What It Takes to Make Digital Assets Trusted in Japan

Transcript

[music] This is going to be our second last fireside session for today. And for this talk, I'd like to bring on Mr. Tatsuya Yamada, who is the president of Rakuten Wallet. and we're going to talk about the opportunity for consumer crypto wallets and all the applications that there are in Japan. And to facilitate this conversation and having this incredible opportunity, please welcome Mr. Yamada on stage. Please give him a big round of applause.

[applause] Mr. Yamada, I am super excited to uh to talk to you today. And um what I wanted to ask at at the beginning of this is to help sort of our audience understand what made Rakuten get into the crypto ecosystem and if you could kind of highlight what the wider strategy is for building the wallet, we'd love to hear that. >> So back to the five [snorts] seven nine years ago. So, Raken owners, Mikita, they decided to enter into the the digital market and so they uh like to issue the stable coin like Lux coins

because other the company like uh Facebook have plan to issue their coins right as >> the Libra days back. >> Yeah. Yeah. Yeah. Yeah. Then so everyone think about issue this coin, right? And so actually what it's our uh job uh we have two jobs. The one is uh bring the new financial no digital payment uh experience to the lock 10 users. The other one is uh giving the access to the crypto uh to as a new asset class to the lock users. that two laws we have.

>> And is it that the users asked for this when they saw what was happening in crypto or do you feel like you had to offer this thing because this is where the world is moving and you kind of wanted to build a retail experience for uh for the racketin users? What what sort of made you offer this as a bigger opportunity to the consumers? >> Yeah. uh actually so the vaccin has a huge number of the client base then the crypto is kind of so new things for the the cl them then so uh it's still still early stage because the crypto is a uh what they don't understand that what is a crypto right and but uh it's time to good for the

uh the people in Japan because uh crypto to financial products the next year we expected and it's good time uh to uh expand our client client basis. >> Amazing. Um earlier this year raoten ended the standalone web3 wallet and you started focusing more on the spot trading market. Um what led to that? What were kind of the earlier assumptions that you made about people wanting to sell custody crypto and changing that now led to this? And what were some of the learnings and the reasons? Yeah. So three years ago, so everyone talked about the web three, right? Then so at that time so we expected web three is kind of the new uh wave. And we when I start the web street

wallet uh we expect that gaming and uh metverse market quicks and uh the we think uh it had the strong demand for this kind of platform the wallets that's why so we uh issue the uh web three wallet however it's takes some more time to you know so mature for the uh >> educating the users too. >> Then so at the same time so many our clients have interest in trade crypto as a financial products that marketers made the good trend then that's why so many people is uh watching the market

that's why so we decided to focus on provides a platform for trading. >> So what does that mean moving forward for the product? Does that mean you're going to offer all the features of most exchanges or is it just bot trading like how are you thinking about expanding the wallet? >> Uh you know so uh of course for uh two types uh product we have for the settlement and the trading then in the uh bas focus on the trading. Yeah. And are you planning on going down the full brokerage route, or is it mostly just easier access to some of these assets, but you kind of still expect consumers who are more advanced to go to a a

different sort of exchange for all the other trades, but they want to be high level on on the raotin wallet. uh interaction wise just wise or uh trading uh the experience and uh the most of locking users you know uh they don't know how to use digital for the payment right and now so uh we l it just focus on the provisor trading platform yeah >> what have been sort of the most common requests that users have asked for after the spot trading focus this and and what is working with them? What do they want more of? I'd love to kind of hear how the users are are liking this.

>> So, uh I sometimes I talk to the clients then so they required three major points. One is a simple UI always new experience and the second is trusted circumstance for trade the cryptos. The third one is uh access to the good quality informations uh for uh help to make their decisions right that's kind of the three uh major point they are requiring to us >> amazing one thing I'd love to understand is how do you see payments come into play here is spot trading the same as supporting payments and stable coins or is that a different category how do you unify the

the general raoten experience with the cryto side >> you know so stable coin is coming in Japan and last this year right then uh the globally so uh many players provide so stable coin for the uh settlement and transfer assets and then in Japan it's a coming the same trend then it's a regulation they have started two years ago and so uh just a few company uh started to issue their own coins. That's a good trend. Uh go a chance to the uh support to the the blockchain

