Japan: The Early Adopter Of Bitcoin - Mike Kayamori @ TOKEN2049

[Music] good afternoon everybody oh all right so I hope you're not tired so let's let's get some exercise so how many token issuers are here oh that's it that's it how many on the investor side so who's the remaining right blockchain companies alright so today I'm gonna talk about Japan obviously Japan was the first g7 country to regulate crypto currencies it's also the first place that formalized an ICO framework and I would like to share all of that with you today but before that so a quick introduction of myself prior to starting coin I worked at soft bank so I was in charge of soft banks South East and India operations on partnerships joint ventures investments and prior to that I worked for a VC fund in the US for close to 10 years and then I start before that I parted my career in a Japanese conglomerate and when I was at soft Bank and obviously soft Bank is an internet mobile internet conglomerate and that's when I knew that with mobile smartphones internet and digital currency this could completely disrupt the entire financial ecosystem and that's what brought me to Bitcoin and cryptocurrency and blockchain so what do we do we do we operate a crypto token exchange we started out from a crypto Fiat exchange and then we went into crypto only ICO and we're also launching our blockchain our cash token but today I'd like to talk more about what's going on in Japan all right so we operate the world's most advanced exchange and maybe I can share some numbers with you so I started this company four years ago so this was before Mount God's happened and we knew at the time that the world needed an exchange that was built by bankers so somewhere safe secure reliable and when I looked around there there was none so with my co-founder I started coin and that a year from there so two thousand and actually actually 2016 December we had our largest transaction in the month and that was 200 million u.s. dollars worth of transaction and two years later so in 2017 December we did 31 billion US dollars in transaction so when you look at that the amazing growth and and obviously it's gone down it's about one third from the peak but that's that's the case when there's Corrections there's hacks and all these challenges in the crypto world but we are also an exchange of exchanges so we white label we work with local financial institutions and partners to expand globally because it's difficult for us to expand by ourselves in each market with regulators banks and and partners we also launched an IC o---- platform it's a self-service IC o---- platform and also a crypto only exchange why do we have separate exchanges because we comply with regulation so coin X is a crypto fiat exchange while cryptos is a IC o---- and crypto only exchange so a little bit of highlight and I apologize for the Japanese we are the first global exchange so we started out in Singapore but we're the first global exchange to be licensed in Japan so there were 16 exchanges licensed in Japan last year September 2017 and we were one of them since then there's been additional four and right now in the pipeline according to the Japan FSA which is the governing regulatory body in Japan there's about 90 plus applications in the pipeline so when you add all that together there's about a hundred exchanges in process to be regulated in Japan also we did the first regulated IC o---- in Japan last November and raised at that time about a hundred and five million u.s. dollars worth of our cash token in November and what so what is a regulated IC o---- which means prior to a private sale or public sale we would go to the Japan FSA by the way a lot of this today is gonna be confidential and I'm gonna share a lot of things that we talk with the FSA and the regulators in Japan because I think it's a beautiful market it's a place that everybody should come but with caution so we would work with FSA almost every day talking about our white paper explaining them how it works that it's a utility it's not a security and once you get that blessing can you only start your IC o---- so we were able to raise our token using Japanese yen fiat right so it wasn't ëthere IAM or Bitcoin which we gave the token buyers an option but the interesting thing with Japanese people bought in Japanese yen so we believe that with a proper regulated IC o---- in Japan that token issuers can raise in fiat in Japan as well all right so let's move on so Japan the early adopter of Bitcoin so it's interesting well China has been and I SEOs and exchanges Japan has actually embraced them and they they've been working for over two years to set legislation do public hear hearing and passing the bill and last April is when they passed the legislation so now it's a law so anybody any token issuer any exchange who wants to do business in Japan must get a license and as I explained there's already 90 plus applications in the pipeline and it's it's not enough it's fundamental the requirements are you need minimum paid in capital you need to have kyc AML compliance segregation of customer assets and independent auditor it's it's it's basic but it's actually quite difficult a lot of exchanges they do zero kyc and compliance they don't do customer asset segregation and probably the most difficult is getting a third-party auditor so getting like a big four who have difficulty understanding your business right but with this the Japanese FSA or des Japan FSA is open for business so what we do is we know that not only crypto services but public companies FX companies online brokerages they're all starting to offer crypto services to their customers and the reason why is this is the Millennials when you talk to online brokerages and FX companies in Japan they said their core customer age group is actually 50s and 60s they have almost zero 20s and 30s the Millennials and for them if they don't have access to the Millennials they're going to be out of business in another 10 20 years and that's where we provide the entire white label as a platform and also liquidity right so we've launched with so this is a pop ups so this is a public company in Japan you can see it has a similar screen which is a white label of our platform and this is how we expand so our company does not need to be a customer brand name it needs to be on the back end working with all these financial institutions and it's not only Japan so obviously we work with the jibrell tar blockchain exchange we are the platform that runs all of their exchanges but going back to Japan right so what can you do with cryptocurrency in Japan I apologize that it's in Japanese you can pay electricity and utility this is the largest consumer electronics store in Japan you can pay with Bitcoin this is like the Expedia of Japan you can pay with Bitcoin on one of the fashion department stores in Japan the the Yelp of Japan so all these places accept Bitcoin but do they really use it that's a different question because of the volatility in all those but the willingness for the entire industry or in Japan to accept crypto is there and also now banks are keen on issuing their own token as you know Rakuten which is the Amazon of Japan is thinking about their own token