Japan FinTech Observer #100

Welcome to the hundredth edition of the Japan FinTech Observer.

After Consensus in Hong Kong is before Japan FinTech Week, hence a brief reminder that we are hosting our own in-person, 100% offline meetup on Monday, March 3. Please register here. Given current demand, we will close registrations by February 28 at the latest.

The Japanese Yen had a stellar week, appreciating a little more than 2% (and over 3.5% during the past six trading days) versus the US Dollar, driven by higher bond yields, with the?2-year JGB yield exceeding 0.8% (highest since October 2008), and the 10-year JGB yield reaching 1.44% (highest since November 2009). Investors are betting on a higher pace of Bank of Japan policy rate raises in the face of higher-than-target CPI numbers.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: establishment of MUFG Morgan Stanley Credit Solutions; the Development Bank of Japan and the Indonesia Investment Authority have launched a fund offering hybrid capital solutions for Indonesian corporates; IDB?Lab has been working with Japanese companies such as NTT Data; Blocksky has raised funds with SBI Investment as the lead investor
• Banking: Mitsubishi UFJ NICOS has resolved to acquire the shares of rental guarantee firm Zenhoren through a tender offer; SMBC announces new ventures in cybersecurity and philanthropy
• Payments: double jump.tokyo and TIS to jointly promote infrastructure for stablecoin payments; Progmat and Korean partners will conduct a proof of concept for "Project Pax," a cross-border remittance infrastructure project for stablecoins in collaboration with Swift
• Asset Management: Nikko Asset Management and Tikehau Capital have established Tikehau Amova Investment Management in Singapore; Nomura Asset Management to merge "1 trillion yen fund" after long under-performance
• Digital Assets: Laser Digital has launched the "Laser Digital NEAR Adoption Fund;" NTT Digital and Figment are strengthening their validation business efforts with the aim of developing the Web3 ecosystem; Community-driven IP platform “Xross Road” and advanced AI technology provider “Allora Network” have formed a strategic partnership
• The Last Word: Entrepreneurial Framework Conditions in Japan

Venture Capital & Private Markets

• Establishment of MUFG Morgan Stanley Credit Solutions: MUFG’s consolidated subsidiary MUMSS announced that it has established a subsidiary, MUFG Morgan Stanley Credit Solutions, for the purpose of enhancing its solutions business functions in private credit and providing higher quality services to wholesale customers
• The Development Bank of Japan (DBJ) and the Indonesia Investment Authority (INA) have launched the "IJ Hybrid Capital Solution Fund I," a fund which will be jointly managed by the two institutions and offer hybrid capital solutions for Indonesian corporates; INA is an Indonesia's sovereign wealth fund mandated to increase investment to support the country's sustainable development and build wealth for its future generations
• IDB?Lab has been working with Japanese companies?to explore the potential of entrepreneurship and innovation in Latin America and the Caribbean (LAC); as the innovation and venture capital arm of?the Inter-American Development Bank Group,?IDB?Lab?seeks to identify business and technological innovations that will have a significant development impact in the region, and Japanese companies are highly regarded as valuable partners in co-creating innovative and impactful solutions
• Blocksky has raised funds with SBI Investment as the lead investor; with this funding, Blocksky will fully deploy its web3 advertising platform "W3AP" in Japan and the global market; W3AP delivers innovative approaches to address key challenges in the web3 advertising market, delivering new value for advertisers, web3 companies and projects, and users

Banking

• Mitsubishi UFJ NICOS, a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, has resolved to acquire the shares of Zenhoren through a tender offer under the Financial Instruments and Exchange Act, and to enter into a capital and business alliance agreement with Zenhoren and MUFG; Zenhoren was established in November 2001 for the purpose of operating a rent liability guarantee business; since then, Zenhoren has expanded this business, primarily for rental housing, and listed its shares on the Standard Market of the TSE in October 2023
• SMBC announced a new joint venture in cybersecurity: Sumitomo Mitsui Financial Group, Mitsui Sumitomo Insurance of the MS&AD Insurance Group, Cyreeg, and E-Guardian established SMBC CyberFront on February 17, 2025, with full-scale business operations, including service provision to customers, scheduled to begin gradually from April; SMFG will hold 60%, Mitsui Sumitomo Insurance 20%, Cyreeg 18%, and E-Guardian 2% of the shares in the joint venture
• SMBC also presented enhanced philanthropy advisory services: Sumitomo Mitsui Financial Group launched Philanthropy Advisory Services in November 2024, with the aim of supporting the realization of customers' aspirations and execution of donations aimed at contributing to society and solving social issues; in order to further support those customer needs, Sumitomo Mitsui Banking Corporation and SMBC Trust Bank have launched Grantee Introduction Services

