Japan FinTech Observer #110

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

The decades-long (if not forever) pricing system for Japanese sake has been broken. It has not happened overnight, rather it has been a slow, post-pandemic process as far as I could tell, but by now most of the sake breweries follow the new scheme. However, a Fair Trade Commission investigation into cartel-like price setting is not yet in the cards, I hear.

For as long as I have been consuming the odd glass of sake, which for sure is longer than some of my readers have been roaming this planet, the following rule was iron-clad: the 1.8l bottle (isshobin) costs exactly twice as much as the 720ml bottle (four go, with one go equating to 180ml, i.e. 1/10 of the isshobin). This arrangement was always a bit odd in the Japanese retail world, as volume discounts are generally not available - 10 cookies cost you 2.5x the price of four cookies.

Nowadays, even that odd rule has been broken. Price increases have not stopped at sake, but miraculously have had limited or no impact on the isshobin, making it even more of a bargain. The intended upside here is that the restaurant industry, where you get served from the isshobin, did not have to raise prices, or could generate additional margin to make up for the compression in other areas, e.g. food stuff (rice).

So we got a nice bottle of Yamaguchi Junmai Genshu yesterday, at a price of JPY 1,600 for the small bottle, while the isshobin was a mere JPY 2,900. Thank you for asking.

After these Golden Week ruminations, here is what we are going to cover this week:

• Venture Capital & Private Markets: UTokyo Innovation Platform (UTokyo IPC) has decided to invest in Abies Ventures Fund II; Layer 1 blockchain platform "Kaia" has secured investments and strategic partnerships from 1kx, Blockchain Capital, and others; Volution launches $100m UK fund with SBI Investment as Co-GP
• Banking: MUFG Revises Earnings Target and Dividend Forecast; FFG and Minna no Ginko Establish Strategic Partnership with FinTech Startup LiNKX; The Norinchukin Bank Group Begins DX Support Through Box; AEON Credit Service India has collaborated with Novac Technology Solutions
• Payments: after ten years of good service, LINE Pay in Japan has shut down; Cross-Border QR Code Payments Between Cambodia and Japan; JCB's Test For Consumer Behavior Changes Through CO2 Emission Visualization; Mobell Communications Wins King’s Award for Enterprise in International Trade
• Capital Markets: FinCity.Tokyo Launches "English Information Disclosure Support Program"; the Tokyo Stock Exchange is scheduled to make investor relations system development mandatory
• Digital Assets: Laser Digital to offer DeFi-enabled Ethereum Adoption Fund; Metaplanet plans to establish a wholly-owned U.S. subsidiary in Miami; SyFu Forms Strategic Partnership with Japanese Telecom Giant KDDI
• The Last Word: Bank of Japan Monetary Policy Meeting

Venture Capital & Private Markets

• Japan's three Mega Banks' CVC activities during the first quarter puts them into the Top Five globally, based on CB Insights' latest "State of CVC" report
• Japan’s private markets are standing strong in 2025 despite global volatility, with both VC and PE activity showing long-term promise, according to a new PitchBook report; VC deal flow has stabilized following a record-setting Q3 2024, with late-stage deals continuing to dominate; while total deal value dropped modestly, exit activity remained robust—reaching its highest level since the pandemic, led by M&A in software and B2B startups
• However, just six mega-deals made up the most of Private Equity deal value