issuance and I see you as well until the largest hack happened in Japan right so obviously in 2014 Mount happened in Japan and in January 2018 coin check happened this was half a billion dollars worth of nem was stolen from their their their hot wallet right so these things despite putting all these guidelines have happened to Japan again so what's happened is the pendulum has swung back like really turned back at the moment where as you can read here the Japanese government sanctioned seven exchanges of so luckily we're not one of them all the entire 90 applications are put on hold it's it's essentially it's delayed there hasn't been an approval of exchanges this year all new listing has been stopped all new listening and then every ICO is halted right so but that said it's to me I think it's all temporary so by the time April May it's that might be a little too short so June timeframe I think the government will startin to loosen up again and because they've made it very clear that innovation is important but they want to put some control so going to the next one this is what I can't publish this because this is something the government tells the exchanges is right now if your token issuer interested in the Japanese market they're saying that the token issuer itself needs to get a license from the Japanese government and that's almost impossible right so the the subtle thing is that they're saying that if you work with regulated and licensed exchange like us and we give the approval or blessing then you can do an IC o---- but right now obviously right now everything is all halted and every new listing needs to be white listed what does this mean so now there's going to be an association for crypto currencies in Japan and they're gonna create a whitelist and if you're not in that whitelist you cannot list in Japan so obviously from an ICO perspective and from a token listing you'd it's it's completely going to be under the government oversight like for example when we did our ICO we did kyc of all of our customers and actually they the government asked us to submit or disclose all the people who bought our token and in order for these to to happen they're actually telling us regulated exchanges to have a self-governing organization so to have an independent body within our company to approve to then monitor and if something happens to wait to delist so all of these things the government is actually putting the responsibility and the the onus on exchanges that said the groundwork for improvement is already set as you can see the largest Trust Bank in Japan Mitsubishi UFJ Trust Bank is starting a custodial / escrow trust service so as part of the customer asset segregation it's starting only with Bitcoin but now your asset when you deposit to exchanges is now going to be taking care at mu F J trust right so all of these things to protect customer assets is it's coming in place and this is this is also an interesting survey I apologize that it's in it's in Japanese but this was a recent survey this month that we took internally and when people think of cruise so the question was what do you think of cryptocurrency and they think it's the future this is change this is something we build on this is the currency this is what you invest in and these are all younger demographic who think and believe that crypto is the future this is something they build their future on and this is the preferred asset class that they invest in so this was something where there's no word that says speculation or fraud or scam or any of these things so you can tell that the the Millennials the Japanese young generation the last generation of the past 20-30 years actually look at crypto as their future and so I would like to end my session with a few looking taking a step back so this was 2013 to 2016 when mount docks happened the market essentially froze for about two years two years right and but when you look at it from another when you add another three more years and this is when the coin check incident happened obviously there was a big ramp up so there's bound for correction but people when you look at the the height of Mount GOx and it's not even it's just it's it's not even a huge bump when you look at it from a long long-term perspective when you look at another ten years twenty years and we're the Millennials when they look at their preferred investment when they look at their future obviously crypto is a big part of that right the market is still very early the Japanese regulators right now the pendulum has come back right now so we do need to be careful so I don't advise any token issuers or funds to go to Japan and try to market your talk into Japanese retail buyers because you will get in trouble but so I would say wait until in another three months four months and have the government settle down and that's that's probably the right timing this is this is from pintura capital I'm using this so it's not plagiarizing but this was 2014 when I started my company right so the gold market cap right now is still under a trillion so it's only gone up 15% max well the Bitcoin market cap in 2014 was six billion right it's now a hundred and forty five it was close like two hundred and fifty but it's a hundred and forty five as of this morning crypto is 335 billion so when you look at this this is only a short period of three plus four years and you can see where it's where it's going all right so I think the four stages of change where you start from denial know like cryptos nothing and then you want to resist a lot of countries are still here the resisting it banks are resisting it China's resistant in well Japan is right here right despite the big hacks that they're starting to explore they're trying to put guidelines they're trying to put legislation so that this is something that the Millennials the new generation expect to build their future on so in closing and this is something I can never share but don't mess around with regulators just don't mess around don't mess around with the police every day we get inquiries from police I'm not joking like in Japan the Tokyo police the Osaka police they will tell us hey coin do you know this Bitcoin address do you know who it belongs to because this was an illegal purchase it bought child porn or drugs so work with the police work with the regulator's the biggest but the biggest one you need to be aware of is work with the tax authorities they will come and get you like in last year the biggest entity or government that made money as a tax authorities right for example in Japan the tax rate for cryptocurrency is 52% so 52% and they will come and get you right so let's make sure that all of these things yes you can be a decentralized exchange yes you can say that hey I can't control my customers but authorities won't won't budge into that right so these are the three things especially when you want to do business in Japan is to be cognizant about so with that get a good lawyer right so if you want to do business in Japan make sure you have a subsidiary make sure you have you work with regulators and all of that a good law firm can help you out so with that thank you so much and if you need to reach out to me my email is here all right thank you you