financials. Then Russian group also think about how to provide the new uh digital payment uh platform. Then yeah uh step corner uh we uh just respond to the issue. >> So, are you saying that you would like to issue your own coin or integrate others or is it going to have to be both? What's kind of the interesting opportunity here for for Rakiten? We have so many choices of course uh connect to the other ecosystem using uh uh issued by this uh third parties like USC and others uh the stepcoin and for

the ecosystems in it's uh our own coin is more workable for the our ecosystem I think >> in general how has regulation sort of made things interesting now we're seeing and even from other speakers today, we saw a lot of clarity coming from the Japanese regulators. They're making it easy for you to enter this this business and um also stable coins are becoming more and more common. Um what does that mean for the broader Japanese industry from your perspective?

Is that a good thing? Do you feel like it's going to create too much confusion for the users? um or like you kind of need to have that like what are the good and the bad things about this new uh change >> you know so last uh June this year uh uh brokers the business regulation have started so it's a good opportunity for everyone especially lock as to expand the customer basis then so for example lockets uh we have the uh lock securities as a company they have huge number of the investors account and uh it's good time to introduce uh crypto to

uh their clients then >> and these clients are businesses or >> yeah yeah okay >> that's so we'll ask uh the rock securities and other the group company introduce our service uh to their clients that's a kind of so good opportunities in addition so I just mentioned earlier uh regulation will be changed uh June July or 2027 >> that's when it becomes legal or is that when you're expecting >> uh legally because uh they passed uh this new uh changing and on diet last uh >> I think it was March

>> May or yeah then that's why so uh regulatory have to change the regulation within one year and so that we expected but also already so scheduled I think >> that's that's great news then because then it allows everybody to come in and offer super super exciting products um >> yeah so in addition so after change of regulation uh next year July and also taxation is a change in 2028 January >> could you uh for the non-Japanese uh people in the audience could you describe like what the difference will be after taxation and what it was before >> so we have to pay the maximum 55% for

the capital guy uh the miscellaneous tax and in the chance to the uh the 20% uh reduce the 20% uh which mean the same uh the rate for the other financial products and it's a kind of a good for the investor right >> and today so no one want to trade it and they want us so makers or you that profit because uh the 50% is gone right that's why so good opportunity because uh many investor is interested in so trading a crypto however so taxation is one of the you know uh concern about uh uh to traders crypto

then yeah that change uh >> so what is going to be the taxable percentage after like what is It goes from 55% to what number? >> Yeah, the 20% >> 20% Oh, I see. 20% is >> plumber. Uh, >> which is the same as >> January 2028. >> Oh, okay. And is that 20% the way stocks are treated in in Japan? >> Yes. >> Okay. So, that then it becomes >> Yeah. The same time as the ETF is start uh also 2028 >> January.

>> January. Yeah. >> It's very close. What 14 months? Um, when you think about building the wallet experience uh for your users, do you feel like they need to know that there's a blockchain behind it or do you feel like the best experience is you just execute the trade and they don't need to know how things are working in the back? Um, what kind of goes into making a good wallet? >> So, early on, so when I start this business, uh, the wallet is kind of so, uh, uh platform for the managing uh private keys. However, yeah. Yeah.

However, no one uh don't care about that they're behind the uh the technologies, right? So we just provides a good services I mean so uh they don't care about what kind of technologies as background right and when I use the internet they don't care about dip >> or what database you are using >> the same same way yeah um one of the things I am very curious to know is how do you see crypto overlapping with the loyalty rewards programs. Uh there's so many amazing programs in Japan. Rocket also has an amazing loyalty rewards program, but do

you feel like there's a way to improve how loyalty points work or how consumers can have better sort of unified ways to do this with crypto or do you feel like payments and stable coins and and everything else on the payment side will remain separate? Um how do you think about that as the the future of what this looks like in Japan? All right. So payment and a try investment is a different story right then uh we expect to grow up the number of the the investor for trading a crypto uh just because regulation will be changed and today over 14 millions account for trade crypto in

