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

A couple of items from the rumor mill, as they seem to have escaped the inner circle of confidentiality.

First, Revolut is working on obtaining a banking license in Japan. Prior to being sanctioned with a business improvement order in September 2022 (the work on which was completed by November 2023), Revolut was working on obtaining a securities brokerage license, but has put the latter on hold as the FSA preferred them to work on new business initiatives sequentially. These circumstances are not necessarily hidden anymore, since Revolut is openly recruiting for banking roles, and the preparatory entity was recently referenced in other reporting. We were expecting the news to break by October, but obviously there have been some further delays. The banking path clearly differentiates Revolut's positioning from other FinTechs like Wise and Nium, who went for a Type 1 Fund Transfer Service Provider license instead.

Second, Toss Securities, a brokerage arm under Korean financial technology giant Viva Republica, has been executing on its vision to become a leading player in the Korean retail trading market, obtaining FINRA approval for a US broker/dealer entity this year. So it will not come as a surprise that the team has been looking at the Japanese market as well, to grow either organically or through acquisition.

Here is what we are going to cover this week:

• Venture Capital & Private Markets: Fhenix, the leading infrastructure protocol powering Private DeFi via homomorphic encryption, has received strategic investments from BIPROGY and the Translink Sustainability & Innovation Fund

• Insurance: Tokio Marine's Philadelphia Insurance Companies has acquired the Collector Vehicle Division from Ignyte Insurance, a Carlyle-backed portfolio company

• Banking: SMBC completes proof-of-concept experiment using quantum computing; Nippon Export and Investment Insurance (NEXI) has provided loan insurance for back financing related to a loan extended by a venture debt fund

• Payments: our neighbors - the Bank of Korea (BOK) published a report regarding the opportunities, risks, and necessary policy responses surrounding the potential introduction of a Won-pegged stablecoin

• Capital Markets: second quarter results from Japan Exchange Group and Nomura, and an expensive financing round for Masayoshi Son's AI ambitions

• Digital Assets: defunct crypto exchange Mt. Gox has postponed its creditor repayment date by another year; TIS and Ava Labs launch "Multi-Token Platform"; Secured Finance announces new JPYC-based product suite; Progmat-led consortium unveils framework to unlock security token data utility

• The Last Word: The Bank of Japan's October Monetary Policy Meeting

• Fhenix, the leading infrastructure protocol powering Private DeFi via homomorphic encryption, has received strategic investments from BIPROGY and the Translink Sustainability & Innovation Fund; BIPROGY, renamed from Nihon Unisys in 2022, is one of Japan’s largest IT service providers, with a strong footprint in the financial sector; this move underscores the growing necessity of privacy solutions for institutional adoption of Web3 and demonstrates strong institutional confidence in Fhenix’s technology; the investment lays critical groundwork for Fhenix’s deeper expansion into the Japanese Web3 ecosystem

Not FinTech

• CRIT Ventures has launched a KRW 37.5 billion (about USD 27 million) “IBK-Crit Global Content Investment Partnership,” marking a major step for Korea’s cross-border venture ecosystem; the announcement confirms that Japan’s Square Enix —developer of the Final Fantasy series—has become a limited partner (LP) in the fund; this is Square Enix’s first-ever participation in a Korean venture-capital vehicle, underscoring the growing convergence between Japan’s gaming industry and Korea’s creative-tech startups

• Tokio Marine's Philadelphia Insurance Companies acquires collector vehicle business: Philadelphia Insurance Companies (PHLY) has acquired the Collector Vehicle Division from Ignyte Insurance, a Carlyle-backed portfolio company; the transaction, valued at $615 million, brings four of the most respected names in collector vehicle insurance into the PHLY family: American Collectors Insurance, J.C. Taylor Insurance, Condon Skelly and Heacock Classic; with deep roots and decades of leadership in the collector vehicle market, these brands insure a broad range of specialty vehicles from antiques and hot rods to exotics, motorcycles, and classic trucks

• SMBC completes proof-of-concept experiment using quantum computing: Sumitomo Mitsui Banking Corporation, SMBC Digital Marketing Corporation, and Quanmatic jointly conducted a proof-of-concept experiment on "app advertisement analysis using quantum computing" aimed at advancing advertisement distribution in smartphone applications

• Nippon Export and Investment Insurance (NEXI) has provided loan insurance for back financing related to a loan extended by a venture debt fund to Hella Infra Market Singapore, a Singapore-based subsidiary of an Indian start-up company; this marks the first individual transaction under the framework agreement entered into by NEXI, Mars Growth Capital, and MUFG Bank in October 2023 to provide loan insurance comprehensively for financings to overseas start-up companies

• At the end of October, the Bank of Korea (BOK) published a report regarding the opportunities, risks, and necessary policy responses surrounding the potential introduction of a Won-pegged stablecoin (SC) in Korea; titled "Currency in the Digital Era: Harmony of Innovation and Trust," the report adopts a cautious stance, emphasizing that financial innovation must be securely integrated into the existing monetary and financial system

• Edgar, Dunn & Company have published "Payments as a catalyst for growth," with a six page Japanese market summary