• UTokyo Innovation Platform (UTokyo IPC) has decided to invest in Abies Ventures Fund II, managed by Abies Ventures, through its Academic Startup Acceleration (ASA) Fund—a university startup support fund operated under the Tokyo Metropolitan Government’s “Global Innovation with STARTUPS” initiative; through this investment and broader collaboration with Abies Ventures, UTokyo IPC aims to further accelerate the development of university-launched startups in Japan and expand the broader innovation ecosystem
• Layer 1 blockchain platform "Kaia" has secured investments and strategic partnerships from renowned global venture capital firms in the blockchain space, including 1kx and Blockchain Capital (BCAP), aimed at expanding its ecosystem; additionally, numerous Asia-based prominent VCs also participated, including Galaxy, Spartan Capital, IDG Capital, Mirana Ventures, Caladan, Lingfeng Innovation Fund, Comma3 Ventures, SNZ, Waterdrip Capital, and MEXC VC, highlighting the high level of interest in promising Web3 projects
• Volution launches $100m UK fund with SBI Investment as Co-GP: Volution has launched a new $100m fund to back the next generation of high-growth FinTech, AI and SaaS businesses tackling productivity challenges in capital markets and enterprise; the fund has been launched in partnership with leading Japanese venture capital investors SBI Investment through a Co-GP arrangement that leverages the strengths of both managers; this is Volution’s second dedicated fund and following the success of the first, a significant number of Volution’s existing LPs have recommitted to the new fund
• The Japan Investment Corporation (JIC) has released the findings of a survey regarding the overseas expansion of Japanese startups, highlighting the increasing importance of going global, given the relatively large but shrinking domestic market and the need to compete on a global scale to achieve significant grow

Banking

• MUFG Revises Earnings Target and Dividend Forecast: after the market close on April 30, 2025, MUFG announced that it has revised its earnings target for profits attributable to owners of parent and its year-end dividend forecast for the fiscal year ending March 31, 2025, both previously announced on November 14, 2024, to take into account recent business performance trends; this is the second upward revision to MUFG's full-year earnings target and year-end dividend forecast for the fiscal year ended March 31, 2025
• FFG and Minna no Ginko Establish Strategic Partnership with FinTech Startup LiNKX: Fukuoka Financial Group (FFG) and its subsidiary Minna no Ginko, along with next-generation financial system development startup LiNKX, have signed a basic agreement on a strategic partnership; as part of this partnership, FFG's subsidiary, The Bank of Fukuoka, has invested in LiNKX; Zero Bank Design Factory, FFG's system subsidiary, and LiNKX have been collaborating on system development for Minna no Ginko; going forward, this partnership aims to leverage LiNKX's advanced knowledge and technical capabilities in cutting-edge financial systems to enhance FFG's digital services and advance its system infrastructure, while realizing sustainable growth and increased corporate value for both FFG and LiNKX
• The Norinchukin Bank Group Begins DX Support Through Box: Nochu Information Systems (NIC), a group company of The Norinchukin Bank responsible for system engineering, has started providing Digital Transformation (DX) support services as a sales partner of Box Japan; NIC has been working within the Norinchukin Bank Group to establish systems for consolidating and centralizing internal information using Box, improving question-answering capabilities and searchability of internal documents using AI, and building a foundation for efficiently utilizing organizational knowledge
• AEON Credit Service India has collaborated with Novac Technology Solutions, a technology and digital transformation solutions company, for its lending business; as part of this five-year association, AEON Credit will deploy ZIVA®, Novac’s flagship next-generation digital lending solution, for its end-to-end loan origination, underwriting, and disbursements, marking a new chapter in scalable and customer-first lending

Payments

• Good bye, LINE Pay in Japan! After ten years of good service, it has been thoroughly replaced by PayPay within the LY Corporation portfolio, but is still going strong in Taiwan and Thailand
• Cross-Border QR Code Payments Between Cambodia and Japan: the National Bank of Cambodia (NBC) and the Payments Japan Association (PJA) have announced the signing of a Memorandum of Understanding on the cooperation of cross-border QR code payment between Cambodia's KHQR and Japan's JPQR; this initiative aims to establish mutual interconnectivity between the two nations; the collaboration for cross-border payments using QR Codes between KHQR and JPQR is structured in two phases
• JCB's Test For Consumer Behavior Changes Through CO2 Emission Visualization: JCB is conducting a one-month demonstration experiment in collaboration with MASH Style Lab, Lumine, and Your Arbor to verify changes in consumer behavior through the visualization of CO2 emissions by product and payment method; this experiment is being held as the second phase following the first experiment conducted at Lumine 2 Shinjuku in April 2024
• Mobell Communications Wins King’s Award for Enterprise in International Trade: the UK-based telecoms company whose entire revenue is generated from Japan-focused services, has been awarded a prestigious King’s Award for Enterprise in International Trade; as a wholly owned trading subsidiary of a UK-registered charity, 100% of its business profits are donated to charitable causes in Malawi and Japan; through its trusted brands - Mobal, Hanacell, and MobalPay - Mobell provides essential mobile and payment solutions including SIM cards, eSIMs, pocket Wi-Fi devices, and international payment cards

