Taisuke Isono, Head of Innovation at SMBC Nikko Securities, Unpacks Japan's Web3 Strategy

Financial Institutions as Enablers, Not Controllers

TOKYO—Taisuke Isono, Head of Innovation at SMBC Nikko Securities, projects a groundbreaking role for Web3 technologies in redefining the value of intangible assets like culture, history, and intellectual property (IP). Speaking in an interview at the Nikko Open Innovation Lab Office in Tokyo on September 28, Isono outlined how Web3 can elevate Japan’s unique cultural values, enabling them to gain recognition on a global scale.

“Web3 is uniquely positioned to facilitate the seamless sharing, connecting, and circulation of intangible assets such as culture, history, and intellectual property, which traditional systems find difficult to monetize,” Isono explained. “Through this technology, Japan can effectively present its intrinsic values to the global stage.”

Traditional capital markets, Isono argued, often fail to accurately value these intangible assets. In contrast, Web3 offers an innovative solution. “We’ve focused on reassessing overlooked assets like intellectual property, culture, and history by revitalizing these through Web3. For example, we collaborated with local governments on an NFT-based regional economy project, showing the potential to connect traditional marketplaces and small businesses with the digital asset ecosystem,” he elaborated.

Isono emphasized that securities firms have a broader mission beyond just distributing financial products. “Financial institutions should act as facilitators, not controllers. Our role is to create and foster markets, acting as intermediaries that bring various parties together to collaborate and innovate,” he said.

SMBC Nikko Securities: Shaping Japan’s Financial Landscape

Operating under the global umbrella of Mitsui Sumitomo Financial Group (SMFG), SMBC Nikko Securities is recognized as a pivotal player in Japan’s financial sector. The firm’s strategic focus on cost optimization, group integration, and innovation solidifies its standing alongside titans like Nomura, Daiwa, and Mitsubishi UFJ Morgan Stanley Securities.

Unlocking Japan’s Cultural DNA in the Web3 Era

Isono sees Japan’s rich cultural heritage as a key strength in the Web3 transformation. “Japan has deeply distinctive assets—traditional craftsmanship, community-oriented cultural practices, and its rich historical lineage—that the conventional capital markets fail to properly value,” he noted. “Web3, however, offers the means to reimagine these assets, presenting them to a global audience in entirely new formats.”

He continued, “Japan’s cultural DNA, when integrated with Web3 technologies, could serve as a formidable competitive advantage in the emerging digital economy.”

SMBC Nikko Securities actively explores this integration by linking traditional artists with the global NFT community. The firm has hosted exhibitions reinterpreting traditional art in digital formats and utilized NFTs as tickets for cultural events, unlocking new use cases for heritage assets.

One innovative example involved partnerships with NEAR Protocol and U.S.-based NFT platform ROVE to issue NFT-based digital art tickets for cultural events. “This initiative wasn’t just a technical experiment; it demonstrated how finance can intersect with culture and the arts within the Web3 ecosystem,” Isono explained.

Looking ahead, SMBC Nikko is blending Web3, finance, and artificial intelligence (AI) within incubation programs aimed at fostering next-generation technologies and talent for the financial sector.

Bridging Regulatory Gaps for Web3 Growth

Despite its promise, significant challenges remain before Web3’s potential can be fully realized in Japan. While Japanese regulators acknowledge the transformative potential of blockchain and Web3 technologies, aligning these innovations with established financial regulations, securities laws, and tax frameworks remains a complex task.

“Adopting decentralized service structures within tightly regulated financial systems will take time,” Isono admitted. Initially, SMBC Nikko’s experiments centered on Security Token Offerings (STOs), but stringent regulations led the firm to shift its focus toward NFTs and other less restrictive Web3 ventures.

“Innovation cannot thrive within rigid regulatory confines,” remarked Isono. “We prioritized NFT projects as a practical entry point to develop real-world applications in less restrictive environments. Through these projects, we aim to identify broader points of intersection between Web3 and traditional finance.”

To bolster the Web3 ecosystem, SMBC Nikko is actively working with regulators to build a flexible framework. "We are engaging in policy discussions with the Japanese government to amend laws like the Financial Instruments and Exchange Act (FIEA), Banking Act, and tax policies, ensuring these are more conducive to Web3 development,” Isono said. Particular attention is being paid to addressing compliance risks and data management challenges as financial institutions integrate Web3 technologies.

The company is also heavily focused on education. “We are organizing hackathons and incubation programs to enable corporations to experiment with decentralized finance (DeFi) and Web3 innovations,” Isono revealed.

Paving the Path for Web3 Innovation

Through its initiatives in NFT pilot projects, talent incubation, and regulatory advocacy, SMBC Nikko Securities is at the forefront of Japan’s Web3 revolution. Capitalizing on its blend of cultural heritage and technological progress, Japan has the potential to position itself as a global leader in the Web3 ecosystem. As financial firms, policymakers, and cultural stakeholders collaborate, the nation moves closer to unlocking the transformative opportunities of a Web3-powered future.