The State of Crypto regulation

[Music] hello and welcome back to everyone we have an exciting discussion on crypto regulation i was gonna say on three continents but it's not i mean we have we have the uk represented we have the eu and we have the us but uh yeah i was just trying to be a little bit of fun but i'll now give the word to eliresa our moderator and welcome also to agatha blair joshua nina the state is yours thank you victoria and hello everyone i'm very glad to be able to be the moderator of this ebc the state of crypto regulation panel um so just shortly to myself an alireza aloisa sierra i'm a german germany based lawyer i'm quite active in different associations for example i'm with inatpa i'm bored of innatbar i'm also with think block tank think tank in luxembourg and i'm doing a lot with german and international companies being active in a crypto space but today it's not about me today it's about our speakers and i'm very happy that we have four international speakers today which will give us a good overview a great overview would say about the regulation and the different jurisdictions in different areas and for the beginning i would like to ask each of the speaker to introduce herself himself and give us an insight is your jurisdiction crypto friendly and why and i would like to start with ladies first and go to josh so josh please go ahead hi thanks it's great to see everyone i'm josh clayman um i'm at linklaters which is a global law firm and i'm us head of fintech and head of blockchain and digital assets i'm also senior counsel and one of the global tech sector co-heads i've been in the space for a while and i chair the legal working group of the wall street blockchain alliance and most recently um i have become on the board of senior advisors of cypher accelerator which is a blockchain and crypto accelerator that wharton is backing i've also had the pleasure of getting to know the folks on the panel through think tanks and other things and i'm i'm really privileged to be with you guys uh in terms of whether the uf is friendly to crypto i think it depends on who whom you ask right i think unlike many other jurisdictions the idea that digital assets would be completely outside of a regulatory perimeter is a bit of a foreign concept we have many regulators with many overlapping jurisdictions in many cases and what they may cover so i think in concept it's friendly to crypto and innovation i think sometimes in practice it may be a little tougher thank you george i would like to go over to germany and in germany we have our my dear friend and colleague nina uh located uh nida can you please go ahead please introduce yourself and give us a little bit of insight what the german regulator is doing with regards to crypto and if it's friendly or not that friendly all right many thanks alireza yeah my name is nina ziegler i'm a partner at dwf another global law firm and had our global blockchain competence group there i'm also involved and that's where alireza and i got in touch and many of the association was founding member of the bundesblock the german blockchain association then we formed together the think block tank the legal think tank in luxembourg in 2018 and uh went on supporting the european commission in forming inauda and josh and i actually met at the wharton crypto at rec tech meetings in in philadelphia and agata and i we share being experts on the european blockchain observatory and forum panel so i'm also been in this space for quite a while my personal um specialization is in financial regulatory and governance uh questions and towards your question whether germany is actually crypto friendly i would say it's as as josh said it depends who you ask um we gained a lot of clarity in legal topics during the past years but we also ring-fenced um the crypto space quite a bit and moved it all into the regulated financial services area so i guess the financial service providers out there um will have welcomed that you know the legal certainty and um you know that um the competition um of uh new startups is quite limited due to the fact that you basically need a license for everything um on the other hand the crypto startups the the tech community um would actually say uh germany is quite crypto unfriendly i guess thanks thank you nina so we're gonna we're gonna get to that later in the discussion but let us finish with the speakers um so um looking over to you agata i mean you are also a truly international player i know that you're right now uh sitting in portugal but you're not gonna give us insights on portugal but rather on a more global perspective you're gonna talk a little bit about the eu but please first start introducing yourself and then tell us is the eu crypt crypto friendly or not uh thank you very much alireza and thank you for having me on this on this panel i welcome to see friendly familiar faces we have more or less pretty much almost all of us have spoken about the topic frequently in other panels and discussions uh i hold the eu flag for today's for today's discussion and i consider myself an international lawyer advisor and university assistant professor i've spent several years practicing law finance law in london financial sector in a in a leading law frankly for chance and an investment by credit suisse and currently i focus on legal and regulatory challenges facing blockchain industry and as nina has mentioned i am an expert at the eu blockchain observatory forum i am also since recently achieved legal officer for a company called status which is a blockchain project and i'm also in in some capacity currently also an assistant professor at the warsaw university of technology and i guess professor and a number of other academic institutions in europe and uh i will share josh josh and nina view on where you know it depends whom you ask whether eu as such is a crypto friendly jurisdiction or not however i must say that at least the eu is trying to achieve something extraordinary by by passing a big regulation to cover the crypto space within the eu whether that's going to be friendly enough uh depends