Japan FinTech Observer #95

Welcome to the ninety-fifth edition of the Japan FinTech Observer.

Thank you for all the well wishes. We are back, and so is Ueda-san, who is going to raise the policy rate to 0.5% this week. It simply has to happen, notwithstanding any nonsense coming out of Washington prior to the Monetary Policy Meeting.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Komainu has raised $75 million in strategic investment from Blockstream Capital Partners; BounceBit has secured a strategic investment from Laser Digital; Startale Group launches Startale Ventures; and TSE-listed ELEMENTS consolidates the two leading personal authentication players
• Insurance: justInCase, a small amount and short-term insurance provider recently acquired by Sony Financial, has begun selling "Simple Hospitalization Insurance"
• Banking: Money Forward rattled investors with its forecast for fiscal year 2025; AEON Financial's acquisition of Vietnam’s PTF receives regulatory approval; SMBC has released a new finance scheme for supporting capital investment in semiconductor manufacturing equipment; Gojo & Company has become B Corp-certified
• Payments: Payments Japan published its "Cashless Roadmap 2024"; JCB International has launched a new JCB Panda Card in collaboration with Taiwan Rakuten Card; a new collaboration between GCash, Alipay+, and PayPay simplifies payments for Filipino tourists
• Capital Markets: The Tokyo Stock Exchange has signed an MOU with Authentic Indication to improve the execution environment for block trades; the Japan Securities Clearing Corporation plans to begin production-parallel operations of its regulatory reporting to the Financial Services Agency and the CFTC; the latest Status of Disclosure on “Action to Implement Management that is Conscious of Cost of Capital and Stock Price” sees 90% TSE Prime coverage; Apollo looks at Japanese demand for US Treasuries
• Digital Assets: the Sonieum mainnet has been launched, with suspension of accounts for IP violations inviting immediate criticism; TSE-listed Remixpoint has emerged as a new player who has been actively investing in cryptocurrencies
• The Last Word: 10,000 bankruptcies

Venture Capital & Private Markets

• Komainu has raised $75 million in strategic investment from Blockstream Capital Partners, subject to relevant regulatory approvals; Komainu was launched in 2018 as a joint venture between Japanese bank Nomura, crypto security experts Ledger, and digital asset investment manager CoinShares; the funding transaction itself is innovative in that it is funded in Bitcoin with appropriate hedging and risk management and Komainu establishing its own Bitcoin Treasury to manage the Bitcoin provided by Blockstream
• BounceBit, a pioneering company in the digital finance sector, has secured a strategic investment from Laser Digital, the digital asset subsidiary of Nomura Holdings; this investment marks a significant step forward in the collaboration between BounceBit and one of Japan’s most established financial institutions; BounceBit leads the way in CeDeFi infrastructure, offering institutional-grade yield products, Real World Asset integration, and CeDeFi as a service
• Startale Group launches Startale Ventures; as the Soneium Mainnet is officially live,?Astar now a collective, and Startale Cloud Services (SCS) emerging as a key infrastructure project under the Startale umbrella, Startale Group has announced the launch of Startale Ventures, a new investment arm designed to accelerate innovation and user onboarding in the web3 space
• Personal authentication merger - ELEMENTS to make SMBC Group's Polarify a Subsidiary: ELEMENTS has resolved to acquire shares of Polarify, a subsidiary of Sumitomo Mitsui Financial Group, making it a consolidated subsidiary; SMBC Group will continue to maintain ownership of Polarify shares; the business integration of these industry leaders will expand their customer base to approximately 550 companies with a cumulative total of about 120 million identity verifications

Insurance

• justInCase, a small amount and short-term insurance provider recently acquired by Sony Financial, has begun selling "Simple Hospitalization Insurance", a medical insurance plan that allows customers to accumulate 1% of the insurance premium in Ponta points, through "Ponta Easy Insurance" offered by Loyalty Marketing

