Shaping the Future of Crypto Regulation | European Blockchain Convention

foreign [Music] great that works already morning everyone uh thanks for joining us we have a very distinguished panel here tonight oh sorry if it's so dark it feels quite nicer you can tell it was late um today obviously so I'm very happy um to have them all here um we would like to give you an overview of what we think the future of crypto regulation will be and uh I would like to start uh handing over there for uh for the sake of time to Joachim who's a member of the European commission to give us a bit of an idea of what we can expect from the European uh Union institutions concerning crypto regulation then we will go um a bit more into a broader perspective uh giving you an overview of where we see developments in other jurisdictions across the globe and then hopefully Enlighten you a bit with um why we should be excited concerned more engaged and why you should probably think about this topic much more than many of you would like to but also uh hopefully to release you uh with an optimistic outline uh especially for Europe and no pressure your him so please kick it off thanks Robert that is why I like you so much sometimes he calls me after nine o'clock in the evening when I'm already sleeping discussing interesting questions and now I'm sitting here very first person in the morning and have to tell you what the future will be future will be bright uh fully convinced of that and let me just say a few words about why so for those people that don't know me yet I'm principal Economist indigro of the European commission responsible for developing the EU token economy for industry and small and medium-sized Enterprises and I've been in the space for quite a lot of time and that's why I am old enough to Recall why we are doing what we are doing here and this is the starting point the starting point is never regulation the starting point is also not crypto the starting point is how we see the world how we see individuals and collectives and that is why I think the European approach and I say the European approach I don't say the European Union approach because we have thousands of years of European history that brings us together especially in a place like Barcelona here with a lot of history and that's an approach that is different individuals are the starting point and the rights of individuals are the starting points individuals own their data individuals decide what they do so it's a bottom-up approach but individuals are nothing without collectives and this also our approach to Identity no one needs to know everything there are very clear privacy rules but you as individuals engage with many different collectives at the same moment in time your family your sports club your religion politics work whatever you do and you are an individual as part of different collectives and this means that we are there to empower this bottom-up decentralized development of collectives that do whatever they want to do according to their preference of course to the extent that it is legal and this is why our data strategy our work also on how we see decentralized Finance how we see crypto assets Etc is the starting point for us on this discussion this is one integral space and when we are discussing regulation for example on Mika Mika is a sort of very liberal approach and I will very briefly explain why Mika and crypto assets are not about Securities or financial instruments that is what they are not in Europe and philosophy so in that sense we want to empower something that is below because it creates much more opportunities than risks and let's not forget the second thing risk is in centralized structures and we've also seen that last year with certain incidents that happened on the market that the c5s is not the device and there our opinion is that we've seen that in the financial crisis we've seen that in the capital markets in the banks that wherever you have centralized structures you have systemic risks wherever you make decentralization work you don't have this type of risk and this is what we need to remember because the mainstream narrative is the opposite but that is a war going on on language that is meta Politics on language that's not the reality on which we are living here and this approach we live and that is when for example we designed Mika we made it a variable approach Mika has three pillars Mika first of all has a pillar of what it all excludes basically it's a regulation excluding regulation on defy on Taos on nfts on other stuff all of that is excluded not because we are too stupid to understand that but because we either don't see the risks at least at a significant level or because we think it's premature to regulate like we've also done on alternative Finance where we haven't regulated for 10 years so that's starting point one second thing is the main default thing the second pillar utility tokens utility tokens are not primarily financial and therefore have we have reversed the burden of proof you start a project you send a white paper to your National regulator at that moment you can already scale in 29 countries 27 of the EU plus Norway and Liechtenstein and the burn on the proof is on the regulator to show you that you do something wrong this is revolutionary this is not what we even have in other things like crowdfunding service provider regulation things like that the third thing is unstable coins and everyone comes to us and says oh we are so strict on stable coins we have been very clearly instructed when we drafted Mika to prohibit all of that that was the time of the Libra discussion Etc politicians didn't like it we said we prohibit nothing but we want to set out rules of what we think is important because regulation is important at the end of the day when you deal with the money of other people of whis what we see as reasonable and that is why I think Mika in that sense is not that restrictive now of course the crunch question comes on the technical standards I fully agree because at the end of the day 10 of the problems that you will ever face with regulation is the text of a regulation ninety percent of your problems will be how people interpret regulation and this is why the most important thing that we see for the moment also for the future is education