Welcome to the eighty-first edition of the Japan FinTech Observer.
The two items to highlight this week are somewhat contradictory. We start with the good news. Based on its third progress report on the Financial Action Task Force's (FATF's) Fourth Mutual Evaluation, published in 2021, Japan has managed to eliminate all "partially compliant" ratings. This is significant, since the combined force of the Financial Services Agency (FSA) and Bank of Japan (BOJ) was put behind a concerted effort to raise the AML and CTF standards across the industry prior to the inspection, only to disappointingly receive ten "partially compliant" and one "non-compliant" mark.
Now that we have confirmed our status as a law-abiding nation, let me ask you this: for how long will you be able to operate a non-compliant money transmitter business in Japan? Shockingly, it took close to three and a half years for the FSA to shut down EcoRemit, during which time the company executed approximately 270 remittances of over 1 million yen each, for which it was not licensed, in addition to having no Compliance and Internal Audit departments to speak of. Three years seems an awfully long time to make improvements that are considered foundational to the conduct of the business.
Elsewhere, here is what we are going to cover this week:
🔹 Venture Capital & Private Markets: Global Brain Corporation and Sony Financial Ventures have jointly established their second CVC fund; G.U. Group has raised 150 million yen through convertible corporate bonds with token conversion rights from Aozora Bank; Helicap Group announced a USD 3m investment by GMO Payment Gateway, Inc. in its flagship credit fund
🔹 Banking: SMBC Bank International has officially commenced operations as a universal bank in the UK; the Financial Services Agency, Japan (JFSA, 金融庁) has put into force the first "Guidelines on Cybersecurity in the Financial Sector"
🔹 Payments: G.U. Group and Aozora Bank consider issuing a specific trust beneficiary rights-type stablecoin; JCB／株式会社ジェーシービー has enabled Google Pay for its customers in Japan; the FSA has shut down money transmitter EcoRemit; after the latest progress report, the Financial Action Task Force (FATF) has re-rated Japan, with no partially compliant criteria remaining
🔹 Capital Markets: Nomura has been suspended as a Primary Dealer for a month; enechain Corporation has upgraded its marketplace for wholesale electricity trading; Berkshire Hathaway has raised 281.8 billion yen ($1.9 billion) in a yen-denominated bond offer
🔹 Asset Management: LY Corporation shuts down PayPay Corporation Asset Management
🔹 Digital Assets: Hakuhodo Inc. has partnered with Tools for Humanity, a key company in the Worldcoin project; Crypto Garage has launched its blockchain backend service “mahola”; Monex Group, Inc. updates on the De-SPAC transaction for Coincheck, Inc.
🔹 The Last Word: Sentiment
