Japan FinTech Observer #129

Welcome to the one hundred twenty-ninth edition of the Japan FinTech Observer.

The Bank of Japan will hold its Monetary Policy Meeting on September 18 & 19, following the FOMC in the US. The consensus expectation is for the Bank to keep its policy rate on hold this time; beyond this meeting, the economists we follow diverge in their forecast for the next rate hike, with a range from October 2025 to January 2026.

The Presidential Election of the Liberal Democratic Party will be held as a "full-scale" election on October 4. A “full scale” election is typically held when the LDP President’s term expires, and includes one vote from each of the 295 current LDP Diet members, plus an equal amount of votes representing the preferences of local party members. Should a run-off vote be needed, the 295 current LDP Diet members will be joined by 47 prefectural votes only.

We would like to give a shoutout to the hidden heroes of Japan's digital transformation. Following the launch of My Number Card functionality on iPhones in June 2025, the use of smartphones as digital health insurance cards will be iteratively rolled out starting September 19, 2025. As of July 2025, 79.2% of the population holds a My Number Card, and 86.6% of cardholders have registered it for health insurance use. In August 2025, approximately 17 million traditional National Health Insurance (NHI) cards across 1,400 municipalities expired, with the transition to new cards not throwing up significant issues. Since they have gotten to work, the Digital Agency has been doing a first-class job.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Saison Capital has established a USD 50m blockchain-focused investment fund named Onigiri Capital, with secured commitments totaling USD 35m; Singapore’s GIC and Japan’s SoftBank Vision Fund are considering selling their stakes in Vietnamese fintech firm VNLIFE; The real estate investment arm of Morgan Stanley has reached the final closing of a JPY 131 billion ($900 million) real estate fund
• Insurance: MS&AD Insurance Group's subsidiaries—Mitsui Sumitomo Insurance (MSI) and Aioi Nissay Dowa Insurance (ANDI)—have submitted their quarterly progress report on executing the business improvement plans mandated by Japan's Financial Services Agency
• Banking: Compliance Data Lab has announced the implementation of "Compliance Station® UBO" at West Japan City Bank; TOPPAN Edge was certified by the Global Legal Entity Identifier Foundation (GLEIF) as the first Japanese Qualified vLEI Issuer (QVI) in the verifiable Legal Entity Identifier (vLEI) ecosystem
• Payments: SBI Shinsei Bank is preparing to launch a digital currency for its corporate clients, using DeCurret's "DCJPY", and joining the J.P. Morgan-initiated Partior network; Nudge will begin accepting credit card bill payments in the stablecoin "JPYC"; the Deutsche Bundesbank Representative Office, jointly with Japan's Ministry of Finance and the Bank of Japan, held an event titled "CBDC Insights: Digital Euro and Japan's Approach
• Capital Markets: the total net assets of Money Reserve Funds (MRFs), which serve as a pool of idle money invested in highly safe assets like short-term public and corporate bonds, have recently surpassed JPY16 tn to reach a record high; Mitsubishi UFJ Securities Holdings has launched its new subsidiary, MUFG Securities (India) Private Limited
• Asset Management: Mitsubishi UFJ Asset Management has introduced Bloomberg’s BQuant Enterprise
• Digital Assets: SBI Digital Markets (SBIDM), Samara Alpha Asset Management (Samara Alpha), and Bracket Labs Group (Bracket) have forged a strategic alliance with the objective of reshaping the tokenized securities market; Zodia Custody, the institutional digital asset custodian backed by Standard Chartered, and Japanese financial giant SBI Holdings have mutually agreed to terminate their much-anticipated joint venture, "SBI Zodia Custody"
• The Last Word: UOB - Q4/2025 Forecast for Japan

Venture Capital & Private Markets

• Saison Capital, the venture capital arm of Japan's Credit Saison, has established a blockchain-focused investment fund named Onigiri Capital; the fund aims for an initial target size of $50 million and has already secured commitments totaling $35 million; Onigiri Capital will concentrate on investing in startups that develop solutions for stablecoins, payments, asset tokenization, decentralized finance (DeFi), and financial market infrastructure related to real-world assets (RWA); the fund is co-led by Qin En Looi and Hans De Back, both of whom possess extensive experience in fintech and digital asset investments across Asia; Onigiri Capital plans to leverage Credit Saison's network in Japan, South Korea, Singapore, Malaysia, Indonesia, and the Philippines to connect U.S. startup projects with the Asian cryptocurrency community and financial institutions
• Singapore’s GIC and Japan’s SoftBank Vision Fund are considering selling their stakes in Vietnamese fintech firm VNLIFE; the Singaporean sovereign wealth fund and SoftBank Vision Fund 1 are working with a financial adviser and have reached out to potential investors to gauge interest; a transaction could value VNLife at $1 billion or more; deliberations are at an early stage and there is no guarantee of a deal
• The real estate investment arm of banking giant Morgan Stanley has reached the final closing of a JPY 131 billion ($900 million) fund with a focus on properties in Japan’s residential, office and industrial sectors; the yen-denominated vehicle, dubbed North Haven Real Estate Japan Strategy Fund I, seeks to invest in assets benefiting from structural tailwinds in Asia’s second-largest economy, including domestic urbanisation and international migration, high return-to-office rates and strong e-commerce activity
• This week, the Bank of Japan (BOJ) has published a new paper out of the "Bank of Japan Review" series, examining the recent trends in Private Equity (PE) and Private Debt (PD) funds, which have significantly expanded their assets under management (AUM) since the Global Financial Crisis (GFC), particularly in the United States; a key concern is the financial health of the underlying portfolio companies; while their business performance remains solid, they face a growing interest burden; the paper also highlights increasing interconnectedness between these private funds and the traditional financial system, including Japanese banks and institutional investors; this growing linkage elevates the potential impact of stress in the private markets on Japan's financial system, necessitating close monitoring

