Liquid CEO Mike Kayamori recently took part in a question and answer discussion at the Foreign Correspondents' Club of Japan (photo credit to Bitsonline).

Here are five highlights from the Q&A.

Where is crypto heading and what are the challenges?

Crypto and blockchain is multifaceted, that’s the beauty of it. One person can see Bitcoin as a currency, while another sees it as digital gold.

Crypto has grown and will continue to grow. Naturally, with growth comes innovation but also challenges.

Outside of cryptocurrency you can see financial institutions become decoupled. FinTech startups focus on one thing and do it extremely well, which takes the power away from these large institutions somewhat.

They key here is collaboration between these innovators to provide a seamless service. You can see the same innovation and collaboration in cryptocurrency.

I see a world where Bitcoin can be purchased easily in regular stores. Digital assets will become a normal part of our lives. For example, I can envision loyalty points becoming digital tokens.

Bitcoin is only 10 years old. Any person who understands the Internet or economics probably has heard the word Bitcoin. They might not understand how it works, but they’ve heard of it. In the next 10-20 years, it’s natural to think that there will be much more embracement of this technology.

Trusting the system can be hard in crypto with large losses and big exchange hacks. What can be done about the security of investments?

The industry is growing up and maturing. With growth there are bound to be issues – you have to be careful. When the internet began people didn’t trust it, but now the internet is an integral part of our lives. Parts that weren’t trusted are, for the most part, solved.

In crypto, when private keys are stolen your funds are gone. Damage is higher than losing a credit card, for example.

Trust and security is a core part of any service. Interestingly, the Bitcoin blockchain has never gone down. It may get slow at times but it has never gone down or been compromised. In contrast, banking services have downtime.

In this regard trusting the system makes sense. The challenge begins on the custodial and settlement side when people use service providers to secure private keys.

In Japan all private keys of customers have to be stored offline, which is what we do at Liquid. This is a safe custody solution, but is this the best way for a technological progression? Probably not. That’s why we are working on a hybrid version.

What is the business plan of your company for the next five years?

There is already a pressure from regulators, and as a startup in crypto it requires a lot of resources to be compliant. It certainly does raise the question whether it makes sense to be part of a larger financial group.

In Japan there was a period of lots of consumer lending startups that eventually all joined a larger financial institution.

The way I see it, there will be service providers that will excel and work under a larger institution, but crypto is different. The business model continues to evolve. When you become part of a large institution it’s difficult to prioritize and innovate.

Simple exchanges can be offered by banks and payment companies, but when you look at the innovation side I strongly believe that innovation comes from a startup. The passion and drive to stand out and success is so important.

Liquid is an independent, standalone company that will continue to put innovation and customers as its core. Where necessary we can work with other institutions and FinTechs, but we are independent and growing. Acquisitions will happen in this industry, but we want to be independent.

We are an exchange. We need to offer a large variety of assets. We have over 100 tokens and this will continue to grow. Offering more tokens and more financing options is our goal. In the next 3-5 years I believe in a world where companies will start offering cryptocurrency options. They will be looking for liquidity providers, which will be us.

Furthermore, Liquid will be looking to go into adjacent areas. Whether it’s providing crypto or blockchain solutions, or working with banks. Our core will always be crypto and blockchain.

Are you personally involved with influencing regulation in Japan?

I am part of a self-regulatory organisation which represents service providers to talk with regulators and advisors about these things. We go to the JFSA every month to talk about our business.

We have been told by the JFSA that later this year the FATF is visiting japan to inspect banks and financial services. They are interested in meeting crypto exchanges too and they would like to meet Liquid.

Where will crypto be in 5-10 years?

From day 1 we have always been pro-regulation. I want crypto to go mainstream rather than being a niche.

There are still the crypto libertarians that don’t want to be regulated, but that’s not how we look at it. We believe that for crypto to go mainstream it needs to be regulated by economic powerhouses.

I have no doubt that crypto will be utilized by mainstream financial services. It’s not a subsection of the forex market, it’s going to disrupt financial services in one way or another.

I am seeing financial institutions showing interest and we are only 10 years in. When I started this company people thought I was facilitating money laundering. Now there is less negativity but it’s still there.

A large amount of our staff come from a banking background and they all tell me that there is a risk of staying in existing banking. AI is replacing traders. You don’t need retail banks and branches anymore. Everything is going to be mobile and digital.

Crypto will go mainstream. I don’t know how long it’s going to take, but it’s coming. Bitcoin has come a long way in such a short time.

Our customers are mostly millennials. When you talk to the securities companies in Japan, their average customer is 65.

These companies are concerned that in 10 years they may cease to exist. Getting millennials to be their customers is almost impossible. Crypto is more exciting and interesting to the newer generations.

Human innovation is from technology. This is the first time where technology is innovating money and value.

That’s why i believe crypto will go mainstream. Whether it’s 5 or 10 years, or more, who knows. It will happen. Digitization will never go back.