and that can only be co-education in this space let's not forget that also people working in the public space need to be educated and they can only in such a fast-moving field be educated by doing stuff in Practical terms by working together with you guys by understanding the business model but that must come from both sides you must understand that these are not the idiots somewhere that want to prevent everything and we must understand what you actually want to do and then we can design principles that can work and I have received an email very early this morning when I was still sleeping from my colleagues in digiconnect and they are right they said please when you speak inform them on our new Sandbox yes that's a very typical example of what we're doing we've just launched the first call for regulatory sandbox connected to the European blockchain service infrastructure where we will support up to 20 projects that in Europe intend to work in this space and where we will together with the public players with The Regulators ensure more legal Clarity for very Innovative very Advanced projects I can only invite you to have a look at this and this is part of the learning that we are doing what will be the future and only one minute because we want to have this Interactive there are different opinions on the future and don't expect anything in the next one and a half to two years because the parliament is coming to an end the European commission term will end next year there will be no new initiatives until probably 2020 425 at the earliest for the next five year Circle which gives us time to work and engage which is very positive for me the future is and that's my very personal opinion Mika is the last piece of traditional regulation because Mika is about intermediaries it's about Central players and in what I want to achieve decentralization a true space where we can have a trustworthy technology that works that we develop we will not have these entities any longer we will have purely collectives where no one will be at the end of the day individually responsive or responsible and this is something where traditional regulations will not work so we will go into other forms of self-regulation we will go maybe into embedded regulation where I'm very doubtful that this can work in a proper way but we need to design certain things we will go into forms where we need to develop more guidance where we will need to ensure in a soft way like with the sandboxes that things can be compliant in Europe but this is hard but this is something that is a very broad approach not only regulation it is also civil law civil law is not based on these principles we have to develop that as well this is on other use cases showing best practices having a lot of Outreach activities we need all of you in that but you need to work together with us to make this space happen because what I see in the rest of the world very honestly is a top-down approach either from Big techs or from governance that want to control you or from people that don't understand anyway what is going on no names so in a way I think we have already quite a lot of history in this space we want to have it liberal we want to have it truly decentralized and not fake decentralized but you are the ones to have make it work together with us thanks georgem for this uh really inspiring uh hopeful vision of the future I would like to ask Justin would you share that I mean normally the the industry comes in and tries to be Innovative and the commission comes back yes holding us down and in this case it's like should we or should we tell your him that he's maybe too optimistic no no so it was a very optimistic view um obviously I represent the private sector over here so so I'll put on my devil's advocate cap um so I'm from Malta where in fact we do have regulation we have a vfa framework which is quite aligned with Mika at least from the service asset service firm from the provider side not from the issuers so we're really quite aligned so fortunately if you're licensed in multi you'll be grandfathered into Mika because we're quite aligned um in other jurisdictions there's just AML registration which isn't really much it's not really a license so I believe the same Journey that Malta went through between let's say 2019 and 2021 to get accustomed to this new regulation all other member states will will go through because obviously it's a new law and Regulators Market operators lawyers will need to get accustomed with the new law so there might be some confusion um and perhaps some ambiguity in terms of how this is all going to roll out um yeah in terms of if I what I think about the regulation I think there's many many positive aspects specifically when it comes to regulating centralized players um so liability for custodians fairer more transparent rules when it comes to trading venues um better governance rules so effectively applying for Amicon the license on the Mika is going to be very similar to applying for a license under many other Industries so if you're applying for it for a brokerage license under Investment Services run e-money license under the financial services regime in terms of the process it's quite similar so business plan projections policies governance um Etc so obviously I think that's very positive when it comes to stable coins I believe that there are some some restrictions and there might be some some markets disruptions in terms of how it's going to roll out um so we have three categories we have utility tokens um and and as Joachim explains there's just going to be notification no license or approval and also all utility tokens Orange which are in circulation until Mika comes into force will be sort of exempt Not to cause markets and disruption then we have e-money tokens um which yes will be regulated like emis however there are a few differences and this is mainly in the composability um of the blockchain and of the token itself and also the network effects because when you have an e-money token it is the issuer which will control um who can send the the e-money what can happen when it comes to stable coins of course you can send peer-to-peer without any centralized Authority and when it comes to third-party protocols and these can can obviously use use the stable coins and so for