Japan FinTech Observer #147

Welcome to the one hundred forty-seventh edition of the Japan FinTech Observer.

A unicorn was born through Alpaca's latest funding round. As if we knew this was coming, we are pleased to announce that Co-Founder & Chief Product Officer Hitoshi Harada will join the next Tokyo FinTech Meetup on Wednesday, February 28. To get your opportunity to "touch a unicorn", please request an invite via our Luma page.

Japan will go to the polls on February 8. While Takaichi's decision was expected, the timing surprised, with most pundits forecasting such decision either post-FY2026 budget agreement in March/April, or post the current Diet session, which ends in June. Outside of the budget, the agreement to issue deficit-financing JGBs expires in March. Recent iterations have seen it extended for five years, although it might now become a bargaining chip for the election, with some candidates advocating for a one year term.

Lastly, central bankers around the world have declared their solidarity with Federal Reserve Chair Powell. Ueda declined to sign.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Alpaca secures unicorn status with USD 1.15bn valuation following USD 150m Series D; SMBC Fin Atlas Beyond Fund makes inaugural bet on AI security firm WitnessAI; Minerva Growth Partners targets ¥20 Billion for second fund to deepen crossover strategy in Japan; Mercuria and Daiwa break new ground with Japan’s first open-ended aircraft fund targeting ¥150 Billion
• Insurance: Nippon Life Insurance Company's tender offer for Medical Data Vision; Prudential Japan CEO resigns as internal probe reveals financial misconduct involving over 100 employees
• Banking: Money Forward reports full FY2025 results; SMBC launches Japan’s first credit card-based foreign currency accumulation service to court retail investors; Fujitsu and Standard Chartered unveil roadmap for Qubitra, a JV for quantum commercialization in Finance; Infcurion tapped by SMBC Group to power invoice digitization and card payment features in corporate finance platform ‘Trunk’; the Reserve Bank of India (RBI) has given SMBC Group initial approval to establish a wholly-owned subsidiary
• Payments: JPYC bridges the gap to retail - Yen-pegged stablecoin to power touch payments via Japan’s national ID system; Digital Garage, JCB, and Resona Holdings form strategic alliance to mainstream stablecoin payments in Japan; Binance Japan has officially launched the "Binance Japan Card"
• Capital Markets: Elliott opposes the updated take-private offer for Toyota Industries Corporation; TP ICAP Group has agreed to acquire Vantage Capital Markets, a global brokerage with significant presence in Tokyo; MUFG Trading has established a wholly owned subsidiary in Singapore for structured trade solutions
• Digital Assets: Japan Blockchain Industry Outlook 2026 - the transition from narrative to utility
• The Last Word: Ten for the Road

Our weekly online forum is taking place this week on Wednesday at 9pm JST, and will be streamed on LinkedIn Live (and YouTube & Twitter). Supported by our friends at Alpaca and ITFOR, we will also go offline and in-person again. Please check out our schedule on Luma, or register straight on LinkedIn.

Venture Capital & Private Markets

• Alpaca secures unicorn status with USD 1.15bn valuation following USD 150m Series D: Japanese-founded and US-headquartered Alpaca, a provider of API-first stock and crypto brokerage infrastructure, has raised $150 million in a Series D funding round, propelling the company’s valuation to $1.15 billion; the round was led by Drive Capital, with participation from major institutional players including Citadel Securities, Kraken, and the venture arms of BNP Paribas (Opera Tech Ventures) and MUFG; as part of the transaction, Drive Capital Co-Founder Chris Olsen will join Alpaca’s Board of Directors; in addition to the equity financing, the company secured a $40 million line of credit to bolster its balance sheet
• SMBC Fin Atlas Beyond Fund makes inaugural bet on AI security firm WitnessAI: Japanese banking giant Sumitomo Mitsui Banking Corporation (SMBC) has made its first-ever investment through its new corporate venture capital (CVC) fund; the fund, named the "SMBC Fin Atlas Beyond Fund" and launched in collaboration with Fin Capital, has participated in the recent $58 million funding round for WitnessAI, an emerging leader in artificial intelligence security and governance; this inaugural investment marks a clear strategic move by SMBC to back foundational technologies shaping the future of finance

