industry announced on Feb. 16.

The ministry said in a Friday announcement that the approved revision, which contains amendments to the Act on Strengthening Industrial Competitiveness, would expand strategic investment to provide support for local startups and medium-sized companies. Such revision would allow venture capital firms to invest in projects that only issue cryptocurrencies, local news outlet Coinpost reported on Saturday.

Following the cabinet approval, the bill has been submitted to the legislative body and will be deliberated upon, the ministry said in the statement.

Limited partnerships in Japan often serve the purpose of investing in unlisted companies, which has become a common measure for VCs to invest in startups, according to local news outlet Coinpost.

“Under Japanese rules up until now, VCs were not able to invest in crypto assets,” Hiro Kunimitsu, founder and CEO of Gumi Inc., wrote in an X post. Gumi is a Japanese game development firm that has launched its own blockchain investment fund, gumi Cryptos Capital. 

Kunimitsu explained in his X post that Japanese crypto projects had to source capital from foreign venture capitals, which has been a huge obstacle for funding. “I think that the fact that Japanese VCs can now invest will be a big opportunity for many Web3 startups from Japan,” Kunimitsu said.

Under Prime Minister Fumio Kishida’s “new capitalism” policy, Japan has been pushing to cultivate its Web3 industry. In December, the Japanese cabinet approved a revision to its tax regime that could exclude companies from paying taxes on unrealized profits from crypto.

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