Regulation As A Competitive Edge

Butch Takaoka 0:00

Most companies look at regulation and treat regulation like it's the enemy, like it's a tax. But we really turned that around and we took a different approach. We took a compliance-first approach. Japan has one of the most strict regulatory frameworks in the world with the FSA and the JBCA.

Meet RYO And A TradFi Skeptic

Joeri Billast 0:20

Hello everyone and welcome to the Web3 CMO Stories Podcast. My name is Joeri Billast, and I'm your podcast host. And today I am joined by Butch from the RYO Project. Hi Butch, how are you? Very good, thank you. Guys, you you probably know that RYO is the main sponsor of my Web3 CMO Series podcast, and Butch Takaoka is the chief financial analyst at the RYO Digital Project. So, Butch, you've spent more than two decades in traditional finance across institutions like Gottman Sachs, Lehman Brothers, and Mura. What first convinced you that Web3 was more than just another financial threat?

Butch Takaoka 1:07

Yeah, sure. Oddly enough, before I joined, I didn't really know anything about blockchain or crypto or anything. You know, I heard of BTC, I saw the logo BTC, and when I first joined, everything was really new to me. And I spoke to some of my ex-banking friends and I said, hey, you know, what do you think about crypto? And at the time everybody said, oh no, you know, it it's a scam. And it wasn't very positive. But I came in as a skeptic, basically. But my first two weeks, once I got more familiar with crypto, I actually spent hours on my own kind of study, watching YouTube, watching TED Talks, try to figure out what the hype was, but it's not really hype. And I realized it was not a trend when I actually looked at how we were gonna roll out our ecosystem and how RYO at the core of our ecosystem with our Global Mall, our Life Wallet, at the time we were talking about V A GM network, that we're doing something very special. The ecosystem would be something where in this space would provide real value in terms of being able to use it. And you know, a lot of people say i if my mother could use it, you know, then anybody can use it. And it's the t technology isn't what's driving it, it's really what problems it can solve. And that's when I realized that it's not just another trend.

Joeri Billast 2:41

What also is very interesting to me, and also when I first had your President Lany podcast, is that you are in Japan, Ryo is in Japan, and Japan is often seen as one of the most regulated markets in the world.

Why Compliance First Beats Speed

Joeri Billast 2:55

And I'm curious about that. Why do you believe that a strong regulation can become a competitive advantage rather than a barrier to innovation?

Butch Takaoka 3:05

Oh, definitely. I think that most companies look at regulation and treat regulation like it's the enemy, like it's a tax. But we really turned that around and we took a different approach. We took a compliance-first approach. Japan has one of the most strict regulatory frameworks in the world with the FSA and the JBCA. Japan takes consumer protection and top priority. So being compliant first, the approach might be slower up front, but it's something that we've done. Now that a lot of our competitors can easily replicate that. And compliance done early becomes a barrier to entry, and that in itself becomes a better way. I love that.

Joeri Billast 3:50

So it's uh also a question about patience and building step by step. Now, many Web3 projects they talk about adoption. Now, yet the mainstream users are still hesitating. So, in your view, what is the real reason that people have not fully embraced digital assets yet?

The Real Barrier Is Credibility

Butch Takaoka 4:10

Well, I think the easy asset that people say is lack of knowledge, lack of awareness. In my case, for example, as I mentioned, I wasn't aware. But also on the other side of the coin, the real barrier isn't really that knowledge gap. It's more of a credibility issue. You know, you had collapsed changes, you have projects that basically disappeared, you have, you know, like the blow-ups like FTX, for example. So people look at that and you know, they're not irrational to hesitate to jump on board. So rationing to a a track record that hasn't been good enough, that's why a lot of people hesitate. So to change that, it's really building infrastructure that people can see, that people can touch. We have our ATM network that it's physical. People can see it, they can touch it. And since we took a compliant first approach before we launched any type of project, that in itself leads people to be aware and say, okay, this is something that's very credible and easy to Yeah, it's credible, it's feasible.

Joeri Billast 5:18

I also love that I met the founders young in real life. They are very visible and that you don't have that with a lot of projects in the space. And you mentioned something about consumers, about trust. Now, RYO emphasizes consumer protection, compliance, transparency. Why are those principles becoming

Consumer Protection As Web3 Matures

Joeri Billast 5:40

increasingly important as the industry matures?

