Japan FinTech Observer #22

Welcome to the twenty-second edition of the Japan FinTech Observer. It seemed a relatively quiet week, but there was still enough to report on:

• Venture Capital & Private Equity: Saison Capital participates in Cryptoworth funding round; Hyperithm invests in Openfrabric; an interview with the CEO of Yoii on revenue-based financing; Sumitomo Mitsui Trust Bank invests with Copenhagen Infrastructure Partners as an LP
• Banking: E-signatures and e-contracts are taking off; MUFG announced the launch of a new project to support the inheritance of Japanese traditional craft (‘kogei’)
• Payments: Digital Wallet Corporation is offering Bill Payment for Filipinos residing in Japan, Singapore and Canada; Japanese commuter rail companies are introducing contactless fare payment systems compatible with credit and debit cards
• Capital Markets & Asset Management: the Government of Japan will hold "Japan Weeks" from September 25 to October 6 to promote relevant policies for the realization of an international financial center and Japan's attractiveness as a financial an capital market; Osaka is renewing its push to become a "Global Financial City"; the first six active ETFs will launch on the TSE on September 7; Japan's Ministry of Finance will raise its assumed long-term interest rate to 1.5% for the fiscal 2024/25 year from a record-low 1.1% that has been used since 2017; Credit Suisse is shutting its cash equity sales business in Japan; Japan's retail investors' equity holdings remain at a low 11% level
• Digital Assets: Sony & Astar have published a list of the startups that took part in their web3 accelerator; Chainalysis Japan leadership change; B2C2 acquires Woorton to strengthen its position in the EU; Komainu gets a full operational license from Dubai's VARA; gaming blockchain Oasys is hosting a hackathon with applications due by September 5
• The Last Word: 155

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Venture Capital & Private Equity

• Saison Capital participated in a strategic venture round for Cryptoworth , led by CMT Digital and also supported by Kyber Ventures , ODA Capital, and Polygon Labs Ventures in spite of a market slow down of overall web3 VC funding; Cryptoworth provides connectivity to web3 digital asset data from more than 1,000 integrations of wallets, exchanges and NFT marketplaces. Cryptoworth’s automation streamlines reconciliation of cryptocurrency data into the most popular SMB and Enterprise accounting software like Quickbooks, Xero, Netsuite, and SAP
• Hyperithm invests an undisclosed amount in Openfabric AI , a decentralized Layer 1 platform for building and connecting AI applications; since Openfabric’s inception in 2019 as a research project, they have gained the attention of developers and supporters in the AI & Web2 / Web3 industry; Openfabric harnesses the power of blockchain, advanced cryptography, and novel infrastructure to create a new foundation for AI-Apps
• An interview with Masaharu Uno , Co-Founder & CEO of Yoii Inc. , on revenue-based financing for startups has been published; we had previously profiled Yoii, which is backed by a large number of prominent venture capital firms
• Previously, Sumitomo Mitsui Trust Bank invested in Copenhagen Infrastructure V as a limited partner; Copenhagen Infrastructure Partners is an investment fund manager to invest in renewable energy-related businesses in OECD - OCDE countries, including floating and fixed-bottom wind power, solar power, and other categories (storage batteries and power transmission lines), with a target fund size of EUR 12bn

Banking

• In a newsletter previously shared, Anderson Mori & Tomotsune stated that the "use of e-signatures for e-contracts is progressing from the preliminary phase to the implementation phase"; GMO Internet Group, Inc. 's quarterly earnings confirmed this trend, with their "GMO Sign" product gaining significant traction, not only in financial services
• MUFG announced the launch of a new project to support the inheritance of Japanese traditional craft (‘kogei’) culture and techniques and to find and spread inspirations in tradition that can be applied innovatively in an era of change; the project will encompass a range of planned initiatives that include empathizing with the preservation of craft culture and techniques and hosting and sponsoring exhibitions

Payments

• Tokyo-headquartered Digital Wallet Corporation announced that its mobile money transfer app known to be the number one remittance service in Japan,?Smiles Mobile Remittance?(Smiles), has officially launched its Bills Payment feature in all operating countries; this innovative feature is set to empower Filipinos residing in Japan, Singapore and Canada, offering them the convenience of settling their bills in the Philippines using only their smartphones at any time
• Japanese commuter rail companies are introducing contactless fare payment systems compatible with credit and debit cards in a push?to make the services more convenient for foreign tourists; Tokyo Metro, which runs subway lines in the country's capital, will begin a trial for the service on some lines in fiscal 2024 using a platform developed by Sumitomo Mitsui Card, a subsidiary of Sumitomo Mitsui Financial Group; Tokyu Corp., which operates?commuter rail lines in the Tokyo area, plans to introduce the technology at some stations on its Den-en-toshi Line this summer, and expand the use to all stations in spring 2024

