Tech Giant NEC Teams Up With Crypto Garage for Sovereign Institutional Crypto Custody Architecture

Japan’s financial infrastructure is preparing for an institutional shift into digital assets. Tokyo-based technology conglomerate NEC Corporation and blockchain financial services firm Crypto Garage announced a joint partnership to develop a domestic digital asset custody system tailored for institutional investors, financial institutions, and corporate treasuries.

The venture aims to address a critical vulnerability in Japan’s emerging Web3 ecosystem: a heavy reliance on foreign custody solutions. Domestic institutions currently face operational hurdles with overseas platforms, including language barriers, misalignments with local regulatory compliance, Japanese business practices, and supply chain vulnerabilities.

The joint initiative is timed to capitalize on impending regulatory overhauls. Development is slated to begin by the end of 2026, with the goal of deploying the platform immediately following the implementation of Japan’s revised Financial Instruments and Exchange Act, which is anticipated to take effect in 2027.

Strategic Allocation of Responsibilities

The architecture will leverage the distinct domain expertise of both companies:

• NEC Corporation will handle the core infrastructure and application layers. Utilizing its "BluStellar Modernization Program for Financial Institutions," NEC will construct the management and client-facing applications. The tech giant intends to ensure the system seamlessly integrates into existing legacy bank networks while maintaining flexibility to adapt to rapid regulatory updates.
• Crypto Garage will oversee the underlying blockchain security and compliance mechanisms. The firm will deploy its proprietary private key management technologies (including wallets and signing protocols) and build a backend fully compliant with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) standards.

Capitalizing on the Institutional Shift

The push for localized infrastructure comes amid accelerating domestic interest in corporate crypto treasuries, stablecoin-based settlement systems, and the anticipated proliferation of digital products like Bitcoin ETFs and staking services.

"By combining forces with Crypto Garage, we aim to deliver a highly reliable custody system aligned with Japanese business practices," said Kazuhisa Shimizu, Corporate SVP and Managing Director of the Financial Solutions Business Unit at NEC. "NEC intends to use this system framework to help financial institutions launch new businesses and drive the implementation of Japan’s token economy."

Looking forward, the partners indicated that the infrastructure will feature a highly scalable design to accommodate broader digital assets and future corporate stablecoin management. Additionally, NEC and Crypto Garage revealed plans to explore the creation of a financial industry consortium aimed at standardizing sovereign custody and wallet technologies across Japan.

Dissolution of the SBI Holdings and Zodia Custody Joint Venture in Japan

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

Japan FinTech ObserverNorbert Gehrke