The second largest bank in Japan will sign a deal with SBI Holdings to offer digital banking services available on smartphones.

According to an April 27 article in the Nikkei newspaper, the Sumitomo Mitsui Financial Group (SMFG) and SBI have launched the first steps towards a multimillion dollar agreement expected to conclude later this week, before Japan enters its Golden Week banking holidays.

In June, SMFG will acquire a 20% stake in SBI subsidiary NeoMobile Securities, holdings worth several billion yen. By the end of this year, SBI will accept an investment from SMFG to create a new $1 billion fund to invest in companies involved in digital technology. The new fund will explore areas for investment like fintech, blockchain, and 5G.

Close ties to Ripple

SBI is a firm with a known affinity for the cryptocurrency XRP. Their chief executive officer (CEO) Yoshitaka Kitao is a member of Ripple’s board of directors — in addition to his known friendship with Satoshi claimant Craig Wright — and the company has even considered paying shareholder dividends in XRP tokens.

SBI Mining Chip, another subsidiary of the Japanese financial giant, started manufacturing crypto mining equipment in 2019.

New regulations for digital assets in Japan

Though the partnership between SMFG and SBI shows a heightened interest in digital currencies from both firms, crypto exchanges and digital assets in Japan will soon face new regulatory challenges.

Laws passed by Japan’s House of Representatives last year regarding the Payment Services Act and Financial Instruments and Exchange Act will come into effect on Friday, May 1. The two pieces of legislation are modifications to existing laws for regulating cryptocurrencies in Japan.