• Japan Exchange Group (JPX) reported solid financial results for the first half of fiscal year 2025 (FY2025 Q2 cumulative), driven primarily by increased activity in cash equities and a significant contribution from interest rate-related collateral management within clearing services; Operating Revenue rose 9.2% year-over-year (YoY) to JPY 89,322 million, and Operating Income grew 7.5% YoY to JPY 51,279 million; Net Income attributable to owners of the parent company increased 6.9% to JPY 34,553 million; following the strong results, JPX revised its full-year earnings forecast upward

• Nomura Holdings reported solid financial results for the second quarter (Q2) of the fiscal year ending March 31, 2026 (FY2025/26), demonstrating strengthened profitability across its key segments, particularly Wholesale and its stable revenue businesses; while Group Net Income Attributable to Shareholders of Nomura Holdings declined quarter-on-quarter (QoQ) to ¥92.1 billion, the results were robust when normalizing for one-off real estate gains recorded in the preceding quarter (Q1); the firm achieved an annualized Return on Equity (ROE) of 10.6% in Q2 and 11.3% for the first half (1H), marking the sixth consecutive quarter exceeding the medium-to-long-term target of 8% to 10%

• Founder Masayoshi Son’s latest $2 billion offerings will cost him; these hybrids, which allow the company to defer coupon payments and are subordinate to senior debt, have to offer extra yields to entice investors; the initial price guidance ranges between 8.5% and 8.625% for an issue due in 2065, with the first reset date in 2035; by comparison, the straight 2035 bond is trading at only 6.8%

• The Ministry of Finance has published its "JGB Newsletter" for October 2025

The 153rd edition of the eXponential Finance Podcast features "Blockchains are Cities," with Dragonfly's Managing Partner Haseeb Qureshi, an edited version of our fireside chat at WebX 2025.

Listen to the podcast episode on...

🎙 Apple Podcasts: https://lnkd.in/g78ciCmV

🎙 Spotify: https://lnkd.in/giJxUiCz

🎙 Amazon Music: https://lnkd.in/gkFBbJyb

🎙 YouTube: https://lnkd.in/gT4W29CK

• Defunct crypto exchange Mt. Gox has postponed its creditor repayment date by another year to Oct. 31, 2026, marking its third extension since the rehabilitation trustee's original 2023 target and coming just four days ahead of this year's previous deadline

• TIS and Ava Labs launch "Multi-Token Platform": the "Multi-Token Platform" is a service that provides platform functionality necessary for tokenizing various financial assets by combining Ava Labs' managed blockchain infrastructure "AvaCloud" with multi-asset capabilities through EVM smart contracts and a proprietary key management infrastructure equipped with security and governance functions required for financial business; by streamlining fund transfers and financial transactions that involve many stakeholders and complex business processes and regulatory compliance, it achieves reduced processing time and lower costs, providing new value such as expanded on-chain transactions and product development combining multi-assets

• Secured Finance announces new JPYC-based product suite: Secured Finance AG, a Japanese-founded, Swiss-incorporated developer of fixed-rate DeFi lending protocols, has announced a new suite of products built around the Japanese yen stablecoin JPYC; the initiative aims to bring the Yen yield curve on-chain, enabling global investors to access the Japanese interest-rate market through transparent, decentralized infrastructure

• Progmat-led consortium unveils framework to unlock security token data utility: Progmat, the core developer behind Japan's leading security token (ST) platform, has released the findings of a critical industry study, culminating in a standardized legal and operational framework designed to streamline the utilization of rights holder data in the ST ecosystem; the comprehensive "ST Data Linkage Streamlining Working Group (WG)" report, conducted under the auspices of the Digital Asset Co-Creation Consortium (DCC)—an organization boasting 315 member entities—is poised to dismantle significant regulatory and practical barriers that have hindered the full potential of digital securities in Japan; the report sets forth standardized data utilization requirements, evaluates optimal data linkage patterns, and formalizes the necessary legal structures under Japanese Personal Information Protection (PII) laws, specifically for two major ST asset classes: Trust-type ST (often used for real estate) and Bond-type ST (corporate debt)

Among all the commentary following the Bank of Japan's decision to (again) leave the policy rate unchanged, nobody summarized the situation more succinctly than the research team at UOB in their "Monthly FX & Rates Strategy," published on October 31:

The JPY has weakened anew following the appointment of Sanae Takaichi as Japan’s new Prime Minister. The BOJ has left rates unchanged as widely expected at the Oct MPM. Our view remains that due to on-going inflationary risks, the BOJ will need to hike next in the Dec MPM (although the odds are now reduced to a coin toss) and thereafter a final 25 bps hike in 3Q26. As for the JPY, we still see further strength, but at a more modest pace to 150 by 4Q25 and 144 by 3Q26.

At this point, we do see some of the economists we follow predict a January rate hike, on the basis that it will provide a little more time to assess the state of the Shunto wage negotiations for 2026, as well as any further fallout from Trump's tariffs - although they see some risk of the rate hike coming in December already. Or, as UOB above, they see a December rate hike, with some probability that it will be delayed to January.

The true differentiation in the forecasts lies in the prediction of the terminal rate. These currently range from 1% (as UOB above) to 1.5%.

For further reading, we recommend the Bank of Japan's "Outlook for Economic Activity and Prices (full text)", or the Nomura Research Institute's Tetsuya Inoue's "Notes on Financial Markets".

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.