Japan FinTech Observer #176

Welcome to the one hundred seventy-sixth edition of the Japan FinTech Observer.

While we are right in the middle of earnings season, we have kept this edition free of financial results, and hope to bring you a consolidated view once the majority of companies has reported (and we have had a chance to digest all the investor relations material).

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Japanese Yen stablecoin issuer JPYC reaches ~JPY 6bn total Series B Funding following extension round; Aozora Bank Group launches JPY 15bn venture debt fund to support growing Japanese startups; SMBC Nikko Securities, SOMPO Growth Partners, and SMBC Venture Capital participated in X Miles Series C funding round
• Insurance: Sompo Himawari Life transfers medical insurance block to new bermuda unit; Tokio Marine Group takes stake in carbon InsurTech Kita to expand market risk coverage
• Banking: SBI Shinsei Bank partners with regional lenders to boost structured finance and local investment
• Payments: Digital Garage commercializes stablecoin payment platform "DG SPS" to drive next-gen infrastructure in Japan; NETSTARS and Lawson partner for in-store stablecoin payment proof-of-concept trial; SBI Digital Practice and Nodeinfra partner to launch cross-border stablecoin payment network connecting Japan and South Korea; NTT DATA Payment Services launches integrated 'ADAPTIS' platform in India
• Capital Markets: Various reads on the stock market, JGB market and Yen intervention
• Asset Management: Japan’s Government Pension Investment Fund (GPIF) posted a +8.20% return for the first quarter of fiscal year 2026
• Digital Assets: BOOSTRY and Digital Asset partner to advance on-chain financial services via Canton Network; Nomura’s Laser Digital partners with ZIGChain to target USD 100m in onchain vaults
• The Last Word: The most livable city in the world

Venture Capital & Private Markets

• Japanese Yen stablecoin issuer JPYC reaches ~JPY 6bn total Series B Funding following extension round: JPYC Inc., the developer and operator of the Japanese yen-pegged stablecoin "JPYC," announced the completion of its Series B extension round, bringing total Series B fundraising to approximately ¥6 billion; this round follows in the footsteps of the Series B First Close in February, and the Series B Second Close in April 2026; the extension round saw new capital participation from logistics leader AZ-COM MARUWA Holdings, which contributed approximately ¥1 billion; this follows an earlier capital and business alliance between JPYC and AZ-COM MARUWA; according to the Tokyo-based startup, the fresh capital will be deployed to expand its ecosystem across both traditional finance and Web3 sectors, accelerating the social adoption of the JPYC stablecoin
• Aozora Bank Group launches JPY 15bn venture debt fund to support growing Japanese startups: Aozora Corporate Investment, a wholly owned fund management subsidiary of Aozora Bank, has established a new venture debt fund, the "Aozora HYBRID No. 4 Investment Limited Partnership," totaling 15 billion yen; the fund serves as the direct successor to the Aozora HYBRID No. 3 fund launched in July 2023, which is nearing full deployment after three years of operations; the new vehicle aims to meet strong, ongoing demand for venture debt financing among high-growth Japanese startups; by offering hybrid financing instruments—including venture debt and equity investments—the fund acts as a bridge between equity capital from venture capital firms and corporate investors, and traditional debt financing from commercial banks
• SMBC Nikko Securities, SOMPO Growth Partners, and SMBC Venture Capital participated in X Miles Series C funding round: X Mile, a Tokyo-based startup specializing in digital transformation (DX) for non-desk industries such as logistics, construction, and manufacturing, has raised ¥3.17 billion in a Series C funding round; the round was led by global growth investor Vertex Growth, bringing X Mile’s total capital raised to date to ¥6.96 billion

