Tokyo FinTech
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Tokyo FinTech

Fast-growing Blockchain Hubs: Japan

Yu Wang, Jing Ren, Caroline Lim, and Swee-Won Lo from the School of Business at the Singapore University of Social Sciences published “A Review of fast-growing Blockchain Hubs in Asia” in The Journal of the British Blockchain Association in August 2019, covering China, Japan, Singapore and South Korea using secondary data sources. We have extracted the Japan part here, but please take a look at the entire research report, which also includes a comparison table across the jurisdictions, as well as all the references.

Regulation and standards

Japan was the first country that recognised bitcoin as a legal payment option and has a national system to regulate cryptocurrency exchanges. A cryptocurrency exchange registered with the Financial Services Agency (FSA) of Japan was considered a legitimate entity in Japan. To-date, there were sixteen [Editor’s comment: there are now 20] approved cryptocurrency exchange operators in Japan and cryptocurrencies on these exchanges could be exchanged for fiat monies or alternative cryptocurrencies. Basic guidelines for ICOs that focused on investor protection and anti-money laundering were released by a research group led by academics at Tama University. Still under deliberation by the FSA, many anticipated that these guidelines would eventually pass as a law in Japan.

The regulatory landscape in Japan for cryptocurrency exchanges and ICOs paved a promising future for the development of blockchain projects. In 2016, the Ministry of Economy, Trade and Industry (METI) engaged Nomura Research Institute to survey domestic and international blockchain applications. As an outcome of the survey, METI published the first version of evaluation templates to assess blockchain applications and completed the first evaluation for blockchain applications in healthcare, supply chain & logistics, and smart property in 2018. The process uncovered legal and technical issues of blockchain applications for respective industries.

Blockchain startups

Compared to the exponential growth in bitcoin trading, the number of blockchain ventures in Japan was small relative to other regions in Asia. In 2016, among the 167 FinTech startups in Japan, there were only 20 blockchain-related businesses. This phenomenon in Japan could be attributed to the stronger public sentiment on the use of bitcoin for official payment than the application of the underlying blockchain technology.

Nevertheless, the blockchain startup scene in Japan was encouraging with generous support from the Japanese government. In 2017, METI sent three blockchain startups to the US as part of the Silicon Valley-Japan Bridge Project. In the private sector, major industry players or financial institutions have announced investment funds, incubators or co-working space for blockchain startups. For example, SBI Holdings, a global rank-1 corporate blockchain investor, invested approximately US$460 million in AI and blockchain fund. Mizuho Financial Group, one of the three major financial institutions in Japan, sponsored Neutrino, the first blockchain co-working space in Japan. In short, blockchain startups in Japan received assistance and mentorship from the government, enterprises and large financial institutions. Foreign startups in Japan had similar access to funding, facilities and advice on regulatory matters.

Enterprise- and government-backed projects

Enterprise-backed projects in Japan focused on building applications in financial services and supply chain. The Japan Exchange Group, Inc. (JPX) tested the streamlining of processes in the securities market and ownership registry through a proof of concept (POC) with six other financial institutions in Japan. NTT Data, one of the largest information technology companies, collaborated with Mitsubishi UFJ Financial Group (MUFG) and Singapore’s National Trade Platform to launch a blockchain POC that would foster trade between Singapore and Japan. With Skuchain, NTT DATA developed a business collaboration platform for Japanese manufacturers to boost supply chain efficiency.

The three financial institutions in Japan have implemented blockchain projects to streamline trading, payment, and other financial services. Mizuho Financial Group and Sumitomo Mitsui Financial Group (SMFG) respectively launched blockchain to streamline trade transactions. On the other hand, MUFG introduced its MUFG Coin for commercial and retail customers, as well as to incentivise its employees to reduce overtime hours for healthier lifestyles.

At the government level, Japan’s New Energy and Industrial Technology Development Organisation (NEDO) under the instructions of METI, worked on several blockchain-based projects. Among them included the use of internet-of-things (IoT) to streamline infrastructure for trade information sharing, where NEDO operated in partnership with NTT Data. The Ministry of Internal Affairs and Communications explored the application of blockchain solution to process government tenders and introduced a roadmap for incorporating DLT in e-government services in 2018.

The Blockchain Study Group, established by Deloitte Japan, Mizuho Financial Group, SMFG and MUFG, promoted blockchain adoption and education. The focus of this study group was to conduct studies on interbank payment and a Know-Your-Customer advanced platform. The Japan Blockchain Association facilitated collaboration and conversations between blockchain startups and the Japanese government. Other associations such as the Japanese Bankers Association whose members comprised banks, bank holding companies and bankers’ association analysed the implementation of blockchain for financial services.


Major financial institutions and universities led the blockchain research and development landscape in Japan. In April 2016, the Bank of Japan (BOJ) established the FinTech Centre in its Payment and Settlement Systems Department. The BOJ conducted a joint research project entitled “Stella” with the European Central Bank (ECB). The Stella project evaluated the performance of using Hyperledger Fabric to facilitate large value payments and the “delivery versus payment” environment using single and crossledger platforms, respectively. In academia, Japan has five university nodes in the that promoted scientific and interdisciplinary social and economic research. In addition, the more notable academic initiatives include the teaming of University of Tokyo and University of Aizu with two industry organisations to study smart currency, the establishment of BASE Alliance between Keio University and University of Tokyo, and the establishment of Blockchain Research Lab at Kyushu Institute of Technology.

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Norbert Gehrke

Norbert Gehrke


Passionate about strategy & innovation across Asia. At home in Japan. Connector of people & ideas.