>> 4 zero or 14 >> uh 14 million >> 144 million >> account. It's a lot of users. >> Yeah. And so uh unfortunately this year as a most of people is watching as a stock market you know and so uh most of bus is struggling this year and so anyway so the the market for the trading is a crypto it's a good uh look I thinkers so more uh glow up glow up and for settlement it's using a stable coin right then if the you know consumer I mean so uh the using the payment uh by stable

coin it's a merchant has uh con two point but it's a speed and a cost and today I saw many merchant especially small merchant it's uh it's hard to them because a card here is expensive for them right then if the the blockchain the the payment system can operate more cheaper and faster. So many merchants in the you know start to think to user uh the new uh digital platform then Len if Len can offer the more uh good use case uh for merchant and the users uh we can create uh next

generations of digital payment uh ecosystem >> um I think this is a very interesting point So, one thing I would love to know is when you talk to merchants about accepting stable coins or crypto, what is their reaction? Like, are are they do they just need to hear that, hey, you will have to pay less than two? Like, is the pitch that hey, you save 2% of transaction fees now because it's super cheap, or do they want some other features or they're they're like, oh, we don't want to deal with more crypto because our users won't know. How do they think about that? And and what do you think will make the merchants actually say we accept stable coins?

>> So the cost is more important for them then. So if they you can today so the merchant paid us around 3% for the the credit card >> which is a lot. Yeah. >> Yeah. Then so it can reduce half of that like 1.5%. >> And so there's more important things for them it's speed you know. So they they their clients pay something uh uh but also by credit card uh they can receive their the money from the one month or two months later right then if the stable corner is uh real time it's a good to help especially small margin yeah

>> amazing um >> has all the recent advancements in AI changed your thinking about how you can make a better wallet? How do you think about AI and rockets and wallet overlapping if if it's even a thing? AI is sifting their wallet uh plum or uh what I say uh the more uh what I say uh personalized the advisors and so especially so AI advers support to the

uh help to make uh uh them good better decisions uh uh on their behalf then for example so uh yeah if you know uh AI avatar is support trading and setment it's much faster and easier and so >> so automation around >> yeah so managing >> I think of the of it as uh moving uh moving uh

the word you hold to the word you talk to. >> Yeah, [laughter] that'll be a very funny feature. U talking to your bank account. Um, one other sort of thing I'm curious about is it seems like a lot of focus is on trading. Um, for not just Rocket and Wallet, but in general in crypto right now, especially we're seeing tokenized assets and real world assets and tokenized stocks. Do you feel like over time everything is going to look more like a trading platform and we don't need banks. will just be an exchange as your as your primary money or um or do you feel like all the banks now will have to offer similar things? How do you

see the financial institutions uh in the future reacting or changing too? So many financial group is think to the how to bridge the service between a banking and the securities and maybe including a cryptos in the futures but also and regulation is the same uh directions then but also I don't think the one player is uh take over the the all up justify there then so how to uh the combine and uh each services the from there's a client side it's a one stop is much easier you right then if there the

clients just one account uh with a kasi and AML check and uh securities and just your traders or everything then through there one uh one account is much easier so lux like your lux provides for all of the financial services including lines in the uh the banking the securities and the payment and credit card in addition >> you think that's a good thing in this >> yeah yeah it's a good trend and so uh it's a kind of so opportunity for Len to lead this uh the industry I think >> amazing and kind of my last question to you is uh a lot of things become legal

in in 2028 um and uh there's a lot of opportunity now in crypto and just finance so for founders in the room um and especially the ones that are based in Japan. What would you say is the important thing to focus on for the next few years to anywhere from build something that people would need or just where you think the opportunity is? What what advice would you give them? >> Well, I have just several points and as one is a change of regulation then so as I just mentioned the blockage business have started. It's a uh good opportunity uh for uh industry to expand the customer base and a change of regulation I mean so uh the crypto to be a financial product

much easier to trade that's and additions for 2028 uh the ETF uh is going to start so many investor including uh institutional clients are going to start to allocate their asset to to right that's I expected. >> Yeah, that's a very good news for us. Um, thank you so much for this amazing conversation. Please give him a big round of applause. [applause] >> [music]