on who you ask exactly but at least your jurisdiction which is which is unusual uh jurisdiction as well because it covers 27 different jurisdictions individual jurisdictions and whether that's going to be friendly we are about to find out very soon thank you agatha glad having you today on this panel and now i'm looking over to blair who is sitting or located in the uk a player which has left the eu therefore i would like to give over to you blair please introduce yourself and tell us has uk become a crypto friendly player after leaving the eu well first off good afternoon everybody um and uh great to be here um so and also thank you for inviting someone from the uk onto a european um blockchain conference as well so um you know uh friendship all the way around so um in terms of my myself and so blair holiday so i'm the head of uk at gemiini um for those that aren't familiar with gemiini um we're a crypto exchange in cash custodian uh we were founded in the us but we were launched in the uk in in 2020 on the back of receiving uh finance licenses for the financial conduct authority the uk fca um as an e-money institution uh and also as a registered crypto asset firm under the fifth money laundering directive which is i guess the eu's last gift um to regulation in the uh in the uk uh we're actually one of very few firms that have received that debt approval um i think at the moment there's about 15 and we have two likes we actually have two approvals from them so uh which kind of gives you an uh kind of an idea of how few firms have received that level of approval so far uh in terms of kind of my background uh i started off i'm definitely not going to an academic or a or a lawyer like the learned people on these on this panel line previously start off with banking and i've worked my way through a variety of payments fx and e-money firms and originally got into crypto uh around four years ago uh with circle uh before making the leap to uh to gemini and uh and leading the line here in the uk in terms of whether the uk is a crypto friendly regime i think i'll uh i'll definitely kind of echo some of the points that i've made before i think it depends on what day and what paper you look at i think there are a lot there are lots of aspects to it that can give you the impression or the feeling that it is crypto friendly i think we have uh we have a regime here with through the sca on the fifth month laundering director which means that firms have a degree of registration that they can go through to seek license and approval which should in earnest kind of enable innovation to continue uh i do you know there are still challenges in the space we're not overly regulated which provides kind of opportunity but also challenges as well so i think i think it's still developing i think the uk's understanding of crypto and how it wants to regulate it is still kind of developing so it's kind of a bit of a mixed bag at the moment thank you player even though you're not a lawyer you will give a very diplomatic answer to my question so i will try to get some more insight from you guys to see from the your audience perspective if to where they choose to make a move maybe to your jurisdiction to if they do the right move so i have for you three questions which i would like to discuss with you i would touch on how exactly the relation is working and how this is going to change in 2022 how the nfts are regulated in your jurisdiction and how d5 is regulated and we will talk about this for the next 30 minutes and you guys in the audience uh the those who of you will listen to this you can write your questions into the chat box and you can put it there and in the end we will have a roughly 10 minutes to give you answers on your questions but starting with my first question so how exactly is the crypto regime in your jurisdiction and is it going to change within the next 12 months i'm looking over to the us and to you josh give us a little bit insight how is the regulation currently what are the main facts which are important for someone to understand and how is this going to change most likely thank you well within the us we don't just have a single regulatory scheme right so we have the sec which deals with securities we have the cftc that deals with commodities we have fincen that deals with money and payments and you know things like that kycaml all those sorts of questions we have sanctions um and you know we have the irs dealing with tax so there is no one unified crypto regulator unlike certain other jurisdictions so i think the way things apply is you look at number one transactions that are being done for example if you're offering and selling digital assets you look at the actual transaction that's taking place and it could that be a sale of securities for example i won't go into the howie tests and all of the other you know details about the us unless someone asks later about them but i will say that in general there um there tends to be or there has tended to be a view from sec staff that's been espoused that it's very highly likely that if you sold digital assets for fundraising purposes for example in an ico or pursuant to a theft that you're dealing with a security now um this of course has touch points for anyone who may be marketing this digital asset or or touching it or trading it in various different ways uh so all of the regulations kind of flow through we also know from the telegram case um at least from a letter that was from the cftc that in the cftc's view virtual assets they are commodities and they may on a case-by-case basis be securities so you have to think about these sort of things and of course there are anti-fraud provisions and things that you might expect so how this might change um in 2022 well you know there have been some comments um and suggestions that that a new regulator be formed i personally in my view and this is not legal advice not investment advice not on behalf of my firm or anything like that but i think it's unlikely that we would have a new regulator come about certainly not within 2022. however we have had um a recent report on