Banking

• Money Forward, with a fiscal year that runs from December to November, reported fiscal year 2024 results last week; while these numbers came in largely in line with expectations, the forecast for fiscal year 2025 rattled investors; Money Forward announced that its consolidated operating loss for the fiscal year ending November 2025 is likely to be between 2.3 and 4.7 billion yen, while the market consensus was a profit of 1.3 billion yen
• AEON Financial's acquisition of Vietnam’s PTF receives regulatory approval: In October 2023, Southeast Asia Commercial Joint Stock Bank (SeABank) officially signed an agreement to transfer SeABank’s full capital contribution at Post and Telecommunication Finance Company Limited (PTF), which is 100% of PTF’s charter capital, to AEON Financial Service, the financial arm of the AEON Group, Japan’s largest retail group, for the purchase price of VND 4.3trn (approximately USD 175m at the time); this deal has now received approval by the State Bank of Vietnam
• Sumitomo Mitsui Banking Corporation (SMBC), in collaboration with SMFL MIRAI Partners (SMFL MP), a subsidiary of Sumitomo Mitsui Finance and Leasing, has released a new finance scheme for supporting capital investment in semiconductor manufacturing equipment; in this new scheme, SMFL MP will leverage its expertise in the valuation of semiconductor manufacturing equipment through its business in the secondary equipment market, collaborating with Gordon Brothers Japan, a leading company in the movable property business, to conduct valuations of semiconductor manufacturing equipment
• Gojo & Company announced that the global non-profit organization B Lab Global? issued a "B Corp?" certification for Gojo as of January 2025, demonstrating its dedication to creating a positive effect with its business activities; SATYA, Ananya, and Prayas in India, alongside seven other group companies of Gojo, were included in the scope of the assessment
• SMBC further pursues business in Saudi Arabia: during the past week, Sumitomo Mitsui Banking Corporation has signed MOUs with the National Infrastructure Fund of the Kingdom of Saudi Arabia, as well as with the Saudi Investment Promotion Authority

Payments

• In December 2024, Payments Japan published its "Cashless Roadmap 2024", focusing on Japan's cashless payment trends, the activities of the Cashless Promotion Council, international comparisons, and progress toward the goals outlined in previous roadmaps; the report highlighted the growing adoption of cashless payments in Japan, while also acknowledging challenges and areas for further improvement
• JCB International has launched a new JCB Panda Card in collaboration with Taiwan Rakuten Card; the card offers up to 3% cashback on purchases made via two major mobile payment methods (Line Pay and JKO Pay) at selected merchants such as major airlines, gasoline stations and OTAs in the Taiwanese domestic market; as for other countries and regions outside Taiwan, the JCB Panda Card offers unlimited base 1.5% cashback with 3.5% in Japan, Korea and Thailand
• Filipino travelers to Japan can now enjoy expanded cashless payment options at over 3 million merchants, thanks to a new collaboration between GCash, Alipay+, and PayPay; this partnership allows GCash users to seamlessly pay via QR code at a wide range of businesses, from bustling city centers like Tokyo and Osaka to charming smaller towns and rural areas; this means easier access to everything from local izakayas and traditional wagashi shops to unique anime merchandise stores and cozy guesthouses