Insurance

• Sompo Himawari Life transfers medical insurance block to new bermuda unit: Sompo Holdings has announced that its overseas subsidiary, Sompo Life Re, has secured a reinsurance license from the Bermuda Monetary Authority (BMA) and commenced operations; as its initial transaction, the newly licensed Bermuda entity has underwritten a portion of Sompo Himawari Life Insurance’s in-force medical insurance portfolio via coinsurance; under the coinsurance agreement, Sompo Life Re assumes the economic risk of the contracts under the same conditions as the primary insurer; Sompo Holdings noted that the intra-group transaction will not impact existing policyholders or alter customer relationships; the group expects the deployment of intra-group reinsurance to optimize capital allocation and improve capital efficiency across its domestic life insurance business, ultimately driving broader group value
• Tokio Marine Group takes stake in carbon InsurTech Kita to expand market risk coverage: Carbon insurance specialist Kita has secured a strategic investment from the Tokio Marine Group, cementing a broader operational partnership to bolster risk management across global voluntary carbon markets; the equity stake was executed through Tokio Marine & Nichido Fire Insurance (TMNF); the transaction expands upon Kita’s ongoing collaboration with Tokio Marine Kiln, which initially focused on political risk coverages for credit buyers; under the expanded mandate, Kita and TMNF are co-developing dedicated non-delivery insurance tailored for Japanese carbon credit purchasers, mitigating financial loss if prepaid credits fail to materialize; furthermore, the companies are integrating satellite-driven analytics into Tokio Marine's underwriting framework; TMNF plans to combine Kita’s remote risk assessment capabilities with Nippon Koei's engineering consultancy to create an end-to-end service suite; this joint offering will manage carbon project lifecycles from preliminary site screening to post-investment delivery monitoring

Banking

• SBI Shinsei Bank partners with regional lenders to boost structured finance and local investment: SBI Shinsei Bank has entered into a "Regional Growth Investment Partnership Agreement" with 14 regional financial institutions; the agreement establishes a joint framework in structured finance aimed at expanding participation opportunities and fee revenues for regional lenders while facilitating the circulation of growth capital across local economies; participating lenders currently include Ashikaga Bank, The San-in Godo Bank, The Thirty-Third Bank, Joyo Bank, The Tokyo Star Bank, and The Bank of Tottori, with roughly 10 additional regional institutions expected to join by the end of August

Payments

• Digital Garage commercializes stablecoin payment platform "DG SPS" to drive next-gen infrastructure in Japan: Digital Garage announced the commercial launch of its "DG Stablecoin Payment Service" (DG SPS), a specialized payment infrastructure designed to integrate stablecoin transactions into Japan's existing merchant and payment network; the system will initially be deployed to major payment service providers, including JCB—which operates an international card network reaching 72 million merchants—and Digital Garage's subsidiary DG Financial Technology (DGFT); DG SPS enables payment processors to offer stablecoin acceptance to merchants via a single API connection, eliminating the need for merchants to alter their existing point-of-sale (POS) systems or make extensive infrastructure investments
• NETSTARS and Lawson partner for in-store stablecoin payment proof-of-concept trial: NETSTARS announced that it will conduct a proof-of-concept trial for its "Stablecoin Pay" service at a Lawson convenience store on Monday, August 17; the trial will take place at the Lawson Osaki Atrium location, following a preliminary trial conducted on August 3; the experiment will test point-of-sale (POS) terminal-integrated transactions using three pegged digital assets: USDC, USDT, and JPYC; built on NETSTARS’ proprietary cashless payment platform, "StarPay," the service allows for point-of-sale integration aimed at assessing operational speed, user experience, and impact on store staff during high-volume retail hours
• SBI Digital Practice and Nodeinfra partner to launch cross-border stablecoin payment network connecting Japan and South Korea: Japanese financial powerhouse SBI Group, through its Canton Network-focused entity SBI Digital Practice (SBIDP), has signed a Memorandum of Understanding with South Korean digital asset software provider Nodeinfra to build a stablecoin-based cross-border payment network; dubbed Project Musubi, the joint initiative aims to overhaul traditional foreign exchange mechanisms between South Korea and Japan; currently, cross-border settlements between the two Asian nations rely on converting Japanese Yen (JPY) into U.S. Dollars (USD) before converting them back into Korean Won (KRW); this multi-tier FX process adds transaction costs, extends processing times, and exposes market participants to foreign exchange volatility
• NTT DATA Payment Services launches integrated 'ADAPTIS' platform in India: NTT DATA Payment Services India announced the launch of ADAPTIS, a unified brand designed to consolidate its payment acceptance, merchant solutions, commerce capabilities, and value-added services into a single platform; the initiative targets Indian businesses across all scales—from local micro, small, and medium enterprises (MSMEs) to large-scale corporations—aiming to bridge physical and online operations