stable coins by the um the president's working group for example where this working group which had market participants involvement as well urged congress to pass laws so certainly it's possible that there may be new regulatory schemes that that develop as a result of the passive new laws also the last thing i'll say on this is there is some really um meaningful litigation that's working its way through the court in you know including against um the enforcement action that's been brought against for example ripple and certain of its principles so once we see how these types of cases turn out um i think that that will have a large effect on how you know how the regulation develops also um since we did have a change of administration recently presidential administration things like the occ right now there is no um no appointee there's no nominee currently um to head the occ and that could be an incredibly important role for someone to fill previously uh brian brooks had been the head of the occ and was viewed widely as being crypto friendly um the acting head of the occ has likened uh certain crypto and and d5 to the financial crisis so has really sounded alarms so it'll be really interesting to see the way that that transpires in the next year but i think that's enough for me for this thank you uh josh i will come back to you after we had also a gutter because i will have a follow-up question but it's interesting to see that you just said it the administration has changed stuff have changed i mean the us market is always very much practical orientated when brian was the former guy from coinbase then becoming the occ ahead then i heard that a team of u.s administration went to geneva meeting with the dm guys bringing them back to the us and giving them some promises so this is all what i heard yeah so we're gonna come back maybe to that later but very interesting to see that the u.s administration and u.s policymakers they're very much practical orientated but interesting to see what's coming um so much about the u.

s i would like to hear more from germany i mean the german regulator and the german market in my opinion has been a very much front runner not just in europe but also in the international perspective looking at coinbase having its first license as a broker and custody service provider in germany not in the us and others joining so nina what can you tell us about the german regulation and how this is changing maybe also a little bit explaining on the german law on electronic securities which is also very interesting so what what can you tell us nina yeah um so germany the the history of financial regulation of crypto goes back quite far um as early as 2013 buffon declared that bitcoin for example our financial instruments so already since then um tokens had been captured by german financial regulation in 2019 um the legislators amended our banking law and included a new definition of crypto assets which are um now also um financial instruments and along with that um you know the uh the types of tokens which we according to german law recognize as financial instruments broadened so it's not only the cryptocurrencies like bitcoin and ether anymore but it's more or less um any digital representation of value which might be used as a means of exchange or serve investment purposes so that's very broad and you need to keep in mind that the legislator and also the german regulator buff and now expressly say that everything that can be traded may also serve investment purposes so that means that basically any tradable token will be captured by that definition which leaves very little room for any type of crypto token not being under you know the encumbrance of um of the financial regulation what does that mean basically any type of service um constitutes a financial service which requires a license um we are not that our understanding of security is not as broad as the u.s one um so securities still security tokens still need to be comparable to the traditional bonds or or shares um so the the prospectus regime is not going you know as as far as in in other countries however due to the fact that all these tokens are now um financial instruments um the servicing site is is pretty much limited or restricted yeah and in addition to that um actually since last year we've got this new law on electronic securities which you just mentioned alireza which enables now for the first time to issue um true securities without um having a signed paper handed over to anybody so in germany actually until last year you always needed to print and sign a paper to create under civil law or from civil law perspective or private law perspective a security deed and that paper requirement is now obsolete but only if you use the new um electronic security instrument which we have available since last summer and that may also be registered on a blockchain register so that's the interesting or for this conference the interesting part with the electronic security but unfortunately that register must be run by a service provider again licensed by buffer right so you cannot simply issue a security on ethereum um and manage it yourself um well you actually yeah um you can but then you would as issue i also need the the appropriate license and then the last part the third part um which germany enacted and in autumn is what we call the crypto transfer regulation um that uh basically implements the travel rule which uh fatf requires um to be implemented in in german law so that are the three like pillars that we have seen so far thank you nina so as what i could hear from you um germany is very tough on regulation it's the first player who is doing regulation of crypto assets which is not negative because we see foreign players coming to the german market such as coinbase and deciding uh voluntarily to get the license and to be able to provide the services in a regulated matter in germany and as we can see germany is a front runner or being the first in regulation and a major economic player not just in the european economic area but also globally i would like to look now how the eu