Capital Markets

• The Tokyo Stock Exchange (TSE) has signed an MOU with Authentic Indication which works in improving the execution environment for block trades through provision of Indication-of-Interest (IOI) services; by using the IOI platform provided by Authentic Indication, investors can research demand for block trades without disclosing their own demands to other market participants; when a counterparty is found, orders can be executed on the ToSTNeT market at the mid-price within the TSE auction market at that time; this approach minimizes market impact and preserves the confidentiality of the involved parties
• Leveraging the new standardized framework for regulatory reporting based upon ISDA’s globally promoted "Digital Regulatory Reporting (DRR)" solution and the FINOS open source managed "Common Domain Model (CDM)", the Japan Securities Clearing Corporation (JSCC) plans to begin production-parallel operations of its regulatory reporting to the Financial Services Agency (FSA) and the CFTC from June 2025 onwards: JSCC is the first CCP (Central Counterparty) and Japanese entity to announce the adoption of DRR and CDM within a production environment
• Status of Disclosure on “Action to Implement Management that is Conscious of Cost of Capital and Stock Price”: as of December 31, 2024, 90% of Prime Market listed companies (1,482 cos.) and 48% of Standard Market listed companies (769 cos.) have disclosed; also, a total of 193 companies wish to have more active contact from institutional investors (Prime market: 164 companies, Standard market: 29 companies)
• Apollo's updated chart book looking at Japanese demand for US Treasuries: when the Fed started raising interest rates in March 2022, foreign private investors started buying a lot more Treasuries because they liked the higher level of yields; Japan is the biggest foreign holder of US Treasuries; with rates higher for longer, the latest data shows continued strong demand from Japan

Digital Assets

• The three blockchain-related companies under Sony Group, Sony Block Solutions Labs, S.BLOX, and SNFT, have announced the launch of the "Soneium" mainnet, along with an updated version of cryptoasset exchange services and an NFT?issuance platform; the Soneium blockchain faced immediate backlash after freezing two memecoins, Aibo and Toro, just hours after its Tuesday launch; this action resulted in significant financial losses for investors, with some claiming thousands of dollars lost
• Metaplanet's positioning as the "Japanese MicroStrategy" is quite well understood at this point; enter Remixpoint, a new player who has been actively investing in cryptocurrencies; the company initially invested 5 billion yen by the end of 2024 and has recently decided to increase its holdings by an additional 3 billion yen; the primary cryptocurrency holdings are Bitcoin, Ethereum, Solana, Ripple, Avalanche, and Dogecoin
• The Iwami Ginzan Future Consortium, Japan Post Holdings, Japan Post, and Ota City will conduct a demonstration experiment in the Iwami Ginzan area to enhance tourism experiences, attract visitors, and establish mechanisms for continued regional engagement using NFTs; Iwami Ginzan (石見銀山) is a historic silver mine in the mountains of Oda City,?Shimane Prefecture; the most prominent silver mine in Japan's history, it was built in the early?16th century?and remained in business for nearly 400 years

The Last Word: 10,000 bankruptcies

The number of corporate bankruptcies with liabilities of JPY 10 million or more in Japan last year rose 15.1% from the previous year to 10,006, surpassing 10,000 for the first time in 11 years. The annual figure marked the third consecutive year of increases as rising prices due to the yen's weakening and labor shortages caused business failures in a wide range of industries.

Meanwhile, total liabilities left by failed companies in 2024 decreased 2.4% to JPY 2.3 trillion, as there was only one bankruptcy case with liabilities of JPY 100 billion or more, involving MSJ Asset Management, formerly Mitsubishi Aircraft, with JPY 641.3 billion. More than 70% of the failed companies had liabilities of less than JPY 100 million.

By industry, business failures increased in eight of the 10 sectors surveyed. The services sector topped the list, with 3,329 bankruptcies, up 13.2% from 2023. The construction and transport industries, both facing serious hiring difficulties due to stricter overtime rules, saw their bankruptcy numbers increase 13.6% and 9.8%, respectively.

Companies struggling to reduce debt and raise prices to reflect higher costs could face tougher management conditions amid rising interest rates, thus resulting in even more bankruptcies in 2025.

Please follow us to read more about Finance & FinTech in Japan, like hundreds of readers do every day. We invite you to also register for our short weekly digest, the “Japan FinTech Observer”, here on LinkedIn, or on the FinTech Observer website.

We also provide a daily short-form Japan FinTech Observer news podcast, available via its Podcast Page. Our global Finance & FinTech Podcast, “eXponential Finance” is available through its own LinkedIn newsletter, or via its Podcast Page.

Should you live in Tokyo, or just pass through, please also join our meetup. In any case, our YouTube channel and LinkedIn page are there for you as well.