Butch Takaoka 5:44

Well, if you look at, for example, if the you you look at the internet, it the internet played out the same way. In the beginning, the earlier adopters, you know, they accepted that it was a little bit rough. They didn't really know what was going on at the time. But then when people actually started gaming, banking online, you know, then consumer protection, it just became non-negotiable. So I think Wet 3, we're at an inflection point right now where there's real world use. For example, with us, we have a partnership with GRNX and Canada. And we have this grain trade partnership where we're importing grain and making payment with digital payments and be the first of its first of its type in the world. That's something that not touting it as digital itself, but it's actually protecting the consumer. Because we're talking about we met these farmers, we met our partners in Canada, and we're talking about farmers with their harvest, that's their livelihood. So that's something that we can't take for granted. That's not a constraint on innovation. It's really definition of um being ready for

Japan Versus The West On Adoption

Butch Takaoka 6:55

the mainstream.

Joeri Billast 6:55

No, I already mentioned that you are in Japan. So I am also curious how different is the conversation around Web3 in Japan compared to what you see in North America, Europe?

Butch Takaoka 7:09

Yeah, that's a great question. If you think about it, America, I think, is in the top three. I think America's number two globally in crypto adoption. But I found out recently Japan's not even in the top 10. So that's a huge gap, considering the fact that two economic superpowers, financial markets that are well known, that Japan is very far behind. And the question is why. And I think it's really, again, awareness. You know, in the US, you have now with the presidential administration, very pro-crypto. I've seen Super Bowl ads with crypto, you know, and it's up there mainstream. Now, a couple of years back, we went to a WebEx conference here in Japan, and the former prime minister he gave a five-minute keynote. And at the Web3 conference, he basically said, you know, the goal of Japan in digital space is to be number one in the world. Quite honestly, he was just lip service. He said it, well, we're still way behind. We're two, three years behind in this space. So that ambition hasn't really translated into real-world reality. But part of it's cultural, because Japanese are very risk adverse and they move very airfully, they make very slowly. But once things catch on, Japan's also very trend conscious. So once something catches on, then it spreads like wildfire. So I think we're in a point right now where people are starting to become aware of web 3. We're trying to make people aware of web 3. If you go out on the street, a lot of people, if you ask them what's web 3, they probably look at you, but I don't know what you're talking about. But it's not really linked, I think it's a great opportunity. So that's why it's important that we create awareness. And what's in Japan, if you establish trust, then trust is indefinite.

Joeri Billast 8:57

Now, there is a lot of speculation, of course, in crypto, then in the crypto space.

Products For Users Not Speculators

Joeri Billast 9:02

And when you evaluate Web3 projects, Web3 product, what separates a solution for everyday people uh from one built primarily for speculators?

Butch Takaoka 9:14

Well, for everyday people, because Lonnie always said for the masses, for the masses, to be used by the masses, it has to be simple, it has to be safe, it has to be easy to use. If it's not easy to use, then you know, game over. I mean, there's only a small percentage of people in Japan who actually have crypto accounts, and a smaller percentage who are actually active crypto traders. So it's sort of like the hole in the donut. And that whole we're looking at the entire donut. So when we're looking at the entire donut, you have to make things simple and easy to use and very familiar. And that's something that we're looking to do. And Japan has uh 123 million population, I think 30% are over the age of 65. And so to cater through a wide range of demographics 20 through the 80s, if Mike Malta can't use it, then it's gonna be a challenge. Simplicity, it's really not a feature, it's something that has to be inherent.

Joeri Billast 10:14

So simplicity, trust seems to be the recurring theme behind uh long-term adoption.

Trust Building Steps That Work

Joeri Billast 10:20

What practical steps can Web3 companies take to earn that trust instead of for it?