reacted to that or what the eu is doing as we could see it also in the traditional or conservative securities market where germany was always the front runner in providing suggestions on how to regulate things i would like to hear from agatha if this is true putting in mind that we had the asthma and eva advice papers in january 2019 where they made an analysis of all the jurisdictions within the european economic area and where i believe the result was that only one jurisdiction was regulating or is regulating cryptocurrencies and utility token and all the others more or less not really and that also the advice of both institutions esma and eba was to have eu harmonization when it comes to regulation of crypto assets and to have a single market so what can it tell us about this agata what is going to change or what has changed already well thank you adidas you are right indeed in terms of financial sector europe is already harmonized under my feet and other related financial regulations but in terms of other areas where crypto assets started to be present what we are seeing right now in europe is very fragmented landscape so we have very proactive robust jurisdictions like germany for example and we have other jurisdictions which are passive and haven't done uh much in terms of responding to this innovation so given that increasing fragmented landscape of regulations that could possibly govern this space and just to give you a little background over a year ago in september 2020 the european commission took a proactive step and adopted what's called a digital finance package and it's a comprehensive set of measures which is kind of aiming to make europe fit for um for the digital age and to build a future future digital economy and it builds also on fintech action plan european fintech action plan of 2018 and and it's an ongoing work of european commission european parliament and so on so the the package consists of various measures but the the the important ones that we should mention here is this proposal for regulatory framework on crypto assets and also a pilot regime so famous mika which is a proposal for regulation on markets and crypto assets that will apply to those crypto assets which are at the moment unregulated at the eu level so outside of the regulatory framework for financial instruments and outside of financial regulation in general and a pilot regime is the proposal for regulation for market infrastructures based on distributed ledger technology and it applies to those crypto assets that are already regulated under existing uh legislation so it's a little bit more limited in scope so the mika famous mika is the first eu level comprehensive legislative proposal for crypto assets it's a bespoke regulation quite detailed and growing in size as we keep negotiating it and um that will bring everything that is outside of financial regulation under one umbrella of my umbrella of uh of this regulation it's a regulation so it will be directly applicable without any need of transposition and it will supersede any national regimes applicable to crypto assets not covered by existing eu financial services legislation so those countries that have already been proactive and uh designed they they own regulatory framework uh frameworks for those crypto assets those those frameworks will actually be um [Music] be replaced by harmonized mica regulation it's a very very comprehensive and detailed regulation which is hopefully nearing the end of this le of its legislative process so it might be that the next year will be a big year for europe and there will be this new brand new very comprehensive baseball regulation that covers this large jurisdictional region so in that sense i'm i i'm pretty sure we will europe will be a benchmark for other uh for other jurisdictions to learn from so we'll see if it's to follow or to to pick the best beats and design better regulatory frameworks but certainly we will be forming some kind of precedence for this large big bespoke regulation regulator framework for crypto assets thank you agata thank you for this insights and just to bring some advantages to this whole regulation topics because most of the non-lawyers would say do we need so much regulation is it really good for the market does it really help the market i would just tell you if you get a license under the new mika regime in one jurisdiction within a european economic area you can passport your license or your permission or your white paper within the entire european economic area so you do not need any longer a license in germany or licensed in lithuania or licensed in the netherlands you get just one license and you pass body to all european economic member states countries and this is also the benefit of a single market not just single regulation but just one regulation which applies to everyone and which gives you the access to 500 600 700 million people so this is i think something very good and from that perspective but what you said agata the eu is putting a benchmark for for others to follow is this a benchmark or where uk will follow is this something where uk maybe has left the eu and will follow the lead of at least the crypto assets regulation of how the amica is doing it or how is it going to be or how is it right now blair what can you tell about that yeah look that's that's an interesting topic and i think i think um hypothetically the the situation you outlined there sounds very good in principle i guess the challenge will be for firms to actually uh receive that that bit of regulation especially in the kind of startup phase or innovation phase whereas i'm sure that that level of regulation benefits um you know much larger institutions such as uh banks and whatnot else that already kind of approved in germany for example but if we look at the uk uh in particular there's two main of what we call national competent authorities in the uk the fca for the financial conduct authority and the prudential regulation authorities so the potential regulation authority looks after prudential regulation in particular so that leaves the fca which is kind