Insurance

• MS&AD Insurance Group's subsidiaries—Mitsui Sumitomo Insurance (MSI) and Aioi Nissay Dowa Insurance (ANDI)—have submitted their quarterly progress report on executing the business improvement plans mandated by Japan's Financial Services Agency (FSA); the plans address root causes of past misconduct, including price-fixing (insurance premium adjustment) and information leakage; the overarching theme of the September report is the execution of a fundamental "business model transformation" to restore trust; the report emphasizes moving away from a culture focused excessively on top-line revenue and towards one built on customer-centricity, robust compliance, and sound governance; a key strategic development highlighted is the planned merger of MSI and ANDI, targeted for April 2027, which is now a central driver for integrating and elevating their respective improvement plans

Banking

• The Bank of Japan has published "Financial Results of Japan's Banks for Fiscal 2024;" the three main features of the financial results of Japan's banks for fiscal 2024 are as follows: first, net income increased for major financial groups, regional banks, and shinkin banks; for all types of banks, pre-provision net revenue (PPNR) excluding trading income and profits/losses from investment trusts due to cancellations, which indicates core profitability, increased and credit costs declined; net income was also boosted by a rise in realized gains on stockholdings at major banks and regional banks; second, PPNR excluding trading income and profits/losses from investment trusts due to cancellations increased for all types of banks; it was boosted by an increase in net interest income, mainly against a background of rising yen interest rates, and an increase in net non-interest income; third, the capital adequacy ratios increased for all types of banks, remaining sufficiently above the regulatory requirements
• As “special fraud” operations rise sharply across Japan, scammers have started buying bank accounts from foreigners and using these to transfer and receive swindled funds; many of these bank accounts are thought to belong to foreign students or technical trainees who lived in Japan temporarily, then sold them for pocket money when they returned to their home countries; such sales are illegal and the accounts are often used to commit crimes; last year, annual losses from special fraud in Tokyo hit a record of approximately 15.3 billion yen; in just the first half of this year, that figure has already surpassed 15 billion yen
• Compliance Data Lab has announced the implementation of "Compliance Station® UBO" at West Japan City Bank; this system utilizes the high-quality corporate database of Tokyo Shoko Research (TSR) to instantly provide Ultimate Beneficial Owner (UBO) information online and streamline West Japan City Bank's continuous customer management operations for corporate clients; CDL will continue to advance product development and support to contribute to the further sophistication of West Japan City Bank's continuous customer management, as the demand for building more effective AML/CFT (Anti-Money Laundering and Counter-Financing of Terrorism) operations increases ahead of the FATF's 5th Mutual Evaluation of Japan in 2028
• In related news, TOPPAN Edge, a TOPPAN Group company and wholly owned subsidiary of TOPPAN Holdings, was certified by the Global Legal Entity Identifier Foundation (GLEIF) as the first Japanese Qualified vLEI Issuer (QVI) in the verifiable Legal Entity Identifier (vLEI) ecosystem; in November this year, TOPPAN Edge will launch vLEI-Gateway™, a vLEI issuance service targeting a wide range of global manufacturing and finance use-cases, including supply chain management, international trade, and financial transactions involving crypto-assets on the blockchain
• Earlier this year, Rakuten Bank reached 17 million accounts in Japan – without a single physical branch; "Rakuten Bank is Japan’s largest digital bank in terms of both the number of accounts and total deposits,” President and CEO Tomotaka Torin told the Rakuten AI Optimism conference in July; “We’ve reached 17 million accounts and deposits totaling 12 trillion yen, and both our account numbers and total deposits have been steadily growing;" Torin, who joined Rakuten Securities, Inc. in 2006 and became CEO of Rakuten Bank in June 2025, has built his career across institutions including SBI Shinsei Bank, the Asian Development Bank (ADB) and Mizuho Bank; at the conference, he broke down the secrets behind Rakuten Bank’s rapid ascent – and how AI is shaping the industry