Capital Markets

• FinCity.Tokyo Launches "English Information Disclosure Support Program": the Organization of Global Financial City Tokyo aims to enhance the appeal of the Tokyo financial market as a top international financial center by supporting listed companies (especially those listed on Growth and Standard markets) in improving their English information disclosure and IR activities, thereby attracting overseas investment and revitalizing the market
• The Tokyo Stock Exchange (TSE) is scheduled to make IR system development mandatory so that listed companies can proceed with the development of an information disclosure system (IR system) for building relationships with shareholders and investors; the TSE summarizes and highlights matters and points that it would like listed companies to address in preparation for the mandatory implementation of IR system (scheduled for July 2025)
• Addressing Global OTC Derivative Clearing Mandates, by Tetsuo Otashiro, Director, Global Policy and Regulation / OTC Derivative Clearing Service, Japan Securities Clearing Corporation
• Reflections on Central Clearing: 15 Years after the Pittsburgh Summit, by Jutaro Kaneko, Deputy Commissioner for International Affairs, Financial Services Agency

Digital Assets

• Laser Digital to offer DeFi-enabled Ethereum Adoption Fund: Laser Digital, Nomura’s digital asset subsidiary, announced the evolution of the investment strategy of its Ethereum Adoption Fund SP, designed to offer enhanced yield to investors in collaboration with Galaxy, a global leader in digital assets and data center infrastructure, and Monarch Digital, a spin-off of DeFi startup Dinero Protocol; the Fund offers institutional investors residing in eligible jurisdictions (with the exclusion of US persons) long-only exposure to Ethereum with additional yield opportunities through built-in Decentralized Finance (DeFi) mechanisms, staking and eventually restaking
• Metaplanet plans to establish a wholly-owned U.S. subsidiary in Miami, Florida, this month as part of its ongoing global expansion strategy; the new entity, Metaplanet Treasury Corp., is expected to raise up to $250 million in capital to accelerate its bitcoin treasury operations
• SyFu Forms Strategic Partnership with Japanese Telecom Giant KDDI: SyFu has entered into a strategic partnership with KDDI, one of Japan’s largest telecommunications companies, to launch an exclusive “KDDI × SyFu” MANEKINEKO NFT; SyFu has previously received investment from KDDI, actively collaborating on innovative initiatives in the fields of Web3 and digital payments; this new partnership is aimed at merging real-world economies with Web3 technologies to offer consumers a novel and engaging experience

The Last Word: Bank of Japan Monetary Policy Meeting

At the Monetary Policy Meeting last week, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the inter-meeting period: The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5 percent. It also provided an updated "Outlook for Economic Activity and Prices".

Deciphering central bank speak is a bit like tracing the slight nuances in wording by the Communist Party, and the Bank of Japan watchers at Mitsubishi UFJ Morgan Stanley are delivering outstanding work, highlighting the changes from one Monetary Policy Meeting to the next. They were also the first to move their forecast for the next policy rate increase into early 2026 - their colleagues at Goldman Sachs only followed post the May 1 pronouncements.

Also, the "Notes on Financial Markets" by the Nomura Research Institute's Tetsuya Inoue always provide valuable commentary on the Bank of Japan's Monetary Policy Meeting.

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