of looking after conduct and they are the particular regulator that does uh look after crypto in particular um regulation in the uk for crypto is limited to the fifth money laundering directive um which requires crypto firms operating uh in the uk to seek license or rather a registration from the from the fca and to conduct that activity um within this jurisdiction and that legislation is largely focused more on businesses rather than the technology so it's about the conduct of the business uh and it's most particularly focused on money on anti-money laundering uh technology and measures that are in place uh although uh there are aspects of the approval process which certainly kind of go beyond um just purely regulation and kind of uh drift more into some of the other kind of more traditional uh approvals that and licenses in the uk space um i guess that although that is the underlying crypto asset registration um or legislation that applies to crypto firms uh for example at gemini we uh we don't just offer crypto to crypto we also we enable customers to buy sell and store crypto using uh using fear through so those customers can come on board and purchase crypto uh using their debit card or bank transfer um so with that in mind other parts of legislation kicks in and so um so while you know the idea that crypto firms would only be subject to one piece of legislation in our instance we also uh we also had the money area as well which meant that we are also an e-money institution and many firms within the uk space um will have that kind of crossover into other spaces and so you can obviously look at the e-money side uh as one particular bit of legislation that is applicable and also kind of there are other options out there in terms of uh multilateral trading facilities uh and other aspects as well so you know the loss of regulation in the uk is still under development and it'll be interesting to see what 2022 kind of looks like from a further um fairly developing of the crypto kind of legislative landscape there is already kind of certain kind of barriers and and certain requirements that are already in place for crypto firms i think um i think 2022 we will see either the more more of a discussion or a development of something that is in the ballpark of mika um i think you know it would be you know it would be a mess of the uk government not to kind of look at that and understand what works and what and what doesn't um i think uh you know i certainly think that our regulatory process is going to you know is certainly going to develop and certainly going to end up becoming continually more challenging for certain groups i think if we look at the fifth directive and the way that process has gone here um as i said at the start there's i think there's something like 15 firms that have got through that process which started in earnest almost two years ago now and we know that around about 100 odd firms uh have either had it the the approval declined uh or have had to remove their application and there are a whole bunch of other firms in the temporary regime um which means that they have not they've never been approved or denied as yet um but they could you know you would imagine on the balance of probability uh that yeah a lot of those firms are going to um uh yeah are going to struggle to receive their approvals as well so um so i think we'll continue you know we will see a development of the regulatory landscape here i think it will continue to be more challenging for firms i think at the end of the day you're going to be left with firms that have a real a really high strong culture of compliance uh financial crime or anti-financial crime within their uh within their controls and their their ethos and um you know i would certainly anticipate that generally would uh would remain kind of top of the tree in that on that basis so we'll see we'll see how it progresses thank you player and let's also see how the uk and the eu will interact in the future on the crypto assets industry maybe there will be something like a memorandum of understanding and something like accepting vice verse uk players and eu players on the crypto market this would be i think something very very yeah positive for the crypto for the global crypto market um so before i go to my last two questions regarding nfts and d5 i would just like to have from you josh um the answer on is do you think that the u.s lawmakers would take the eu regulation of crypto assets the mica as a benchmark do you think that this could be something where the u.s could take it just as it is and say okay we're gonna do the same now for the us or is it out of the picture um i think okay i can speak on behalf of regulators i mean on legislators for example because there are so many different views if you look at um at just some of the comments made um either in hearings or in you know speeches or in the public in general or tweets however you want to look at it you have some people who have very different views about digital assets um from others and some are very receptive to the idea of you know fostering a a robust digital asset market and some who are much more i would say cautious about that i suppose uh in my view i would imagine that both legislators and regulators are are aware of nika for example and are looking at it um and have been and may take it as persuasive guidance but i i think it would be unlikely that they would adopt it um wholesale yeah fair enough josh so thank you for that so looking at the time we have two questions which i would like from you to be answered i would like to start with the nfts and we are we have roughly eight minutes so let's say we have two questions left so each of you has two minutes per question per answer so looking only at nfts george are nfts regulated in the us are they not uh what is the answer oh yes they're regulated much as any digital asset would be um it depends on in which way so just very quickly as i had mentioned for example for the securities law analysis you may say wait nfcs are collectibles they're digital collectibles how can these be securities well it