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Startups in Japan can now issue digital assets, including digital currency tokens, to raise funding, a report by local newspaper Nikkei has revealed.

The move aims at opening funding opportunities for Japanese startups as the East Asian country pushes toward an ambitious goal of attracting JPY10 trillion (US$72 billion) in annual startup funding by 2027.

In 2022, the country’s startups attracted $6.2 billion, a slight increase from the prior year despite a global startup funding slowdown. However, it still lags behind peers like Germany, which raised $12 billion, and the U.K. at $30.8 billion. China and India raised 10x and 4.7x more venture capital (VC) funding in Asia in 2022.

In a bid to buck the trend, the Japanese government will allow startups to issue digital assets to raise funding from venture capital firms, Nikkei reports. Currently, the country restricts VCs to traditional assets, including stock options and security tokens. Under the new rule, digital currency tokens would be added to the security tokens category.

The government plans on getting the ball rolling on the legislative front early next year, cementing the proposal into law.

The new rule would present a new opportunity for Japanese startups amid a push by Prime Minister Fumio Kishida to ramp up investment in the sector.

Japan is the third-largest economy, and some of its giants dominate their fields, from Sony (NASDAQ: SONY) and Mitsubishi (NASDAQ: MSBHF) to Toshiba (NASDAQ: TOSBF) and Sharp (NASDAQ: SHCAF). However, its startup sector needs to catch up to other countries in terms of deals and investment size. A 2022 study revealed that only 6% of Japanese entrepreneurs thought Japan was a lucrative market to launch a startup.

Digital currency tokens have traditionally been a preserve of the Web3 industry. While the initial coin offering (ICO) hype has died after several high-profile scams, Web3 companies still rely on token issuance to raise funds. Last year, the sector raised $26.2 billion.

Watch: Regulatory compliance for blockchain & digital assets

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