Welcome to the one hundred thirty-fourth edition of the Japan FinTech Observer.

Another day, another record high for the Nikkei 225 - by the time I hit "send" on this weekly report, we might well have crossed the 50,000 index level for the first time.

Obviously, one of the reasons to drive this performance is the perceived return of political stability, with Takaichi being sworn in today (October 21) as Prime Minister.

The first order of business will be the supplementary FY2025 budget, which the new government will aim to pass by year-end, followed quickly by the FY2026 budget, which must be passed by March 2026.

"Inflation relief" measures will be on the top of the agenda, which could take the form of income tax cuts, consumption tax cuts, or reductions in social security contributions, with only the first deemed likely by most analysts.

With that, the attention will shift towards the next Bank of Japan Monetary Policy Meeting on October 29 & 30.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Sony Financial Ventures and Global Brain to establish an AI-native, next-gen CVC fund

• Banking: Sony Bank applies for a U.S. National Trust Bank Charter; Money Forward (3994.T) reported a mixed set of third-quarter results

• Payments: Japan's three megabanks are planning to jointly issue corporate-use stablecoins; PayPay launches "PayPay Gift"; Rakuten is weighing a US IPO of its credit card business; NTT Data has signed a Memorandum of Understanding (MoU) to bring India's UPI to Japan

• Capital Markets: Rakuten issues record-high yield bond

• Asset Management: Amova Asset Management CEO Stefanie Drews speaks to Institutional Investor about the manager’s plans for ETF, European, and U.S. expansion

• Digital Assets: the Financial Stability Board (FSB) has published its 100+ page "Thematic Review on FSB Global Regulatory Framework for Crypto-asset Activities," including Japan; Metaplanet's mNAV fell to 0.99 — marking the first time its enterprise value has dropped below the value of its bitcoin holdings

• The Last Word: Economic Forecast for Asia and the Pacific

• Sony Financial Ventures and Global Brain to Establish an AI-native, next-gen CVC fund: the new company aims to build an environment for Japanese and overseas entrepreneurs to pursue their endeavors and evolve into a platform that creates long-term growth opportunities; the new company will start preparing for fund formation and building a startup support structure, along with streamlining and enhancing investment activities through leveraging an AI-powered investment process and combining assets of Global Brain and Sony Financial Group

Not FinTech

• Mitsubishi UFJ Capital and SMBC Venture Capital participate in Space Quarters' 750 million yen seed round extension, with Frontier Innovations as the lead investor; other investors include Keio Innovation Initiative, Tokyu Construction-GB Innovation operated by Global Brain, and XTech Ventures

• SMBC Venture Capital participates in CELLORB's total funding round of 1 billion yen, with Tokyo University Edge Capital Partners (UTEC) as the lead investor; other underwriters include: D4V (Design for Ventures), EX Innovation Fund (TV Asahi HD CVC/General Partner: Simplex Capital Investment), and Regional People and Future

The "Financial Innovation Category" of the Tokyo Financial Award invited financial businesses to apply for “Solutions” to “Themes to be solved” which are based on the needs and challenges related to financial services which were submitted by residents and businesses in Tokyo.

The solutions submitted by applicants were examined in terms of consistency with the theme, innovativeness in technology and business model, and feasibility, among other factors.

The Tokyo Metropolitan Government, through EY as the contractor, will provide a support program to the 15 selected businesses, in Japan and from overseas in order to help them brush up their work for the purpose of commercialization.

After the program, a final selection will take place, and the top three businesses will be announced at the award ceremony. 10 million yen, 5 million yen, 3 million yen will be awarded as prize money respectively to first place, second place, and third place applicants.

• Sony Bank applies for a U.S. National Trust Bank Charter: in a significant signal that global financial giants are eager to establish regulated footing in the U.S. digital asset market, Sony Bank has formally applied to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank; dated October 6, 2025, the application outlines plans for a limited-purpose institution named Connectia Trust, National Association, headquartered in New York, with a clear focus on cryptocurrency activities

• Money Forward (3994.T) reported a mixed set of third-quarter results that revealed a company in the midst of a profound strategic transformation; while net sales for the period ending August 31, 2025, fell short of market expectations, a sharp focus on cost discipline allowed the company to significantly beat profit forecasts; the quarter was defined by a series of bold corporate maneuvers, including the divestiture of a major subsidiary and key acquisitions, signaling a deliberate pivot from a "growth-at-all-costs" model to one prioritizing profitability and a sharpened focus on its core enterprise software business