depends on how you're selling them right so if you're selling them and creating a reasonable expectation of profit for you know this marketplace that you're going to develop or this community you know you may very well have sold a security similarly as some of the nfts have become more and more expensive people have formed for example guilds right where you can purchase a slice or an interest in an entity that then would buy the nfc that begins to look very much like a security right especially if you're owning literally you know a share of an entity buying the nfc as opposed to the nfc itself so again i know it's a dissatisfying answer but from a securities law perspective in the u.s it is case by case you can't just say nft is generally speaking um i think certainly to the extent that you are involving you know money transmission and other sorts of things like that other regulatory schemes may come into play if you're selling them you need to do you know kycaml similar checks if there's securities um obviously that regime comes into play but okay i think that's within my time limit no thank you absolutely josh uh so but it's good that you explain that to the audience because i heard a lot from from my clients saying okay we're gonna issue nfts and we're gonna sell them to the u.

s investors because they're not regulated in the us and i i'm like like stumbling okay are you sure about that because as how you say it you have to look at each nft on a case-by-case basis to like if they qualify as a security another how it has which makes sense to me this is also how the law in in germany or in the eu works you cannot really say nfts are nfts because they're not they're not defined you can't really say what is an nft you would need to look at what exactly is the token or the coin representing what kind of claims and what is it giving to the buyer to the investor yeah and it's good that you say it here out loud and that people need to really look down at their project and look how they qualify or how it qualifies under the respective market where they'll target or whether distributes their their products um i would like to to to mix mix up the the order of of people and i would like to go over to you agatha before i go to you nina because i would like first to hear from you agata how nfts may be regulated by the coming mika regulation or by the existing method regulation and if this uh fungible test or if the if the token is fundable if this is something which needs to be looked at when answering the question if the nft is regulated under mifit or mika thank you very much uh i quite like uh this explanation about uh about each instrument being individually um analyzed and not on the instrument itself but the arrangement around it uh so so how it is being actually sold and what arrangement it's being dressed with to be offered to to others now in terms of the nfts in the context of mika regulation this is actually an interesting story because when mika was initially published it was silent on nfts and then in the process of discussion and negotiation now it's becoming more clear that the regulate this regulation should not apply to non-fundable or unique uh crypto assets however um this is this now it's getting more interesting because this sole attribution of a unique identifier to a crypto asset is not sufficient to classify it as a unique or not fungible so again you have to look into the instrument itself to understand its its attributes and and what it actually represents so um if it's a fractional uh nft it's more likely to be considered as security in which case it would perhaps i'm not saying it will definitely but there is a possibility that it will become a security and it will be covered by a mifit regulation so the the um but the assets that is uh unique and really non-fungible should not be covered by uh by mika regulation which leaves us in a little bit of uh of a gray area again because if the nft is not covered if we ascertain that and then if nft is not covered by the financial regulation and is excluded from mika regulation then again it's becoming there is a question as to how uh such instrument will in fact be regulated across the eu and then we are back into the individual national regimes because there is no harmonized regime that will be directed specifically at the nfts so it's a little bit of a puzzle you just have to really be careful and do not fall into the um obliviousness of thinking that if it's an nft then it's outside of mika and and you are you are safe because it might be that you are within the financial regulation regime or within an individual national uh national regime of an individual member state and then you have to look at this individual regime and so i don't think we are there yet on the nfts to be able to say for sure in in a clear way how they are how are they regulated across the eu thank you agata but as i understand from you the use perspective on regulation of nfts is very close to the one of the us to look at if the instrument is fungible and then to decide if it's maybe a miffed financial instrument or mika financial instrument and to look on a case-by-case uh approach rather than to say nfts are generally not covered by the legal framework so um if we would say we have an nft which is not under mika regulated not under my feet regulated could it be regulated under german law now yeah thank you um and and i just would like to add that the occurring compromise proposal of the european parliament um really has an important exemption for the exemption of nfds from mika which is that um they should only enft should only be excluded if they are not traded on crypto exchanges there you see the same theme again that i just mentioned from the german legal perspective that everything that can be traded actually constitutes a financial instrument because it's for investment per ilk because it serves automatically then serves investment purposes so it will be very interesting to see you know what route mika will ultimately actually take and in addition to that yes um the german definition of crypto asset does not