Butch Takaoka 10:27

Yeah, well, you know, you mentioned I worked in in banking, so you know, it's highly regulated, but it's built through regulation, a track record, being accountable. I think with Web3, it's really done the opposite. You know, when I first joined, for example, it had white papers, you had roadmaps, you had, you know, promises that could be this and that. But there are practical steps that can be taken. You know, for example, we're proactively engaged with the regulators before you were forced to do it. So, and and you know, we took a compliance first approach, maybe five years before we even launched our business, you know, our different verticals. So that's something that it is very important. And having our crypto A team network, which is very physical, and with that compliant first approach that carries a lot of weight. So the ones that behave the best are the ones that take that approach before anyone was even looking. Yeah.

Joeri Billast 11:28

I love that. Now let's talk

AI Deepfakes Make Trust Priceless

Joeri Billast 11:30

about AI. Yeah, AI accelerates the creation of content, products, and even financial services. Do you believe the trust will become the ultimate differentiator for future brands and platforms?

Butch Takaoka 11:46

Yeah, I mean, I think not just AI, but across the board, trust is a very important factor. With AI, you know, AI making life so much easier. You you can do everything with uh AI. I mean, there are deep fakes, but there's bad actors, there's deep fakes. It's all about how you apply it and how you use it. It's a it's a great tool, used properly. I think that to your question, you know, when people look at it, you you can't trust what something looks like anymore with AI. So you have to be very awary. But if you take the approach of taking the approach of doing something, regardless of AI and using AI, that's fundamentally you're building trust anyway. So AI really raises a ceiling for everyone, including the bad actors. But the only differentiator that can't be generated is, you know, proven history of doing what you said you were gonna do.

Joeri Billast 12:46

Now, I don't know. But if you know that I've written this book, The Future CMO, I talked about trust in the book. Like you already mentioned, it's important to design trust or to build trust. Another idea is that technology keeps changing, but human psychology changes much more slowly.

Familiar UX Beats New Tech Jargon

Joeri Billast 13:05

So, how should Web3 leaders balance on the one side innovation, on the other side, the need for familiarity and simplicity?

Butch Takaoka 13:14

Yeah, well, I think it's human nature that you know if people, if they're stuck in their own ways, even with innovation, they recognize, wow, something's really great. Web 3, this is really great, but they're used to doing things the old way, so they're a little bit apprehensive, but that's because it's more of a force of habit. So it's really the human psychology, people don't really adopt what they don't recognize at first. So the leaders who will really drive mainstream adoption are the ones who are out there who meet people with where they are. So you don't really need to understand how a credit card processes a transaction. People just use it. You shouldn't need to understand blockchain to use a digital asset or to understand crypto or to uh train crypto or hold on to crypto. So the technology should be really invisible. What people experience is the outcome and the benefits. So innovation really earns the right, can be adopted when it becomes familiar. So that's really the interface. The user experience, the feeling of safety, being familiar, being comfortable. What does have to come first? So the breakthrough really happens, I think, when it becomes a habit without anyone asking to change who

Collaboration Makes The Market Grow

Butch Takaoka 14:32

they are.

Joeri Billast 14:32

Now, another important topic for RYO is industry collaboration. Why do ecosystems often grow faster when competitors choose to work together rather than operate in isolation?

Butch Takaoka 14:48

Yeah. Well, collaboration is really key, not just in our space, but in any industry. The reason why I say that, for example, we all the only FSA license to operate our crypto ATM network. At scale across Japan, full stop. And and in conventional sense, we have no competition. So the question becomes do we how do we use that as an advantage? And in Japan, there are a handful of exchanges, but we know and we're talking about this the other day with our chairman Anthony, that there are a lot of exchanges. We're doing things that people cannot do or cannot replicate, but we're not creating other exchanges as competitors. We actually want to partner with them because everybody has their own assets and knowledge and points that they could bring to the table that could benefit us collectively to drive Web3 forward, to make it more aware, especially in Japan, because as I said, not many people understand Web3. And collectively, no single company can really win that battle alone. So when exchanges collaborate, sharing infrastructure, quidity, brand awareness, ideas, you know, the whole ecosystem becomes more credible for ordinary people. And, you know, fragmented industry is very unstable, and people don't really like that, especially here in Japan. And collaborative one is something that we'll be here to say. So the fastest way to really grow your share of market, I think, is to actually for the market through partnerships.

