Japan FinTech Observer #103

Welcome to the one hundred third edition of the Japan FinTech Observer.

The Bank of Japan meets for its Monetary Policy Meeting this week. The consensus is for no change in the policy rate.

The Nikkei reports real wages down 1.8% in January, the first time in negative territory again in four months (although negative for the 2023 and 2024 calendar years), real consumption down, and consumer loan balances at record high.

Apollo Global Management sees rapidly deteriorating consumer confidence in the US, and Goldman Sachs has reduced its GDP growth forecast from 2.4% to 1.7%, the first time they are below consensus in almost three years.

As a result, Goldman's USD/JPY forecast has moved from 152/154/156 for 3/6/12 months from now to 150/151/152.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: MUFG Innovation Partners invests in Auxia; SBI Investment, GMO Venture Partners & DG Daiwa Ventures participate in Zolve's Series B; Saison Capital participates in Capim's USD 26.7m Series A; Carbon EX raises JPY 300m, Asuene takes majority stake
• Insurance: the fourth quarterly status report on the remediation effort by the big four non-life insurers in response to the FSA's business improvement orders is in
• Banking: Enhanced business and capital alliance between MUFG Bank and JACCS; invox has launched "invox Corporate Transfer" on the "BaaS by GMO Aozora" platform; Sumitomo Mitsui Finance and Leasing Company's subsidiary acquires Macquarie Asset Management’s helicopter leasing business; the Bank of Japan publishes its 2025 Examination Policy
• Payments: the Bank of Japan's Institute for Monetary and Economic Studies (IMES) has published a research newsletter on the "Legal system for digital money;" the bill to partially amend the Payment Services Act has been submitted to the Diet; the Japan Consumer Credit Association publishes version 6 of the Credit Card Security Guidelines, and also record-high fraud data for 2024
• Capital Markets: X Advanced Metals Corporation is set to debut on the Tokyo Stock Exchange in Japan's largest IPO since SoftBank in 2018; Anderson Mori & Tomotsune explain the "Simplified" Type 1 License
• Asset Management: Alyssa Partners expands its partnership with Dai-ichi Life; SMBC Group's preparations to become an "Asset Management Solution Provider"
• Digital Assets: Nomura Research Institute, Nomura Securities, BOOSTRY, DeCurret DCP, and Sumitomo Mitsui Banking Corporation collaborated on the issuance of a digital bond using a new settlement scheme; SBI-backed crypto market-maker B2C2 partners with Hashkey Exchange; Japan Open Chain has launched DeFi-based "JOC Lending"
• The Last Word: Horrible Europe?

Venture Capital & Private Markets

• 2024 was a year of mixed fortunes for PE in Japan, according to Deloitte's Japan Private Equity Almanac; while it remained the most active market in terms of deal count in Asia Pacific, the absence of 2023’s mega deals left deal values lagging behind; fundraising outperformed the rest of the region by some margin and PE seems to be increasingly accepted and valuedas an exit route for corporates looking to rationalize their portfolios
• MUFG Innovation Partners invests in Auxia: MUFG Innovation Partners (MUIP) has recently invested in Auxia through the MUFG Innovation Partners No. 3 Investment Partnership; the USD 23.5m Series A round was led by VMG Technology Partners, with participation from MUIP, Incubate Fund, Vela Partners, Stage 2 Capital, and more than 50 industry leaders; Auxia has launched its service with Money Canvas, MUFG Bank’s comprehensive asset-building platform, after successfully completing proof-of-concept trials
• SBI Investment, GMO Venture Partners & DG Daiwa Ventures participate in Zolve Series B: Neobank Zolve, focused on cross-border financial solutions, has raised USD 251 million in equity and debt financing; the Series B round was led by Creaegis and saw participation from HSBC, SBI Investment, GMO Venture Partners, DG Daiwa Ventures, and existing investors Accel, Lightspeed Venture Partners, Sparta Group, and DST Global; additionally, Community Investment Management provided a warehouse line to support Zolve's expanding credit portfolio across various regions; Zolve plans to use the new funding to scale its operations globally, broaden its product suite, and improve financial accessibility for international users
• Saison Capital participates in Capim's USD 26.7m Series A; São Paulo-based Capim describes itself as a vertical SaaS company specializing in buy now, pay later (BNPL) for dental services; it claims that its operating system helps dentists digitize and manage their clinics, and increase revenue
• Carbon EX raises JPY 300m, Asuene takes majority stake: Asuene and SBI Holdings have made an additional investment of 300 million yen in Carbon EX, which operates a carbon credit and emissions trading exchange; in addition, Asuene has increased its investment ratio in Carbon EX to 51%, making it a consolidated subsidiary; the cumulative investment amount is now 400 million yen

