The Potential of Next-Generation Finance Highlighted at the 'Japan Financial Innovation Program'

Summary

1. The Implementation Potential of Next-Generation Finance and Japan's Potential as Demonstrated by JFIIP

At JFIIP, Web3.0 products directly linked to the real economy, such as RWA tokenization and payments, were showcased. The advancement of socially implemented digital finance, compliant with regulations, highlighted Japan's potential to lead next-generation financial infrastructure.

2. Diverse Use Cases in RWA, Payments, and ID Materialize

Practical use cases in finance, energy, and ID sectors were presented, including the award-winning real estate RWA and lending model by 'Laplace', My Number-linked wallets, and energy tokenization, clearly demonstrating the expansion of on-chain finance.

3. Global Perspective and Regulatory Compliance as Keys to Growth

Speakers emphasized the importance of a "global perspective" and "strong motivation" beyond domestic focus. Speed and strategy, with regulatory compliance as a premise, were identified as keys for Japan to become Asia's financial hub.

On February 24, an event related to the "Japan Financial Infrastructure Innovation Program (JFIIP)" was held at the JETRO headquarters in Akasaka, Tokyo.

JFIIP was established to support the development of enterprise-grade, regulation-compliant digital financial solutions on various blockchains, including the XRP Ledger (XRPL).

Partners in JFIIP include JETRO, SMBC Nikko Securities, Toyota Blockchain Lab, Securitize Japan, and HIRAC FUND (Money Forward Venture Partners).

The day's program consisted of two parts: the "Final Pitch" by startups that made it to the final selection of JFIIP, and a "Leadership Dialogue" session featuring speakers from corporate partners, a16z Crypto, and SBI Ripple Asia.

A total of 10 startups were allowed to present in the "Final Pitch." The selected products from numerous applications included "SuzuPay," "NexBridge," "Laplace," "TRUSTAUTHY," "Bankey," "KOTOTSUTE," "Seneca," "My Number Wallet," "Green PowerLedger," and "Solobank."

Products addressing crucial themes for the coming years, such as payments and the tokenization of real-world assets (RWA), were gathered. The grand prize went to "Laplace," a decentralized tokenization platform specializing in luxury RWA (real assets).

This project is notable for maximizing the native Lending Protocol* functionality of XRPL. It enables on-chain realization of a Home Equity Line of Credit (HELOC), backed by the value of owned real estate, streamlining processes that traditionally take weeks at financial institutions, and providing immediate capital efficiency to illiquid physical assets. The approach to solving existing financial challenges and the product's overwhelming future potential and social significance were highly praised.

In the "Leadership Dialogue," the on-chain transformation of finance, including RWA, was also a theme. It was noted that Japan is at a turning point in institutional development, and for startups, having a "global perspective" and "strong motivation to advance projects" is crucial. It was particularly emphasized that "whether Japan can become Asia's hub depends on speed and perspective."

The discussions at JFIIP highlighted the challenges and potential of Japan's Web3.0 and digital finance. Specific use cases stepping into the real economy, centered on XRPL, and a stance aiming for global reach with regulatory compliance were demonstrated, suggesting Japan's potential to lead the next financial infrastructure. It was an event that, while acknowledging challenges, also revealed a clear sense of hope.

*The Lending Protocol functionality is currently only available on the DevNet (developer test network).

Message from the Representative

◉ Hinza Asif

Representative of Asia Web3 Alliance Japan

This program is an initiative by Asia Web3 Alliance Japan to broadly demonstrate to the financial industry how startups can be supported through a venture studio model. By bringing together corporate partners and promoting the growth of startups and the development of the ecosystem, it was an extremely meaningful event.

◉ Yusuke Hirota

Founder & CEO, Neuron X Inc.

Product Presented: 'Laplace'

The grand prize winner, 'Laplace,' is a startup addressing the 'on-chain finance gap' by initiating the tokenization of overseas luxury real estate RWA (Real World Assets) and providing collateralized lending for digital assets. It aims to build an essential layer for the transition from traditional to digital finance from Japan.

── What motivated you to participate in this program?

Yusuke Hirota (hereafter, Hirota): I am concerned that Japan is falling behind globally in on-chain finance, just as it did with AI. The key is to quickly implement use cases that comply with regulations into society. I decided to participate to demonstrate Japan's first cross-border real estate RWA in this forum, where government and financial institutions gather, and to advance Japan's digital financial infrastructure.

── What aspects of this product do you plan to enhance in the future?

Hirota: Tokenization will accelerate over the next five years. However, while real-world assets have a credit infrastructure in the form of collateral loans, RWA does not yet have this. Solving this gap is our challenge.

We aim to establish this indispensable layer for the transition from traditional to digital finance as a global standard credit infrastructure by building an RWA marketplace for overseas assets and a collateral credit layer.

── As efforts in the RWA domain accelerate globally, how do you view your competitive advantage?

Hirota: This domain is a complex mix of legal, tax, regulatory compliance, and blockchain technology across countries, akin to a comprehensive martial art. It is challenging for foreign players to clear Japanese regulations, and it is not easy for domestic players to acquire overseas assets.

We have already signed MOUs worth hundreds of billions of yen with overseas developers and are quickly establishing our position. While overseas markets offer yields of 6-10% plus capital gains, Japan remains around 4%. Bridging this information asymmetry and connecting global and Japanese markets is our strength.

