Tag: investment fund

SBI Holdings to Launch Investment Fund for Emerging Companies like Web3, AI, and Metaverse Startups

SBI Commits to Bolstering Startups in Japan

SBI Holdings, a major financial conglomerate in Japan, has announced its plan to start operating an investment fund by the end of 2023, focusing on startups in sectors like Web3, artificial intelligence (AI), and the metaverse. As reported by Nikkei on November 8, 2023, this fund aims to bolster the burgeoning startup ecosystem in Japan.

The fund is expected to reach up to 100 billion yen, with individual investments ranging from several hundred million to a few billion yen. It aims to invest in 150 to 200 companies. SBI is drawing investment from major and regional banks in Japan, supporting the development of domestic startups.

Collaborative Funding from Major Financial Institutions

Significant financial players, including Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance, and Daiwa Securities Group, have already committed over 50 billion yen. This level of venture capital (VC) funding is relatively rare in Japan, and an SBI representative emphasized to Nikkei the importance of having financially robust backers to nurture globally competitive startups.

Japan’s Current Landscape and Goals for Startups

Japan currently faces challenges in cultivating startups. In November 2022, under Prime Minister Kishida’s administration, the “Startup Development 5-Year Plan” was established, addressing the lower rates of new business openings and unicorn companies (privately held startups valued at over 100 billion yen) compared to the US and Europe.

The administration aims to implement “New Capitalism,” seeing startups as vital in transforming societal challenges into engines for sustainable economic growth. The 5-Year Plan sets a target to increase startup investment from 800 billion yen (as of 2022) to over 10 trillion yen by 2027. It also aims to establish Japan as Asia’s leading startup hub by creating 100 unicorns and 100,000 new startup companies.

Enhancing the Ecosystem for Web3

For startups, particularly in emerging fields like Web3, both financial support and a conducive environment are essential. The Japanese government recognizes the need for tax reforms pertinent to Web3 companies in its “New Capitalism Grand Design and Implementation Plan 2023 Revised Version.”

Corporate taxes for Web3 companies have been partially reformed in the fiscal year 2023, exempting self-issued cryptocurrencies from market value evaluation under certain conditions. Financial Services Agency and the Ministry of Economy, Trade and Industry are advocating for further reforms for third-party held cryptocurrencies in the fiscal year 2024 tax revisions. The final decision on these reforms by the Tax Commission is expected to be concluded by mid-December.

Understanding Web3

Web3, often termed as the “next generation of the internet,” is a decentralized network built on blockchain technology, encompassing elements like NFTs and cryptocurrencies. It marks a shift from the one-way information flow of the initial Internet (Web1) and the current centralized Internet (Web2).

Canada Tightens Crypto Asset Regulations for Public Investment Funds

The Canadian Securities Administrators (CSA) have proposed changes to guidelines that will impact how public investment funds in Canada handle crypto assets. This move, which aligns with global trends towards more stringent cryptocurrency regulations, reflects the CSA’s increasing attention to the unique risks and characteristics of crypto assets.

The CSA, a council of the securities regulators of Canada’s provinces and territories, aims to harmonize and improve coordination of the Canadian financial markets. On January 18, 2024, they released a draft outlining proposed changes in the regulatory treatment of crypto assets by public investment funds. This proposal is part of a broader project announced in July to develop a comprehensive regulatory framework for crypto assets in Canada.

Proposed Changes

The primary focus of the amendments is to limit direct crypto asset dealings to certain types of funds and establish rigorous custodianship standards. The key points are:

Restriction on Fund Types: Only alternative and non-redeemable investment funds will be allowed to buy, sell, or hold crypto assets directly. Other mutual funds seeking crypto exposure would have to invest in these funds.

Exchange Listing Requirement: The invested crypto assets must be listed on a recognized exchange by Canadian securities regulatory authorities and must be fungible.

Custodianship and Security: The assets must be insured and held in cold wallets. Additionally, an annual review of the custodian’s internal management by a public accountant is mandated.

Public Feedback and Development: The CSA has opened these proposals for a 90-day public comment period, after which a consultation paper will be developed. This paper will consider a broader framework for crypto asset regulation.

Implications for the Investment Landscape

This move by the CSA could have significant implications for the Canadian investment landscape:

Risk Mitigation: These changes aim to mitigate risks associated with crypto assets, such as volatility and security concerns.

Market Stability: By restricting direct dealings to certain fund types, the CSA seeks to ensure market stability and protect investors.

Product Development: The regulatory clarity provided may encourage the development of new crypto-related investment products within a safer framework.

Global Trend: This regulatory shift in Canada is part of a global trend towards more comprehensive regulation of cryptocurrencies, aligning Canadian policies with international standards.

Conclusion

The CSA’s proposed amendments mark a pivotal moment in the regulation of crypto assets in Canada. By focusing on custodianship standards and restricting direct crypto dealings to specific fund types, these changes aim to balance the innovative potential of cryptocurrencies with the need for investor protection and market stability.

Exit mobile version