In 2016, Makoto Takemiya, co-founder of Japanese blockchain startup Soramitsu, received a Telegram message from someone claiming to be from Cambodia’s central bank. He thought it was a scam. “It said something like, ‘Hey, I’m from [the] National Bank of Cambodia. We want to discuss a pilot. Can somebody contact me?’” Takemiya told Rest of World.
“It was super weird,” added his partner, Ryu Okada.
It had been mere months since Takemiya and Okada founded Soramitsu, and they only had a few projects under their belt. The company had been funded from Okada’s savings, and was making just enough money for the two to “eat some food and pay some basic expenses,” said Takemiya.
But the Telegram message was real, and it gave Soramitsu the break it needed.
In 2020, Soramitsu and Cambodia’s central bank launched Bakong, a blockchain-based “quasi-digital currency” system that lets users instantly send money in U.S. dollars or riel. The National Bank of Cambodia says some 8.5 million accounts now use the system, which in 2022 processed transactions worth $12.2 billion, and 12.8 trillion in riel ($3.1 billion). Earlier this year, Japanese Prime Minister Fumio Kishida named Bakong as an example of tech innovation that could transcend national borders and help Japan’s goal of solving social challenges in Asia.
On the back of Bakong, Soramitsu has quickly become a prominent developer of digital payment systems across Southeast Asia. The company is currently piloting another blockchain payments system for the central bank of Laos, while working on a project to expand an Asian cross-border payments system as part of a consortium that includes Japanese megabank Mitsubishi UFJ Trust and Banking Corporation.
Soramitsu is also running feasibility studies on digital currency programs for central banks in other developing countries, including Vietnam and the Philippines.
But despite its many international projects, Soramitsu remains relatively unknown. Many sources from the banking sector told Rest of World they were unfamiliar with the most basic details about the company, even though they knew Soramitsu was responsible for the Bakong system. “We all thought, ‘Who is this company?’” said one senior banker in Cambodia, who requested anonymity because they are not authorized to speak to the media.
As a relatively small player, Soramitsu has benefited from low barriers to entry, and the fact that no bigger competitor exists in Southeast Asia, according to Zennon Kapron, director of Kapronasia, a Singapore-based consultancy specializing in fintech. “All of this is quite new, so [a client might be] a little bit more open to using a new vendor or somebody who’s a little bit more unproven to do this,” he told Rest of World.
Soramitsu, which calls itself a “boutique blockchain company,” now has about 150 employees across the world, including in the U.S. Outside Japan, it has registered offices in countries like Switzerland. The company had an annual revenue of around $20 million in 2022, according to Takemiya. The company is still largely self-funded, and also profitable, he said. Along the way, Soramitsu has received grants from Japanese government agencies to undertake its pilot in Laos and its research with Southeast Asian central banks.
Soramitsu’s roots also lie in the U.S. Co-founder Takemiya, the public face of the company, was born Brett Bojduj in San Luis Obispo, California. After graduating with a degree in computer science, he took an internship at Japanese tech company NEC, which eventually brought him to Japan in the late 2000s. He then legally changed his name to Makoto Takemiya and renounced his U.S. citizenship. Takemiya’s dedication to Japan is reflected in his photo on the company’s website: He is dressed in traditional garb, with kyudo arrows in the background.
In 2017, when Soramitsu signed on for Bakong, the Cambodian central bank was going through an institutional change. Then director-general Chea Serey, keen to prove herself independently of her father — the governor at the time — was embracing digital banking. Several current and former bankers told Rest of World she was key to the launch of Bakong, which upgraded Cambodia’s interbank payment infrastructure.
Soramitsu refers to Bakong as a central bank digital currency (CBDC), drawing on the current buzzword in digital finance. But, more accurately, Bakong is a blockchain-based payment network. The Atlantic Council, which tracks CBDC rollouts, doesn’t count it among the 11 launched so far.
No matter its exact category, Bakong has been executed well, according to Ananya Kumar, the Atlantic Council’s associate director for digital currencies. “Building a successful digital ledger technology-enabled platform is really hard for a central bank to do,” she told Rest of World, calling the development “significant.”
8.5 million The number of accounts using Bakong, according to the National Bank of Cambodia.
Source
“Bakong has helped deliver Cambodia one of the most efficient and user-friendly payment systems globally, which for a country like Cambodia is quite a remarkable achievement,” Stephen Higgins, founder and managing partner at Cambodia-based investment firm Mekong Strategic Capital, told Rest of World.
Since Bakong, Soramitsu has leaped into more projects across Southeast Asia — often with the backing of Japanese public funds. Of its two CBDC projects, currently at the proof-of-concept stage, Digital Lao Kip is further along. It was trialed this year following an initial feasibility study funded by aid organization Japan International Cooperation Agency. This August, Soramitsu received a grant from Japan’s powerful economy ministry, METI, to develop a proof of concept for a digital currency in the Solomon Islands.
METI also funded Soramitsu’s feasibility studies in Vietnam and the Philippines. (The latter country, however, reportedly plans to pursue its own independent CBDC project.) Soramitsu also won a contract with the NTT Data Institute of Management Consulting to conduct studies into the feasibility of digital currencies in Fiji, Vanuatu, and Tonga. There are two other cross-border Asian digital payment projects on the way.
The combination of big Japanese institutional backing and a small private developer is unusual. But even while crypto lost its sheen after the crash of 2022, many countries’ continued push into digital currencies has boosted the CBDC industry. This has allowed startups like Soramitsu to play a role in “building new rails,” said Daniela Barbosa, general manager of blockchain and identity at the Linux Foundation.
“If you go to the same people who built all the other financial infrastructure, you know what you’re going to get? The same financial infrastructure,” Barbosa said.
Soramitsu’s history isn’t associated only with successes. In 2015–16, Takemiya had a bitter falling out with colleagues at fintech startups Tech Bureau and DragonFly Fintech. He had co-founded the latter company. In an explosive statement, five former colleagues accused Takemiya of inflating his impact to influence investors, and “scheming” to “usurp” them. Takemiya told Rest of World he attributed this to “jealousy” over the Bakong contract, and said he has never read the full statement.
Soramitsu’s efforts to push its crypto projects into the mainstream have also run into barriers. In 2022, Takemiya and Soramitsu Japan CEO Kazumasa Miyazawa were among the signatories on an open letter to the people of Sri Lanka, proposing they adopt the crypto token XOR — part of Takemiya’s grander dream of a “new world economic order” called Sora — as legal tender to solve the country’s economic crisis. “We are still talking to their government and there may still be a path to use XOR in Sri Lanka in stages,” Takemiya told Rest of World in a statement after this story had been published.
The group also pitched the Bakong model to Ukraine, but the enterprise hasn’t moved forward, according to Takemiya. A project to build a decentralized digital depository for the Moscow stock exchange also “didn’t survive the crypto winter.”
Soramitsu’s ultimate test will be its ability to scale from its success in Cambodia, a senior banker told Rest of World, requesting anonymity as he was not authorized to speak to the media. A solution that fits Cambodia may not transfer to Vanuatu.
Higgins of Mekong Strategic Capital called the Bakong undertaking “transformative.” But Soramitsu’s projects in countries like Vietnam and Fiji are “in the very early stages and it’s hard to tell what trajectory they will take,” said Kumar from the Atlantic Council. “Success will depend on the design choices made by the central banks.”