Payments

• SBI Shinsei Bank is preparing to launch a digital currency for its corporate clients, with a target launch around fiscal 2026; the new digital currency, known as "DCJPY," is being developed by Decurret DCP, a subsidiary of the Internet Initiative Japan (IIJ) Group; SBI Shinsei Bank will issue DCJPY by converting deposits from corporate customers into the new digital format; a global leader in this field is JPMorgan Chase, which co-founded the "Partior" platform through a joint investment with Singapore's financial giant DBS Group Holdings and other partners; by becoming one of the first Japanese institutions (after SMBC and Mizuho) to join the Partior network, SBI Shinsei Bank intends to offer its corporate clients seamless international payment capabilities
• Nudge will begin accepting repayments in the stablecoin "JPYC" issued by JPYC for its next-generation credit card "Nudge Card" starting October 2025 (approximately one month after JPYC's business registration completion); this will enable "stablecoin shopping" at approximately 150 million VISA member stores worldwide; users can pay their credit card bill by sending JPYC to a Nudge-specified wallet address; at service launch, Nudge will limit eligible users and begin with Polygon support, leveraging its experience with Nudge NFTs
• The Deutsche Bundesbank Representative Office, jointly with Japan's Ministry of Finance and the Bank of Japan, held an event titled "CBDC Insights: Digital Euro and Japan's Approach" on Thursday, September 11, 2025, on the occasion of Burkhard Balz's visit, the board member responsible for cash management, payments and settlement systems, the digital Euro, and the Centre for International Central Bank Dialogue; we have captured the key takeaways from the event, as well as important points from the individual presentations and panel discussion

Also, here is additional material that we used as preparation for the Bundesbank event described above, which you might also find educational:

• The European Central Bank's Legal Conference was held on September 1 & 2, titled "Building Europe's Autonomy: Law, Institutions, Cooperation;" it included a panel on "Resilience, autonomy and cooperation in payments and clearing systems"
• The inaugural episode of "The FoRC: The Future of Regulatory Compliance," a new series from Solidus Labs, features Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle

Capital Markets

• The “purchasing power” of Japanese individual investors is growing; the total net assets (balance) of Money Reserve Funds (MRFs), which serve as a pool of idle money invested in highly safe assets like short-term public and corporate bonds, have recently surpassed JPY16 tn to reach a record high; from a supply and demand perspective, the current stock market rally is driven by continued corporate share buybacks and foreign investors’ active buying of Japanese stocks; meanwhile, this idle money is waiting in the wings for an opportunity to buy on dips
• Nine Mile Capital recently announced that it has entered into significant strategic partnerships with several international investment institutions to jointly advance an investment initiative in the Japanese stock market; this collaboration marks a further deepening of international financial cooperation and is expected to bring new momentum to the development of Japan’s capital market; the total value of the agreement reaches $7 billion; in addition to the Japanese stock market, the investment scope will gradually expand to related financial sectors such as funds, insurance, and investment trusts, which is anticipated to drive a new wave of development in Japan’s financial industry
• Nomura Securities has published its "Individual Investor Survey" for September 2025
• Mitsubishi UFJ Securities Holdings has launched its new subsidiary, MUFG Securities (India) Private Limited, in Mumbai on Monday, September 15, 2025; MUS(INDIA) is a wholly owned subsidiary of MUFG Securities Asia Limited; this strategic expansion marks a significant milestone in MUFG’s commitment to India and its broader Asia Pacific growth strategy, and significantly enhances MUFG’s ability to offer end-to-end financing solutions in India by complementing its well-established leading position in offshore capital markets; the INR financing platform will enable MUFG to provide holistic funding options across onshore and offshore project finance, M&A, and structured/leveraged finance, strengthening its position as a comprehensive solutions provider

Asset Management

• Mitsubishi UFJ Asset Management has introduced Bloomberg’s BQuant Enterprise to its workflow in a bid to update its operational infrastructure; MUFG is also implementing BQuant Enterprise Textual Analytics, which allows teams to use the provider’s pre-trained and configurable natural language processing (NLP) models to generate further insights for alpha generation workflows

Digital Assets

• SBI Digital Markets (SBIDM), Samara Alpha Asset Management (Samara Alpha), and Bracket Labs Group (Bracket) have forged a strategic alliance with the objective of reshaping the tokenized securities market; through the collaboration, Samara Alpha will leverage Bracket’s technology platform to assist in actively unlocking access to yield strategies while SBIDM will source and curate unique and exclusive capital market products; Bracket will provide the vault infrastructure, including advanced tokenization systems and platform access to a fast-growing user ecosystem
• Zodia Custody, the institutional digital asset custodian backed by Standard Chartered, and Japanese financial giant SBI Holdings have mutually agreed to terminate their much-anticipated joint venture, "SBI Zodia Custody," nearly two years after its inception; the venture, which aimed to provide bank-grade crypto-asset custody for institutions in Japan, was dissolved before it could secure regulatory approval or commence formal operations

The Last Word: UOB - Q4/2025 Forecast for Japan

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