Payments

• double jump.tokyo, which develops applications using blockchain technology at their core, has raised funds from TIS, a member of the TIS Intec Group that has supported payment infrastructure for many years; by combining double jump.tokyo's knowledge of blockchain technology and enterprise web3 wallets with TIS's strengths in the payment and financial fields, the partners will promote the spread of stablecoin payments; double jump.tokyo?and TIS will launch a comprehensive support service, utilizing "N Suite" provided by double?jump.tokyo?to help stores smoothly introduce stablecoin payments
• Progmat, Fairsquarelab, and Korea Digital Asset Custody have signed a Memorandum of Understanding regarding a proof of concept for "Project Pax," a cross-border remittance infrastructure project for stablecoins in collaboration with Swift; through this PoC, the companies will advance the connection of infrastructure for stablecoin remittance between Japan and Korea, while also identifying key issues for Korean financial institutions' participation in Project Pax and compiling suggestions and recommendations for legal framework development in Korea

Asset Management

• Nikko Asset Management and Tikehau Capital have established Tikehau Amova Investment Management, their joint venture focused on developing innovative private asset investment strategies tailored to the Asian market; based in Singapore, Tikehau Amova Investment Management was incorporated at the close of 2024; the licensing application was made to the Monetary Authority of Singapore in early 2025, with the launch subject to regulatory approval
• Nomura AM to merge "1 trillion yen fund" after long under-performance: Nomura Asset Management plans to merge the "Nomura Japan Equity Strategy Fund" and align it with the investment strategy of the more successful "Nomura Japan Open: fund; these changes are driven by a comprehensive product review initiated by Nomura AM in December of the prior year, aimed at improving the overall quality and performance of the Fund; the Fund was established in February 2000 and its net assets climbed to as high as 1.167 trillion yen ($7.8 billion) in May of that year as it profited from tech-sector bets amid the IT bubble

Digital Assets

• Laser Digital, Nomura’s digital assets subsidiary, has launched the Laser Digital NEAR Adoption Fund; the Fund’s strategy seeks to provide a long-term exposure to the?NEAR?token enhanced with staking which allows institutional investors residing in eligible jurisdictions to participate in the blockchain consensus mechanism and take advantage of the economic opportunities of the NEAR blockchain; consequently, the Fund aims to harvest gains from a long-term trend combined with carry component in the Digital Assets asset class; the Fund utilises?TruFin’s institutional-grade liquid staking solution, TruStake, to provide Investors with seamless exposure to the NEAR token, as well as the network’s underlying staking rewards
• NTT Digital and Figment are strengthening their validation business efforts with the aim of developing the Web3 ecosystem; NTT Digital provides services using advanced Web3 infrastructure technology to Web3 users who continue to expand globally, and will further promote efforts to develop the blockchain ecosystem through the strengthening of the validation business; additionally, Figment will enhance its support for NTT Digital's initiatives by providing robust infrastructure and advanced operational know-how necessary for the validation business, as well as knowledge about protocols
• Community-driven IP platform “Xross Road” and advanced AI technology provider “Allora Network” have formed a strategic partnership to accelerate business growth and success in the IP industry; while the IP industry is rapidly growing outside of Japan, there is a need to update traditional management methods and development methods for a global audience due to the varying understanding of IP across cultures and legal frameworks; Xross Road aims to provide a platform where IP rights holders, fans, and creators can actively engage, and to fulfill this mission, it is building a new infrastructure utilizing AI and data analysis technology

The Last Word: Entrepreneurial Framework Conditions in Japan

The Global Entrepreneurship Monitor 2024/2025 Global Report was published, as usual also including country scorecards vis-a-vis their peer group. The graph above shows the entrepreneurial framework conditions in Japan across 13 factors, and the report elaborates as follows:

"For most entrepreneurs in Japan, the environment is improving due to an increase in the balance of small loans and the enhancement of consultation systems through local governments and other organisations.

The Startup Development Five-Year Plan, formulated in November 2022, sets two main goals: to expand investment in startups to ￥10 trillion by fiscal year 2027 and to support the commercialisation of more than 5,000 university-based research results over a five-year period.

Support measures include building human resources and networks, strengthening entrepreneurship education (at all levels), strengthening funding supply and diversifying exit strategies.

The overall quality of the entrepreneurial environment in Japan is seen by its own national experts as having improved substantially in 2024, with its NECI (National Entrepreneurial Context Index) score up to 5.1 (placing Japan 15th of 56 GEM economies) from 4.4 (and 27th) the year before.

The NECI is the average of 13 individual Framework Condition scores, and while that overall measure is just better than sufficient, the majority of the Framework Conditions rate as less than sufficient (<5.0).

In the latest NECI, Japan has one condition scored as very good (≥7.0) (Physical Infrastructure), two scored as good (≥6.0) (Ease of Entry: Market Dynamics and Government Policy: Support and Relevance) and one rated as better than sufficient (≥5.0) (Entrepreneurial Education Post-School).

However, that leaves more than twice as many conditions rated as less than sufficient, including one scored as poor (<4.0) (Social and Cultural Norms) and one as very poor (as usual: Entrepreneurial Education at School).

So a very mixed picture overall, with too many of Japan’s Framework Conditions seen as less than sufficient, despite having three conditions ranked in the top 10 among the GEM 56 economies.

On a brighter note, women’s relative access to entrepreneurial resources is seen by national experts as better than sufficient, while new and growing businesses prioritisation of sustainability rates as good."

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