Not FinTech

• CHITOSE BIO EVOLUTION, the leader of the global bioeconomy and the headquarters of CHITOSE Group, has announced the issuance of new shares of JPY 7.3 billion (equivalent to USD 49 million) through a third-party allotment; in addition to the previously raised JPY 3.1 billion (equivalent to USD 21 million), the company has secured additional funding through a third-party allotment with underwriters including Sumitomo Mitsui Banking Corporation, Mizuho Bank, TOPPAN Holdings, NSK, JAFCO ASIA S-8 FUND and JAFCO ASIA S-8(A) FUND, Sumitomo Mitsui Trust Bank, and one other company
• Medapp secures 130 million yen in funding from Resona Bank: Medapp, which develops, develops and sells products to improve hospital management, has raised 130 million yen in venture debt and other funding from Resona Bank; this brings the total amount raised to 1.39 billion yen; through this, Medapp aims to improve hospital management and achieve sustainable, high-quality regional medical care through the development and dissemination of new services
• The Nigerian government is set to establish a $40 million fund investing in early-stage technology startups, as Abuja moves to bolster support for entrepreneurs who have long relied on private investors; half of the fund will come from the Japan International Cooperation Agency, the Japanese government’s overseas development assistance arm, with the remainder covered by a matching sum from the Nigeria Sovereign Investment Authority (NSIA), according to Kashifu Inuwa Abdullahi who heads the National Information Technology Development Agency (NITDA)

Insurance

• The FSA issued business improvement orders to the major Japanese non-life insurance companies (Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance, and Aioi Nissay Dowa Insurance) at the end of December 2023 for price-fixing on corporate insurance premiums; this was followed by business improvement orders targeting those involved in the Big Motor scandal (fraudulent insurance claims, secondment of personnel, etc.) at the end of January; business improvement plans were due by the end of February, and updates on the implementation of the plans required every three months, making the March 14, 2025, submissions the fourth status report across the group

Banking

• Enhanced business and capital alliance between MUFG Bank and JACCS: MUFG Bank and JACCS have been working together on group collaboration based on the alliance announced in 2008; meanwhile, the business environment surrounding both companies has been changing rapidly, including changes in the financial environment and the advancement of digital transformation (DX); in response to these changes, while building upon the achievements of their collaboration to date, MUFG Bank and JACCS have signed a contract for a new capital and business alliance that expands on the content of the former alliance to strengthen and deepen their partnership
• invox has launched a new service called "invox Corporate Transfer" for its "invox Receipt Invoice" service, utilizing the "BaaS by GMO Aozora" banking-as-a-service platform from GMO Aozora Net Bank; invox's new service allows users to make transfers seamlessly and directly from "invox Receipt Invoice" using payment data, with a uniform transfer fee of 220 yen per transaction for both same-bank and other-bank transfers
• Sumitomo Mitsui Finance and Leasing Company's (SMFL) subsidiary, SMFL LCI Helicopters (SMFLH), acquires Macquarie Asset Management’s helicopter leasing business, Macquarie Rotorcraft Leasing (MRL); SMFLH is a joint venture established in 2020 between SMFL and LCI Investments for helicopter operating leasing
• The Bank of Japan's 2025 Examination Policy: The Bank of Japan (BOJ) annually establishes examination implementation policies; these policies are updated each year by the BOJ's Policy Board; in 2025, the policy document outlines the approach to onsite examinations and offsite monitoring of financial institutions; it emphasizes the importance of understanding changes in the financial system environment, the challenges faced by financial institutions, and rapidly assessing the soundness and risk management practices of these institutions; the goal is to proactively and in a timely manner identify emerging risks and trends within the broader financial system, and to maintain coordination with the Financial Services Agency (FSA)

Payments

• Legal system for digital money: The Bank of Japan's Institute for Monetary and Economic Studies (IMES) is conducting research on legal systems with a focus on digital money; in a newsletter published last week in Japanese, they have introduced some of their latest research findings regarding (I) transactions using digital money, (II) new concepts regarding electronic data, and (III) handling of information
• Outline of the bill to partially amend the Payment Services Act: In response to the advancement of financial digitalization, and to ensure user protection while promoting innovation, it is necessary to (I) subject certain fund transfers involving the movement of funds from domestic to foreign locations or from foreign to domestic locations to the regulations of fund transfer services, (II) establish domestic asset holding orders for crypto asset exchange service providers, (III) create electronic payment means and crypto asset service intermediary businesses, and (IV) implement other measures
• JCA publishes Credit Card Security Guidelines V6.0: The Japan Consumer Credit Association (JCA) has published the final version of, and outlined the key revisions to the Credit Card Security Guidelines, Version 6.0, focusing on enhancements to address evolving fraud risks and emerging technologies in the credit card payment ecosystem; the JCA emphasizes the importance of a layered security approach, risk-based measures, and collaboration among stakeholders to ensure a safe and secure credit card environment in Japan; the implementation date for these revised guidelines is March 2025
• The JCA has also compiled data on credit card fraud for the fourth quarter of 2024 (October-December); the findings reveal that fraud losses totaled 162.3 billion yen, a 22.3% increase compared to the previous quarter (July-September 2024)
• Circle's USDC is now available on SBI VC Trade in beta testing for a limited number of users; he general release will be announced upon successful completion of this phase