Capital Markets & Asset Management

• The Japan - The Government of Japan will hold "Japan Weeks" from September 25 to October 6 to promote relevant policies for the realization of an international financial center and Japan's attractiveness as a financial an capital market; in parallel, Tokyo Sustainable Finance Week (September 30 to October 6), and the METI Green Transformation Week (September 25 to October) 6 will be held
• Osaka is also renewing its push to be seen as a "Global Financial City", aiming to become a “global city growing by leveraging finance" attracting the energy of Asia and the world, and a "front-running city in finance” that leads the world with innovative initiatives; to this end, Osaka Prefecture is attracting investors, asset managers, FinTech companies, and other finance-related companies from both Japan and abroad; the prefecture provides a variety of programs, such as subsidies and business matching with Osaka-based companies, to support companies that are interested in locating in the region; please keep in mind, though, that in StartupBlink 's Global Ecosystem Index, the absolute score for Tokyo is about eight times Osaka's
• The Tokyo Stock Exchange approved the listing of the first active ETFs; on September 7, six ETFs will be listed, all investing in Japanese Equities, from three different asset managers, namely Simplex Asset Management , Nomura Asset Management , and Mitsubishi UFJ Kokusai Asset Management ; our perennial favorite is the "PBR over 1x" ETF (JP:2080) from Simplex, as it aims to track the TSE's own efforts in pushing corporate reform
• Japan's Ministry of Finance will raise its assumed long-term interest rate to 1.5% for the fiscal 2024/25 year from a record-low 1.1% that has been used since 2017; the higher assumed rate would be used to calculate debt-servicing costs when compiling the fiscal 2024/25 budget draft in late December
• 瑞信 is shutting its cash equity sales business in Japan and has told hedge funds and other institutional clients it would no longer be taking orders as 瑞银集团 proceeds with a global overhaul

• The Bank of Japan's "Flow of Funds" for 2023 confirmed once more the high cash holdings, and low equity investment level of the Japanese; these are the target of the Kishida administration's "Doubling Asset-based Income Plan"; alas, these numbers have barely changed over the past 25 years

Digital Assets

• 索尼 | Sony Network Communications Inc. have published a list of all the startups that took part in the web3 accelerator jointly held with Astar Foundation
• Chainalysis ' Japan country manager Yosuke Yamada has joined DeepL ; in May, Masahiko "Masa" Uchida had joined from OpenLegacy as Area Vice President for ANZ & Japan; Chainalysis did not respond to our request for comment
• B2C2 , majority owned by Japanese financial group SBI, and one of the leading crypto liquidity provider servicing institutional clients globally, has successfully completed the acquisition of Woorton , the European leader in market making and OTC transactions in the digital asset industry; this strategic move marks B2C2’s commitment to enhance client coverage and with the incoming MiCA (Markets in Crypto AssetsRegulation) regulations, B2C2 will have the opportunity to service clients in the EU (European Union) jurisdiction as well as unlocking client growth opportunities outside the United Kingdom, Asia-Pacific and US
• Komainu , a joint venture between Nomura , CoinShares and Ledger , has received a full operating license approval from Dubai’s Virtual Asset Regulatory Authority (VARA)
• Oasys is a blockchain-based game development platform that offers a highly scalable Layer 1 hub and specialized Layer 2 using Ethereum’s Layer 2 scaling solution; the ecosystem provides game developers with a secure and scalable blockchain infrastructure for creating more efficient, secure, and interoperable games; among Oasys’ validators are leaders in gaming and Web3, such as SEGA, Ubisoft, and Yield Guild Games, who act as initial validators in its Proof-of-Stake (PoS) based blockchain; Oasys announced a hackathon together with partners AAG (Saakuru Verse), Adventure Gold DAO. Chain Guardians (Chain Verse) and Ubisoft, with applications due by September 5

Other Media

• Bank of Japan Working Paper, "Regulatory Reforms and Price Heterogeneity in an OTC Derivatives Market"
• Bank of Japan's Institute for Monetary and Economic Studies (IMES) Discussion Paper, "A History of Current Account Balances in Japan from the Perspective of Savings and Investments"
• OECD, "Taxing Wages: Japan"

The last word: 155

After the minor tweaks to the Yield Curve Control (YCC) at the last Bank of Japan Monetary Policy Meeting (MPM) had surprisingly little effect, and the JPY has settled back around 145 to the USD, analysts are adjusting their interest rate and exchange rate forecasts, based on their projections of BOJ actions.

Goldman Sachs are looking for more persistent JPY weakness over the next 12 months than before mainly on the combination of a more patient BoJ and their upgrade to the US growth outlook. Their USD/JPY forecasts are up to 150, 155, 150 in 3-, 6-, and 12 months, and 135, 125, 115 at end-2024, end-2025, end-2026.

If your income stream is USD-based, you have about a year to take advantage of "Cheap Japan" and your vacation of a lifetime.

If you would like to see more of our content, please head over to the?Tokyo FinTech YouTube Channel?or check out the?eXponential Finance Podcast.

Have an awesome week ahead.