Joeri Billast 16:22

Absolutely. Now, another thing, collaboration. We collaborate, let's say, on the podcast. You you we to re sponsor the podcast. You also supported my Sintra Synergist retreat here in Portugal. It's a business leadership retreat where we have marketers, founders discussing AI, discussing web three, the future, everything that is happening today in the world and opportunities. People share their challenges, we give them solutions, and they are motivated to go to the backstaps. So we're putting real leaders together. And in these discussions, we had a retreat in April, the next one will be November. We talk about the future, of course, and not about the next quarter, I would

Long-Term Shifts Founders Must Watch

Joeri Billast 17:02

say, but the next decades. And so I'm curious to hear from you. What are the long-term shifts that you believe that founders should be paying attention to today?

Butch Takaoka 17:12

Yeah, well, looking at what's going on globally, not just in Japan, globally around the world. People looking at demographic change, there are problems with financial institutions, there's a have trust in traditional institutions. So Japan's a perfect example. As I mentioned, we have an aging population. And it's growing. And the system, the current system, isn't really fully servicing those who are really in need. So I find this is my personal observation is that the young generation, they're really skeptical of the conventional systems and conventional finance. In Japan, we have a regulatory environment that really takes a long time to navigate, as I'm sure you have heard before. But actually, this creates decades of opportunity because, for example, for founders who are willing to build the infrastructure over the long haul and innovate through a vision, not just launching products, but looking at a whole solution and packaging it up in a way that they're offering something that can actually benefit people in the long run. It may take some time to get there, but that is something that I think a lot of the leaders and founders in all industry should take a close look at is okay, what's the end game and what's it gonna take to get there? But it might take long, but this is why we're gonna do it and keep that goal and that focus. Definitely that that has to be off front and work towards that.

Joeri Billast 18:52

And then continuing on your track towards the goal and not giving up because lots of projects maybe they start and then and they stop too early, or maybe they don't do what it takes on the long term. Now, let's talk about the longer term. Let's say we sit together five years from now.

When Web3 Goes Mainstream Invisibly

Joeri Billast 19:09

What would need to happen for you to say that Web3 has finally crossed the bridge from early adopters to the mainstream?

Butch Takaoka 19:20

Yeah, I think when web 3 has crossed the bridge is when people don't call it web 3 anymore. You know, I mean if you think about the internet, I remember back when the internet first came out, you know, people were talking about, oh yeah, I'm accessing info. I was one of them, you know. I was on the PC when it first came out. People were calling the information superhighway back then. And we didn't even have smartphones back then. But when the technology that we use becomes a part of daily life, so much that you don't even recognize that you're using it, you stop noticing it. I think that's the end game. For me, practically, it's when, say for example, my mom or my brothers and sisters and neighbors' parents, people in their 70s and 80s, are using a crypto ATM or buying something in a convenience store with digital assets, using a digital wallet, sending money to families overseas without thinking about that they're using blockchain. I think that's when Japan and Japan's actually we're well positioned when this happens first to earn and establish that trust. So I think, yeah, five years from now, if ordinary people on the street, if ordinary people basically are living on this infrastructure or using this infrastructure without calling it anything at all, I think that's what I will say with this.

Joeri Billast 20:44

And like you said, or Anthony said, like if your mother, your grandmother can use it, you know, without any problem. So why only give me so much? Yeah.

Where To Learn More And Closing

Joeri Billast 20:53

Coming towards the end of this podcast episode. Yeah, if my listeners now they are curious about learning more about the RYO project, where would you like me to send them?

Butch Takaoka 21:03

Oh, website realcoin.com. It's a great website. It's full of information that fully explains what we're about, also explains our timeline, how we got to where we are right now. You can find out more about the members on our team, their background, which is listed, it's a great list.

Joeri Billast 21:20

I know realcoin.com has a lot of information, and from there people can find out the socials and other uh pro other projects that you are working on, like for instance RYO Chan. So thank you, budge. It was really a pleasure to have you on the show. Thank you. So if you know people around you that are interested in everything that is happening around crypto and are maybe fascinated by Japan, uh be sure to share this episode with them. If you're not yet following the show, this is a really good moment to do this. If you haven't given me a review yet, if you give me this five stars, this will really go a long way. And of course, I would love to see you back next time. Take care.