Capital Markets

• JX Advanced Metals Corporation is set to debut on the Tokyo Stock Exchange on Wednesday, March 19, in Japan's largest IPO since SoftBank in 2018; the company priced at ¥820, the top of its downwardly revised range, to raise $2.6 billion at a $5.2 billion market cap; a carve-out of Japanese oil giant ENEOS, JX Advanced Metals mines, smelts, and refines a wide array of metals, such as copper, gold, silver, and platinum; the company’s materials are used for semiconductors, batteries, digital displays, cameras, and other industries
• Anderson Mori & Tomotsune published a newsletter on the "Introduction of a Simplified Type 1 License;" on May 15, 2024, the Diet passed into law amendments to the Financial Instruments and Exchange Act (FIEA); while the Amendments contain many important measures, one of the noteworthy measures is to deregulate the requirements for the registration of a Type 1 financial instruments business under the FIEA for a person who engages only in the distribution of unlisted securities to certain professional investors; the proposed subordinated regulations under the Amendments relating to the introduction of a new special intermediary business operator license dealing with unlisted securities, which is the so-called “simplified (or attenuated)” Type 1 License, have undergone the public comment process and are in the process of finalization; they are expected to become effective around early May 2025
• Japan Exchange Group published its 2024 Derivatives Market Highlights
• Nomura's quarterly Individual Investor Survey has been published

Asset Management

• Alyssa Partners expands its partnership with Dai-ichi Life: Alyssa Partners, a leading real estate investment management firm focusing exclusively on the Japanese market, has acquired a portfolio of residential assets located in Japan on behalf of The Dai-ichi Life Insurance Company; the portfolio consists of 10 stabilized, high-quality multifamily properties located in Tokyo, Osaka, and Nagoya; the 669-unit portfolio has an average age of less than 6 years and comprises a total gross floor area of over 21,000 square meters; all assets are within ten minutes or less walking distance to subways and/or JR stations
• SMBC Group's preparations to become an "Asset Management Solution Provider": As announced in the "Direction of Group Strategy Toward Becoming an 'Asset Management Solution Provider'", published in January 2024, SMBC Group has established a policy to build a unique investment chain that centers on solution functions that connect investment management and consulting from a neutral position; regarding SMBC Global Investment & Consulting (SGIC), which will serve as the core engine of this structure, SMBC Group previously mentioned plans to strengthen systems for various services including fund due diligence, fund monitoring, asset allocation, and house views; through three main initiatives SMBC Group focused on over the past year, it has now established the framework for a series of organizational preparations centered on SGIC
• The FSA has published "Promoting Japan as a leading asset management center," a presentation by Shigeru Ariizumi, Deputy Director-General for International Financial Affairs, at the Japan Securities Summit in early March

Digital Assets

• Nomura Research Institute, Nomura Securities, BOOSTRY, DeCurret DCP, and Sumitomo Mitsui Banking Corporation collaborated on the issuance of a digital bond using a new settlement scheme, and executed a proof-of-concept for Japan's first securities settlement using digital currency; these steps would expand the market for digital securities and demonstrated the scheme’s feasibility
• SBI-backed crypto market-maker B2C2 partners with Hashkey Exchange: B2C2, a global leader in institutional liquidity for digital assets, has entered into a partnership with HashKey Exchange, Hong Kong's largest licensed virtual asset platform; this collaboration will integrate multi-currency fiat trading networks, driving market efficiency and further strengthen Hong Kong's status as a premier hub for regulated virtual asset trading
• Japan Open Chain has launched DeFi-based "JOC Lending": G.U. Technologies Global, which provides web3 solutions such as blockchain infrastructure, including "Japan Open Chain," has launched the DeFi-based "JOC Lending Program"; this program allows users to lend their "Japan Open Chain Token" (JOC Coin), the native token of Japan Open Chain, and receive rewards instantly in USDTX tokens, a multi-chain compatible stablecoin pegged 1:1 to the USDT token; the annualized returns range from 15% to over 25%
• Bitwise Asset Management launches the "Bitwise Bitcoin Standard Corporations ETF" (Ticker: OWNB), with Metaplanet Inc. | 株式会社メタプラネット having a 5%+ allocation on inception; OWNB provides exposure to a significant, emerging trend: companies buying and holding bitcoin as a treasury asset; today, more than 70 publicly traded companies own bitcoin on their balance sheets

The Last Word: Horrible Europe?

The International Monetary Fund expects Poland to overtake Japan in GDP per capita next year.

Please follow us to read more about Finance & FinTech in Japan, like hundreds of readers do every day. We invite you to also register for our short weekly digest, the “Japan FinTech Observer”, on LinkedIn, or here on the FinTech Observer website.

We also provide a regular short-form Japan FinTech Observer news podcast, available via its Podcast Page. Our global Finance & FinTech Podcast, “eXponential Finance” is available through its own LinkedIn newsletter, or via its Podcast Page.

Should you live in Tokyo, or just pass through, please also join our meetup. In any case, our YouTube channel and LinkedIn page are there for you as well.