• Japan's three megabanks are planning to jointly issue corporate-use stablecoins pegged to legal tender like the yen and the dollar, aiming to promote their use in the country; MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank intend to issue the stablecoins under a unified standard for use in corporate fund settlements, as reported by the Nikkei; all too often, Japanese institutions are considered as moving too slowly; arguably, GO-NET, launched in 2019, marks an initiative where MUFG was ahead of its time, with an ambitiously broad approach to payments that has come to fruition about half a decade later; hence, for the stablecoin alliance described above, it might be well worth to dust off those old GO-NET plans again

• PayPay launches "PayPay Gift": PayPay Corporation has launched "PayPay Gift," which allows users to send digital gift certificates to friends and family for use at partner stores; senders can set the gift certificate amount in 1-yen increments as desired, and send them with personalized messages such as "Thank you" or "You did great," along with their choice of design, using the "Send/Receive" feature in "PayPay"; it can be used for a wide variety of occasions, from small tokens of appreciation to celebrating birthdays and life events

• Investors see 2 trillion yen (US$13.17 billion) as a baseline for PayPay’s valuation, but expect it could surpass 3 trillion yen (US$20 billion), with final figures depending on market conditions, this Tech in Asia report states; however, these comments come at a time when recent FinTech IPOs have markedly cooled off - Chime Financial closed yesterday (October 20) at USD 18.29 vs a high of nearly USD 45, and Klarna closed at USD 37 vs a peak of USD 45

• Rakuten is weighing a US IPO of its credit card business

• Rakuten issues record-high yield bond: in a major move signaling rising credit costs in the Japanese market, Rakuten Group successfully priced a JPY 82 billion perpetual subordinated bond; announced on October 17, 2025, the issuance carried the highest coupon for a local bond deal this year, immediately drawing significant attention from domestic and international investors

• ISDA published a paper on "The Derivatives Market in Japan": a healthy derivatives market is an important element to Japan’s plan to become a global leader in asset management; asset managers are eager to increase their use of derivatives to better take and manage risk, but note that there is an opportunity to make the market more accessible; discussions with 20 senior asset managers based in Japan revealed that reducing barriers in the market would enable them to utilize derivatives more efficiently, which, in turn, could enhance Japan’s competitiveness in the global market

• NLI Research has published its monthly "Investor Trading Trends in the Japanese Stock Market"

• According to a recent Morningstar survey, the proportion of investors who view ESG as part of their fiduciary duty has increased in most surveyed countries, with notable declines in the US and Australia, see chart above; while the "Sustainable Finance Forum" took place in Tokyo last week, it is once again a good time to think about why Japan is falling behind on a cause that it has long championed

• From Nikko Asset Management Group (now Amova Asset Management) to Amova Asset Management: Inside the Shift From Legacy Brand to Global Player; Institutional Investor spoke to CEO Stefanie Drews about the rebrand and the manager’s plans for ETF, European, and U.S. expansion

• The latest episode of the eXponential Finance Podcast was recorded alongside the WebX 2025 (Aug. 25-26) conference, featuring Chengyi Ong, Head of Policy for APAC at Chainalysis, the world's leading blockchain intelligence platform. Listen to this episode on Apple Podcasts, YouTube, Amazon Music, and many other major platforms via our Spotify Podcaster Page

• The Financial Stability Board (FSB) has published its 100+ page "Thematic Review on FSB Global Regulatory Framework for Crypto-asset Activities," from which we have extracted all information related to the regulatory environment in Japan for Crypto-Asset Activities (CA) and Global Stablecoin Arrangements (GSC)

This past week, the International Monetary Fund published its semi-annual World Economic Outlook, as well as its Global Financial Stability Report. Growth rates for Japan were upgraded by 0.5 percentage points in 2025, and 0.1 percentage points in 2026 compared to the April 2025 forecast. Overall, the sentiment of the reports might be described as “better than feared,” but “worse than what we need” (quoted from Hung Tran, Nonresident Senior Fellow at the Atlantic Council).

Please follow us to read more about Finance & FinTech in Japan, like hundreds of readers do every day. Our short weekly digest, the “Japan FinTech Observer”, is published on LinkedIn, on Medium & Substack, or on our own FinTech Observer website. Only the latter provides you with the option to subscribe to individual news stories as they are published.

Should you wish to further discuss the Japanese (or Asian) FinTech ecosystem, you may book a consultation via Intro - all proceeds flow towards covering the operating cost of the Tokyo FinTech Association, and research for the Japan FinTech Observer.