Economics

• Sony Financial Group's "Inoue Report" covers the summary of opinions at the Bank of Japan's July Monetary Policy Meeting: The BOJ maintained the policy rate unchanged at its July MPM; while their overall line of discussion of economy and prices also remained unchanged, they appreciated the resiliency of economic activities but expressed stronger concerns about the upside risks of prices; some of the MPM members insisted that the BOJ should pay attention to the risk of overshooting of underlying inflation; accordingly, majority of the MPM members argued that the rate hike should be faster; nevertheless, their diversified reasoning could have different implications for an appropriate level of a “terminal rate”
• McKinsey & Company has published "From drift to dynamism: Reinventing Japan to compete in a new era": Japan is not in crisis—and that may be its greatest blind spot; with the strength of a system built over decades, the country has high trust, deep institutional capacity, and substantial accumulated assets; households, firms, and public institutions have acted as shock absorbers: companies have prioritized employment stability over restructuring, and households have saved and adjusted their expectations; in addition, much of Japan’s quality of life is sustained by “invisible assets”: reliable public transport, universal healthcare, low crime, and well-maintained environments; these strengths have cushioned the impact of stagnation—but also masked it
• Arcus' Peter Tasker lays out "How Japan Can Bring the Money Back Home": Prime Minister Takaichi has set out bold long-term spending plans to stimulate industries deemed vital to national security; by way of support, Minister of Finance Katayama has suggested tilting Government Pension Investment Fund’s asset allocation in favour of domestic securities; she is also considering tax breaks on purchases of Japanese government bonds undertaken via the Nippon Individual Savings Account (“NISA”) savings scheme; a better approach would be to offer the Bank of Japan's Nikkei and TOPIX Exchange-Traded Fund through the NISA platform at discounts proportionate to the length of holding; such a methodology would be akin to one adopted by the Hong Kong Monetary Authority (HKMA) when it returned stocks purchased during the Asian Financial Crisis to the public; doing so would accelerate the very slow sales process that is underway and allow the BoJ to divest itself of its hoard of riches

Capital Markets

• Activists face resistance in Japan after years of easy pickings, Bloomberg reports: Shareholder activists in Japan are facing a challenging phase as they encounter less compliant targets and a more skeptical government; stocks held by activists have underperformed the Topix index by an average four percentage points in the first seven months of the year (see chart above), ending a four-year outperformance streak; the proportion of Topix companies trading below book value has fallen to about 34% from roughly half the market in 2022, reflecting both governance improvements and rising equity valuations
• Are Japanese Stocks at Risk of Falling as the Yen Surges, Goldman Sachs asks: Market conditions in Japan look similar to those from two years ago, when the value of the yen suddenly strengthened, triggering a 24% drop in the TOPIX index; foreign investors’ positions in Japanese equities are 20% above the levels seen before the 2024 correction; the medium- and longer-term outlook for Japanese equities is positive, amid expectations the yen may weaken, helping to boost exporter profits; Goldman Sachs Research recently raised its forecast target for the TOPIX index to 4,500 over the next 12 months; investors concerned about a selloff triggered by a sudden strengthening of the yen might focus on companies that earn most of their revenue within Japan, rather than exporters, which were hit hard in 2024
• The Bank of Japan has published "Impact of the Bank of Japan's Reductions in JGB Purchases on the JGB Markets": Since summer 2024, the Bank of Japan has been gradually reducing its outright purchase amount of long-term Japanese government bonds (JGBs), based on a plan decided at its Monetary Policy Meeting (MPM), so that the Bank can improve the functioning of the JGB markets in a manner that supports stability in the markets; while the impact of these reductions on interest rate formation has gradually realized, it is suggested that the recent rise in long-term interest rates has been driven, to a certain extent, by fundamental factors such as the rise in the underlying inflation; the functioning of the JGB markets has been steadily improving as the Bank makes progress in reducing its JGB purchases, with long-term interest rates being formed more freely in the financial markets; while Japanese investors such as banks and households have gradually increased their JGB holdings, such portfolio adjustments are likely to take some time; the Bank going forward will continue to carefully monitor developments in these portfolio adjustments as well as trends in the JGB markets and their functioning as such progress unfolds
• J.P. Morgan's "Bond Bulletin" covers the "Yen and the art of intervention": This week’s Bond Bulletin examines the first US–Japan coordinated intervention to strengthen the yen since 1998 and explains why the US and Japanese authorities chose to act now; it also assesses what closer links between the yen, Japanese government bonds (JGBs), and US Treasuries could mean for currency and bond markets

Asset Management

• Japan’s Government Pension Investment Fund (GPIF) posted a +8.20% return for the first quarter of fiscal year 2026, boosting its total managed assets to ¥317,759.6 billion; the fund generated ¥24,089.5 billion in total investment returns for the quarter, anchored by strong foreign stock performances and robust domestic equity markets