New Funds

• Minerva Growth Partners targets ¥20 Billion for second fund to deepen crossover strategy in Japan: Minerva Growth Partners (MGP) has announced the first close of its second flagship fund, "Minerva Growth Partners II, LP" (Fund II); the Tokyo-based firm, which specializes in growth equity, is targeting a total corpus of 20 billion yen ($130 million) with backing from both domestic and international institutional investors; MGP operates in partnership with Hong Kong-based Pleiad Investment Advisors, a strategy designed to bridge the gap between private venture capital and public equity markets
• Mercuria and Daiwa break new ground with Japan’s first open-ended aircraft fund targeting ¥150 Billion: Tokyo-based Mercuria Investment (MIC) has unveiled plans to launch the country’s first open-ended aircraft fund managed by a domestic firm; the initiative, dubbed "MACH OE," represents a strategic shift in how Japanese institutional capital accesses the global aviation market, moving beyond traditional tax-lease structures toward liquidity-focused asset management; the fund targets an asset size of over JPY 150 billion ($1 billion) and has secured the Development Bank of Japan (DBJ) as a prestigious anchor investor, signaling strong institutional confidence in the venture

Other media

• Akihito Yuzuriha has left Honda to join SMBC Group's new innovation arm as a director: after half a decade at Honda’s startup investment arm, Honda Xcelerator Ventures – where he worked concurrently with his other role in the corporate’s business strategy and development function – Yuzuriha has joined SMBC Edge, the bank’s newly-established VC arm
• How New Horizon Capital Is revitalizing Japan’s SME sector through Private Equity: Yasushi Ando, President of New Horizon Capital, explains how private equity is helping Japan’s SMEs navigate succession challenges, roll-ups, and restructuring; with a hands-on approach and long-term vision, his company is unlocking new value in the mid-market sector

Insurance

• Nippon Life Insurance Company's tender offer for Medical Data Vision: this transaction is a strategic bolt-on acquisition designed to build a new, data-centric business vertical for Nippon Life; the move is a direct manifestation of the company's long-term corporate vision to evolve beyond its traditional insurance role into a comprehensive "peace of mind" provider; Nippon Life's long-term corporate vision aims to establish a multifaceted enterprise offering integrated services across insurance, asset management, healthcare, and nursing care; enhancing the customer experience (CX) by providing value beyond conventional insurance products is central to this ambition
• Prudential Japan CEO resigns as internal probe reveals financial misconduct involving over 100 employees: Prudential Life Insurance of Japan announced a sweeping leadership overhaul and a comprehensive restructuring of its governance framework, following the revelation of widespread financial improprieties among its sales force; Hiroshi Mahara, Representative Director and CEO of Prudential Life, will step down on February 1, 2026, to take managerial responsibility for the scandal; the shakeup follows the conclusion of an extensive "Customer Confirmation" investigation launched in August 2024; the probe, which involved contacting millions of policyholders, uncovered not only instances of direct fraud but also a pervasive culture of unauthorized financial dealings by sales staff, totaling billions of yen

Banking

• Money Forward reports full FY2025 results: the 24.7% year-on-year growth in net sales reflects the successful expansion across all business segments, particularly in the core Business and Home SaaS offerings; this is further validated by the impressive 31.1% growth in SaaS Annual Recurring Revenue (ARR), a key indicator of the underlying health and scalability of the subscription-based business model; the most dramatic shift occurred in profitability. The company recorded a significant swing from a net loss of (¥6,330) million in FY2024 to a net profit of ¥1,587 million in FY2025; this turnaround, was driven by extraordinary income; the Consolidated Statement of Income reveals a "Gain on sale of shares of subsidiaries and associates" of ¥6,248 million; this one-time gain masks a continued operating loss at the GAAP level, making Adjusted EBITDA the more relevant metric for assessing the underlying operational health of the business during this growth phase
• SMBC launches Japan’s first credit card-based foreign currency accumulation service to court retail investors: in a bid to accelerate the shift from savings to assets among Japanese households, Sumitomo Mitsui Financial Group (SMBC Group) has announced the immediate launch of a new service allowing individual customers to accumulate foreign currency deposits via credit card payments; this initiative—a collaboration between Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Card Company—marks a first for Japan; dubbed "Foreign Currency Credit Card Accumulation", the service aims to lower the barrier to entry for currency diversification while incentivizing users with SMBC’s loyalty program, V Points
• Fujitsu and Standard Chartered unveil roadmap for Qubitra, a JV for quantum commercialization in Finance: Fujitsu and SC Ventures, the innovation arm of Standard Chartered, have formally announced the operational roadmap for Qubitra Technologies, a London-based joint venture designed to transition quantum computing from theoretical research to practical, commercial application within the financial services sector; incubated under the working title "Project Quanta" in September 2025, the newly branded entity aims to bridge the gap between quantum hardware capabilities and institutional banking requirements; the venture plans to leverage Fujitsu’s computing infrastructure—including its Digital Annealer—to tackle computationally intensive banking functions such as high-frequency trading, derivatives pricing, and complex fraud detection
• Infcurion tapped by SMBC Group to power invoice digitization and card payment features in corporate finance platform ‘Trunk’: Infcurion has announced its formal participation as a design and development partner for "Trunk," a comprehensive digital financial service for corporate clients operated by Sumitomo Mitsui Financial Group (SMBC Group); Infcurion is integrating new functionality into the platform that leverages its proprietary "Winvoice" infrastructure; this integration is designed to streamline payment processes for businesses by combining automated invoice data extraction with credit card payment capabilities
• The Reserve Bank of India (RBI) has given SMBC Group initial approval to establish a wholly-owned subsidiary; this move allows the Japanese bank greater operational freedom in India; previously, Sumitomo Mitsui Banking Corporation operated through a branch; the new subsidiary will be a separate legal entity, offering treatment similar to local banks