refer to um fungibility at all um so it will be very difficult to argue just due to the fact that something is non-fungible that it's not encumbered by um the crypto asset regulation in in germany um yeah so unfortunately um no good news for the nft business out there at least in germany already by now typically you know if it's a tradable instrument then you will find yourself in that in that category and plus we have um actually eu white um a new thing implemented into our private law which will come into force uh as of next year and that is digital services and goods um at least if you're if you're trading with a consumer then you may find yourself being obliged to update your digital asset and that will also be very interesting to see how that will work out in you know our token space thank you nina so to put it in a nutshell if it's if the nft is not regulated already by eu regulation by mika or mifit it could be still regulated under german law and this is what um the issuers of nfts but also those who trade with nfts should be aware of and is it going to be easier if you want to issue or trade your nft in the uk blair so how how would that work yeah look i i can't say that this is the the golden bullet and it's all roads lead to the uk i think like uh like it's already been kind of outlined here uh it's very much important to kind of understand how the particular token works uh and whether it is subject to any of the existing legislation the uk legislation is uh when it comes to this is still you know very very similar um identical to to that in the eu as it starts to kind of divert uh kind of diverge a little bit as the uk introduces its own bits of legislation but there's not too much of a differentiation there i think um you know what i would say is that firms that are you know are involved in this space uh are also kind of caught in in other parts of uh legislation as well for example you know if they're enabling that transition from from fear to nifty uh from that purchase perspective they may have they may also be part of uh as to describe before the money uh legislation as well depending on where those uh where that fear is sitting in that kind of purchase process so uh no i i think it'll be interesting to see over the next kind of 12 to 24 months you know the nifty nft environment has certainly grown it's it's grown in a lot of interest in the uk and at general in particular we see a lot of interest in nifty gateway which is our nft marketplace but no i think uh i i think i would echo the points that have already been made here which which is yeah it does depend it's taken by that thank you player um so i was also looking in parallel to the questions i still had the question for you all about d5 but let's put it beside me if we have later a little bit time left we can jump back to defy but i would like to look at the questions raised in the in the chat box um and i like the questions actually so gavin gavin smith is asking you nina so you're probably aware of a bcb which just uh purchased uh zuta bank um would you say showing this case uh the german market is pretty cool or pretty crypto friendly uh what do you think nina about the news that uh bcb uh so for those who of you who do not know bcb bcb is a crypto player and zuta bank is a very traditional german bank which was active in crypto to be fair enough and now we have heard that bcb just acquired the very traditional hamburg based zuta bank so nina yeah i mean we really welcome regulated players to our german market so if you're a regulated player or if you are prepared to acquire one um then you will feel quite comfortable here because i think you know we really created a kind of sufficient level of legal certainty in the meantime um but for startups and mere tech companies um you know they would presumably not be really in favor of our regulatory regime yeah vcb is an interesting case um because you always have to keep in mind that not you cannot simply come into germany and buy a bank if you want to have 10 or more stakes in the bank then you as owner will be checked as well by buffing um so that is maybe the the interesting uh thing in in this acquisition as it was announced as obviously bcb must have passed the test then and that's good news thank you nina um we have two questions from sagar saga i will take your first question to the the panel because it's a legal question the second question i will answer you straight away it's about taxation it is not absolutely true that taxation in portugal is zero percent it depends on what kind of tax you look at and it's also not true that it will stay at zero percent in germany for instance you have no vit on trading of cryptocurrency such as bitcoin there's a nice overview of taxation with any european area of actors which is published on actors page you can check it out it gives a nice overview of taxation but i do not think that people will start now to move to jurisdiction only because of taxation because you can change it quickly year by year and i don't think that this is something which moves the talents from germany to portugal even though fair enough some companies germany have moved to portugal but it's maybe because of the weather rather than because of the taxation so looking at your first question who wants to answer that one how what how high is the probability that talent will flow to el salvador because of regulation maybe josh is that something for you is uh do you think that people are or talent is moving to el salvador because they are very bitcoin and crypto friendly now um i so i i have no insight as to people's migration habits for el salvador i do think you know in general um to the extent that there become greater and greater differences among um you know regimes and and flexibility and permissiveness you may have some folks moving to other jurisdictions um but i think as some people have mentioned on the panel previously i think to the extent that people are willing to to buy into the regulations so to speak and to embrace the regulation and and the idea that digital asset businesses will be regulated um i