── Finally, could you tell us about your target user base?

Hirota: There are two user bases: supply and demand. On the supply side are developers offering overseas assets and financial institutions providing loans. On the demand side are individual investors who wish to incorporate overseas assets into their portfolios and investors in need of financing.

By collaborating with Japanese financial institutions and sales partners, we aim to connect both sides and lead global financial innovation from Japan through an on-chain financial infrastructure that transcends borders and asset classes.

◉ Hiroyuki Tachibana

CEO of MyNa Wallet Inc.

Product Presented: 'MyNa Wallet'

MyNa Wallet offers a simple, secure, and safe way to access Web3.0 using the My Number Card. The decision to participate in JFIIP was driven by the perceived necessity for multi-chain compatibility.

── Could you share your impressions of participating in this program?

Hiroyuki Tachibana (hereafter, Tachibana): Although 'MyNa Wallet' was initially developed based on EVM, receiving technical support from Ripple during the program allowed for a surprisingly smooth integration with XRPL, which was a significant achievement.

The engineering team also provided detailed insights into the differences in philosophy and design between Ethereum and Ripple, clarifying how to apply these insights to our wallet.

── What themes did you have in mind prior to participating? 

Tachibana: Our goal with MyNa Wallet is to enable anyone to handle digital assets without needing to be conscious of blockchain. To achieve this, we recognized the need for multi-chain compatibility, including XRPL, in addition to EVM, which led to our participation.

── What are your future focus areas?

Tachibana: Through MyNa Wallet, we aim to build a KYC-compliant blockchain platform utilizing the My Number Card. We envision creating an environment where all users are verified and can trade with confidence, integrating various services into this ecosystem.

◉ Akira Tsuruoka

Digital Platformer Inc. DID/VC Group

Presented Product: 'Green Power Ledger'

Digital Platformer has been involved in numerous Web3.0 solutions, including offering the deposit-type stablecoin 'Tochika' with Hokuriku Bank. The newly announced 'Green Power Ledger' focuses on improving the traceability of renewable energy.

── Could you share your thoughts on participating in this program?

Akira Tsuruoka (hereafter, Tsuruoka): The products from other participants were outstanding, so I thought it would be great if we could rank in the top half of those who pitched. I was surprised and grateful to be selected for third place.

── What is the necessity of utilizing XRPL in the product you presented?

Tsuruoka: I believe XRPL's strengths lie in its low transaction fees and the speed of finalization from a real-time transaction perspective.

Electricity trading typically involves large-scale transactions, but with 'Green Power Ledger', transactions can be made from 1 kW. Considering that the profit from 1 kW is only a few yen, low fees are essential. Given this context, XRPL is a suitable technology.

── What is your vision for the future?

Tsuruoka: Currently, we are at the PoC stage, but ultimately, we aim to offer P2P electricity trading for individuals and corporations.

This initiative allows for a design that minimizes energy loss, contributing to eco-friendliness and social significance. Looking ahead 5 to 10 years, we plan to incorporate AI into our efforts.

◉ Sojun Katsura

Director, The True Translate Inc., SME Consultant

Presented Product: 'KOTOTSUTE'

'KOTOTSUTE', offered by The True Translate, is a digital asset inheritance system based on XRPL. It has been recognized as a solution to the digital asset inheritance issues that arise with increasing digitization.

── Could you share your impressions of participating in this program?

Sojun Katsura (hereafter, Katsura): I first learned about this program on X and decided to participate. Without knowing the number of participating companies, I was surprised to find out that 76 companies were involved. Being selected as the 4th place winner among them is something I am very grateful for.

── What areas do you plan to focus on moving forward?

Katsura: I believe the business in the inheritance sector we presented is very well-suited to Japan.

Even those familiar with handling cryptocurrencies face the risk of asset loss, known as 'GOX'. For those less experienced, even completing a transaction can be challenging. Considering these circumstances, I believe a certain level of custodial functionality is necessary.

In this context, XRPL has a 'Clawback feature' that allows token retrieval under specific conditions. This is beneficial for both users and businesses, so we plan to continue developing our products with XRPL as the core technology.

◉ Kosuke Ai

CEO, GustoDevelopment Inc.

'SuzuPay'

GustoDevelopment leverages advanced technologies such as AI and blockchain, with a mission to 'develop systems and provide services for the future.' 'SuzuPay' is distinguished by its funding support features for small businesses and its low fees.

── Could you share your impressions of participating in this program?

Kosuke Ai (hereafter, Ai): Previously, most pitches were conducted primarily in Japanese, so presenting entirely in English this time was honestly a challenge. However, I felt confident that we conveyed our message effectively.

Moving forward, I want to ensure that our pitches are easily understandable in both Japanese and English, and I plan to prepare thoroughly for that.

── Payment services are a very hot topic in the current project landscape. What are your strengths compared to other companies?

Ai: Our strengths include the funding support features for small businesses, low fees, and the use of XRPL, which enables very fast payment processing.

Additionally, our product supports off-ramps, making the payment system more user-friendly even for those unfamiliar with blockchain technology.

── What are your future plans?

Ai: We aim to expand to retail businesses, e-commerce, and online payment providers.

Ultimately, we want to create a world where the term 'blockchain' is not consciously thought about, making it an infrastructure as naturally used as smartphones.

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