Payments

• JPYC bridges the gap to retail - Yen-pegged stablecoin to power touch payments via Japan’s national ID system: JPYC, the prominent Japanese Yen-pegged stablecoin, is set to undergo a significant stress test in the physical retail environment, moving beyond the digital realm to power real-world transactions through Japan’s My Number Card system; in a move that signals the increasing convergence of Web3 assets and traditional payment infrastructure, Sumitomo Mitsui Card Company (SMCC) and MynaWallet have announced a continuous proof-of-concept (PoC) program; the initiative places JPYC at the core of a new payment ecosystem designed to allow consumers to spend stablecoins as easily as tapping a transit card
• Digital Garage, JCB, and Resona Holdings form strategic alliance to mainstream stablecoin payments in Japan: in a major push to modernize Japan’s payment infrastructure, Digital Garage (DG), global payments brand JCB, and Resona Holdings have entered into a tripartite partnership aimed at the full-scale social implementation of stablecoin payments; while the global market for stablecoins is expanding rapidly due to their utility as a settlement layer, Japan has faced hurdles regarding regulatory compliance and practical business modeling; this partnership seeks to bridge that gap; the alliance identifies significant opportunities in reducing foreign exchange friction for inbound tourists, streamlining fund settlements, and improving cash flow for merchants through immediate settlement
• Binance Japan has officially launched the "Binance Japan Card", issued in partnership with Life Card and operating on the JCB network; the flagship feature of the Binance Japan Card is its reward structure; unlike traditional credit cards that offer points or miles, this card offers a 1.6% return in BNB (Binance Coin), the utility token central to the Binance ecosystem; according to internal data from December 2025, this rate represents the industry’s highest standard for domestic credit cards offering crypto-asset rewards

Capital Markets

• Elliott Investment Management and Elliott Advisors (UK), which advise funds that together have a significant ownership stake in Toyota Industries Corporation, have published an open letter to the Company's shareholders; in the letter, Elliott outlined its opposition to the revised tender offer by Toyota Fudosan at ¥18,800 per share, which Elliott believes very significantly undervalues Toyota Industries; Elliott's analysis showed the Company's intrinsic net asset value to be more than ¥26,000 per share as of January 16, 2026 – almost 40% above the Revised TOB price – and that the Standalone Plan for Toyota Industries offers a clear path to a valuation of more than ¥40,000 per share by 2028
• TP ICAP Group, a world-leading provider of market infrastructure, has agreed to acquire Vantage Capital Markets, a global brokerage with significant presence in London, Hong Kong, Tokyo, and Dubai; the acquisition, subject to regulatory approval, strengthens TP ICAP’s position in equity derivatives and fixed income, particularly across APAC markets, while enabling Vantage to leverage TP ICAP’s extensive US footprint; Vantage’s leadership team will remain in place, ensuring continuity and stability for clients; completion of the transaction is subject to regulatory approvals and is expected to close in Q2 2026
• MUFG Bank’s consolidated subsidiary MUFG Trading has established a wholly owned subsidiary in Singapore, MUFG Trading (Singapore); MUFG Trading was established in July 2022, to provide new structured trade solutions to MUFG's corporate clients for their sales and purchase of goods and raw materials, based on approval from the Financial Services Agency; the new entity, MUFG Trading Singapore, will be dedicated to enhancing the structured trade solutions provided to customers for their global procurement and trades; the launch of its business is expected to take place by March 2026