i think once people can get over that mental hurdle then i think uh that would stem a lot of the that kind of migration but i mean your guess is as good as mine on that i if i could just add to that as well i think uh the idea that there's kind of like this the small nucleus of of staff that kind of moves to kind of wherever crypto is uh is most friendly it's kind of i think is missing the point somewhat i think what we're seeing is just yeah and we've seen that at gemini is just a growth of people interested in joining um crypto firms and moving away from stuffy traditional finance firms and actually seeing the light and seeing the you know the value that crypto can provide uh as a truly international global um currency uh for the world uh and i think a lot of people have woken up to that and you know as an ex-banker i you know i i couldn't have imagined when i started out that i'd be in this environment environment but i am and we've you know we've got an enormous amount of number of uh of a of new roles live and the you kind of the interest from traditional financial uh you know staff is is phenomenal so i think what we'll see is less a talent flow um to one place or another and more of a kind of an awakening of staff in those jurisdictions to say hey i want to move away from a bank or or tradition you know more standardized fintech and i want to be part of that crypto kind of ecosystem be part of that future because the opportunities are enormous so i think um i think that the talent flow is not the el salvador necessarily it's the crypto and that's and that is particularly exciting to see and uh and long may that continue thank you blair we have two and a half minutes left um there are a couple of um questions even though chris i like your comment it's not really a question i agree with you over regulation is not needed but to have a risk-based approach and to protect the consumers i think this should be a goal no matter which jurisdiction you are especially when you look at crypto i mean me personally even though i'm a lawyer i'm not a big supporter of over regulation but we all agree that with in the crypto market in the crypto space there's a lot of fraud and lots of stuff happening therefore a risk-based approach i believe is good for all the markets um the question regarding investment banking i would put aside i like the question regarding spacer in germany which is a big savings bank those are the big savings bank a very traditional bank again and germany declared today or officially announced that it will offer its over 50 million consumers investment in crypto assets so nina what do you think about that is is this a good move is this something which is going to waken up the conservative banking market in germany absolutely i think that is a huge step forward it's not only one single savings bank but it's rather the savings banks community which is walking into that space and for example they they contributed massively to the success of apple pay here in germany um so um yeah they have a very broad custom basis um i i would say every other household here in germany has a savings banks account um so that's that's a big step yes absolutely i would fully agree with you nina and let's see where this is moving um but also other banks like fox banks they also declared that they will route their customers to build stuttgart and bison and the bison happened to will probably help them to make their investments in crypto so the last question which remains here for the last let's say one minute i would like you to agata to take that one so if the eula does not really the the common eu law so mifid and mika does not apply how to determine which eu law applies i think this is something which goes direction passive reverse solicitation versus active solicitation so which jurisdiction law applies for the crypto players in the eu so can you say something about that well um you know it's it's a very difficult question to answer because it really depends what kind of player you are and what you are seeking to do and from where so i i think it largely depends on whom do you offer your products to and are you an issuer or a service provider so you have to really determine your individual circumstances but mostly those regulations whatever regulatory frameworks there are in whichever jurisdiction they usually apply to a particular person which is tends to be some kind of if it's financial regulation and some kind of intermediary or if it's a crypto focus regulation that can be an issuer so you really have to start from uh from from that kind of to what what role are you playing in that piece in that in that business and what you are what are you offering and to whom because it is also very relevant so for example if you are offering anything on the us territory regardless if you are based on in the us or not you may be caught within the us regulations so uh it's not only eu regulation that you have to worry about it's really much broader than that and this um industry is uh you know this technology is disregarding borders it's uh it's kind of above the jurisdictional borders because it's seamless and across the border so there are many cross-border international issues that you have to consider even if you are based as a firm in an individual jurisdiction thank you agatha and thank you all who have participated today in our panel looking at the time i think it is the time to say goodbye and thank you of course and so i hope to see you all soon if corona allows in person uh but we most likely will see each other also literally and for those of you who could not get their uh questions being answered you can reach out to any of us i believe through social media and please enjoy the rest of the ebc thank you all thank you so much sir thank you nina thank you blair thank you agatha thank you josh and yeah i know we have a few questions left you can reach out to the speakers also through the people tab and and have a meeting with them there or if not as aliens said on social media thank you guys thank you so much see you next session bye-bye thanks thank you [Music]