Digital Assets

• Tiger Research describes the "Structure of Prediction Markets in Japan": Prediction markets in Japan have followed a pattern of regulatory workaround rather than institutional incorporation; the method local platforms have adopted resembles the three-shop system, a mechanism that originated in the pachinko industry, in that it physically severs the direct cash flow within the operating process
• BOOSTRY and Digital Asset partner to advance on-chain financial services via Canton Network: BOOSTRY and Digital Asset Holdings have announced a strategic collaboration aimed at accelerating the adoption of on-chain finance and digital capital markets both in Japan and internationally; as the initial initiative of this alliance, the two companies are co-developing a multi-chain enterprise wallet service, which BOOSTRY plans to launch within 2026
• Nomura’s Laser Digital partners with ZIGChain to target USD 100m in onchain vaults: Nomura-backed digital asset firm Laser Digital has made a strategic investment in ZIGChain and entered into a partnership with its product layer, ZIG Markets, to launch institutional-grade onchain financial products; the investment amount and specific token valuation were not disclosed; the collaboration aims to address a gap in emerging market private credit by pairing ZIG Markets' regional origination capabilities with Laser Digital’s risk governance and product structuring expertise; together, the entities are targeting a minimum of $100 million in total value locked (TVL) across a new pipeline of vault products

The Last Word: The most livable city in the world

Monocle’s Quality of Life Survey 2026 aims to determine the 20 most liveable cities in the world, based on a survey of 30 questions sent out to correspondents in 40 cities worldwide.

After poring over the numbers and reading correspondents’ views, Monocle's editors drafted a final line-up. North American cities have struggled (despite plucky Vancouver) due to stubbornly high rates of crime, inequality and poor housing. And in spite of a wealth of ambition – Cape Town’s public pools and Kigali’s spotless streets among them – Africa and the Middle East do not offer the security of certain mature markets in Europe and Asia.

Likewise, London and Los Angeles have failed to make it on to the list. So consider this the beginning of a debate rather than the end of one. According to the UN, four-fifths of the world’s population lives in urban areas (and more are coming). Cities are the engines of progress and an ongoing experiment – even the best ones aren’t perfect. The aim of this survey is to nudge the discussion around liveability away from stuffy policy towards a genuine conversation about what moves our hearts, minds and feet towards certain places.

Here is the list:

• 20 - Perth (tied with Kyoto)
• 20 - Kyoto (tied with Perth)
• 19 - Vancouver
• 18 - Melbourne
• 17 - Seoul
• 16 - Helsinki
• 15 - Amsterdam
• 14 - Singapore
• 13 - Barcelona
• 12 - Milan
• 11 - Stockholm
• 10 - Oslo
• 9 - Munich
• 8 - Paris
• 7 - Madrid
• 6 - Zurich
• 5 - Sydney
• 4 - Vienna
• 3 - Lisbon
• 2 - Copenhagen
• 1 - Tokyo

In fractious times, Tokyo is an outlier for its stability, calm and security. Young children walk to school unaccompanied by their parents, huge events take place every week without major disorder, and crime rates are consistently low. Despite its size, the Japanese capital retains an old-fashioned sense of community. Young people are taught to be considerate. Individual excellence is celebrated but even sporting megastars are expected to stay humble. It would be hard to replicate Tokyo’s modus operandi but we can certainly admire it. So much of this lies in patterns of behaviour that are internalised from birth: quiet voices on public transport; the patient queues on the subway platform; the glass of water and oshibori hand towel at the start of a meal.

Yuriko Koike, Tokyo’s 73-year-old governor, is one of the most powerful figures in Japanese politics. Now deep into her third four-year term, she has steered Tokyo through the pandemic, its troubled Olympic Games and several typhoons. From her office in Nishi Shinjuku, she oversees a city with a $2.5trn (€2.1trn) GDP, a population of 14 million and a dizzying transport network.

The city plays the long game when it comes to transport and construction projects. The complex reconfiguration of busy Shinjuku station won’t be completed until the 2040s. JR East has reinvented an overlooked pocket of Shinagawa to create a new neighbourhood called Takanawa Gateway City. Architect Kengo Kuma has contributed the swirly Museum of Narratives.

The sharp increase in tourism has, however, had an impact on life in Tokyo, with visitors now popping up in the quietest corners of the city. While Tokyo’s population has become noticeably more diverse, there have been attendant challenges for residents. The rise in the cost of living has hit Japan’s citizens and, with the yen at historic lows, fewer are travelling overseas.

Kindness abounds in daily interactions and in a hospitality culture that tugs at the heartstrings. Tokyo should celebrate being such a well-mannered metropolis but its exemplary conduct is never taken for granted. Three (quiet) cheers for this exhilarating city.

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