Digital Assets

• Tokyo FinTech is pleased to once again support the TEAMZ Summit as a community partner, this year at a new venue: Happo-en; secure your ticket at current "Early Bird" pricing, and receive an additional 10% off with the discount code "TOKOYFINTECH2026"; see you in Tokyo in early April 🌸
• Japan Blockchain Industry Outlook 2026 - the transition from narrative to utility: the year 2026 represents a critical inflection point for the Japanese blockchain industry; a clear consensus has emerged among industry leaders and experts: the market is undergoing a decisive shift away from speculative narratives and towards demonstrable utility, comprehensive regulatory integration, and sustainable business models; this transition marks the end of an era dominated by hype cycles and the beginning of a new phase defined by maturation, consolidation, and the establishment of foundational infrastructure for long-term growth; while past years were characterized by feverish excitement, 2026 will be defined by the quiet, substantive work of building real value; the primary catalyst for this evolution is a series of foundational changes in the global regulatory environment, which are finally providing the clarity necessary for the industry to move into the mainstream

The Last Word: Ten for the Road

Following Prime Minister Sanae Takaichi’s surprise announcement of the dissolution of the Lower House, the outlook for Japanese markets has shifted decidedly toward a "Takaichi Trade" narrative. With the general election set for February 8th, strategists are pricing in a consolidated LDP power base, a normalized monetary policy path, and specific sector winners. Here are the 10 key takeaways for investors from the discussions we have observed throughout the past week.

1. Takaichi’s Calculated Gamble: Prime Minister Takaichi has dissolved the Lower House to capitalize on her personal approval rating versus a significantly lower party approval rating. This snap election is viewed as an aggressive move to secure a popular mandate before pushing through difficult structural reforms.

2. An LDP Landslide is Priced In: The opposition’s attempt to form a coalition between the CDP and Komeito is viewed by analysts as a "desperate" move likely to alienate voters. Projections suggest the LDP could increase its seat count from 199 to approximately 260, potentially securing a stable absolute majority and reducing reliance on coalition partners.

3. BOJ Normalization: Next Hike in July: Following the December rate hike, the Bank of Japan is gaining confidence in the "virtuous cycle" of wages and prices. Economists expect the BOJ to pause during the election cycle but resume hiking in July 2025, maintaining a trajectory toward a 1.5% neutral rate.

4. Wage Growth to Anchor Inflation: Preliminary data for the Shunto (spring wage negotiations) suggests base wage growth of 3.2%–3.3%. This is critical: unlike previous years driven by corporate profits, this growth is occurring despite margin pressure, signaling sustainable, structural wage inflation.

5. Fiscal Policy: Discipline Now, Spending Later: The FY2026 budget is surprisingly conservative, with increases mostly tied to non-discretionary debt service and defense. However, Takaichi is expected to unveil a massive "Growth Strategy" white paper in June, targeting 17 key sectors, which will likely unleash fresh fiscal stimulus post-election.

6. The "Economic Security" Long Trade: With Takaichi’s hawkish stance on national security, "Economic Security" is a top conviction long. This includes Defense, Semiconductors, and Shipbuilders. Regardless of the election margin, defense spending is viewed as a secular tailwind.

7. Inflation Winners are the New Alpha: As Japan exits deflation, investors are advised to pivot toward "Inflation Beneficiaries"—companies with pricing power that can pass on costs. This includes trading houses (sogo shosha), construction firms, and luxury consumption plays.

8. Yen Intervention Risks are Elevated: The Ministry of Finance has ratcheted up verbal intervention. While the election usually encourages risk-on Yen selling, a breach of key levels could trigger actual intervention, with strategists estimating a potential 3-4 Yen strengthening impact if executed.

9. Shorting the "Zombie" Companies: In a rising rate environment, companies with weak balance sheets are becoming prime short targets. The strategy involves shorting high-leverage small-caps (specifically TSE Growth components) that will struggle with higher borrowing costs.

10. JGB Outlook: Bear Steepening: The bond market is bracing for higher yields. An LDP victory implies political stability and eventual fiscal expansion, which, combined with the BOJ’s normalization path, supports a short position on JGBs (expecting yields to rise) and a steepening of the yield curve.

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