example Mika bans interest so what will happen if it's a protocol wants to offer interest will this be allowed will this be addressed in the rts's um also we have the Arts so Arts are basically any stable coin which is not um e-money backed by Euro so basically usdc usdt and others which make up 95 of the market cap and will be considered an asset reference tokens so obviously after Mika if these asset reference tokens so usdc usdt don't apply to get authorized on the Mika then they obviously won't be allowed to be listed on European trading venues um which could cause some disruption so obviously it's um you know it's beneficial to push the Euro and this is the intention of the commission however one would hope that these bigger players who who sort of dominate the market right now and do have a very key uh important function within the C find D5 ecosystems do apply for authorization and so we could see set the new e-money tokens um you know rise to the occasion and be used and adopted the same way let's say usdcr but this is a sort of unknown into how this is going to roll out because obviously stable coins are a very important part of the ecosystem um so a lot of unknowns bought a lot of positives obviously like institutional investors will be protected done more interested because we have no Clarity more regulation so so I'm curious to see how it's going to roll out and and I think that this will be addressed better when we have the rts's because there's a lot of ambiguity in terms of okay canted party protocols offer interest or not let's say die which is fully decentralized how will this be treated will it still be able to be listed on trading venues um so I am hopeful and I am optimistic but I'm curious to see what new players will be on the market and in terms of the old important players if these will opt for authorization on the Mika thanks Justine anesthesis are somebody that is located unfortunately now outside the U and you're traveling around the world checking out those Regulatory regimes and developments how do you see what's happening in Europe in the broader context yeah so um I'm coming from this from an international perspective so the EU will will hopefully bring that harmonization across the the EU which which is great and it's very welcomed by the industry but I think at an international level we're seeing very different types of regimes being developed from an from a from an international perspective we've got the financial action task force so that there is a lot of jurisdictions that are at least having an AML regime which is good and that is bringing some kind of standards that are that are common across many jurisdictions but we're also seeing many jurisdictions that are coming up with a very different type of regime Mika will hopefully be a model to follow and we hope that some jurisdictions will follow such a comprehensive uh and and um and full regime covering all the different elements of of a crypto asset framework but we're seeing uh different types of uh regimes being developed be it AML AML plus with a few other requirements or a more broader regime with Prudential conduct of business and other types of of obligations um so this fragmentation across the world is not helpful and brings up a lot of challenges to to firms in particular because this is we all know that this is a sector that is very much Global Without Borders um and we've got many players that are operating in many jurisdiction actions and ideally we'd like to see some International standards at least some base level standard for for everyone to operate from that is not there yet it is from an AML perspective but even from from from a definitional point of view for example we got we got vasps uh from a from a fatter point of view we've got casps in the in the EU we've got digital Assets in our jurisdictions the definitions differ that obviously doesn't help the services that are captured by by avasp also differ globally quite significantly in some cases um regulation is catching up um but in this sector which is very very fast evolving it's difficult for the regulation and the legal Frameworks to catch up with all the different business models all of the different um types of services that are that are being offered but I hope and and I'm positive about Mika Mika is is a very comprehensive regime and I do hope that other jurisdictions follow suit as well um but at the same time I am seeing that uh there's a lot of a lot of different approaches being taken which which I hope changes in the future thanks for this overview Jonathan as you're operating this uh space for a while already and uh sitting uh on the other side of the Atlantic and seeing also a bit what our U.S colleagues are doing there and the SEC is going on full Rampage mode right now making a lot of people very nervous and uh and it's just outlined that we need like common standards and uh you know there will be U.S delegations coming to Brussels thinking about what we did here thinking about maybe it's something we can Implement here what do you see for example from your perspective as the minimum standards we should actually easily agree on the ones that are probably a bit more difficult to achieve but we need to it Korean and the ones which are you know something that we probably have to wait for uh further down the future and I appreciate that I think these are all certainly really good questions and I'm have no doubt people in the crowd are wondering what a partner at a law firm the Cayman Islands knows about the future of crypto regulation I think the truth of it is is we've all got clients in summer starts I've got commercial clients pushing product out there we've all got to manage relationships um the clients that I have are on a full spectrum of video games metaverse layer one layer two stable coins and the idea that you know D5 quasi-banking quasi-custody you know the Spectrum the idea that it's all crypto we're going to regulate a video game the same way a damn near quasi-bank you're like this is the most bizarre thing we need to chop this up there's so many different businesses built within that um and so you know I think my level of frustration and you know as we're saying came in BVI we've got our vast regimes and they're like all right some activities are caught and I agree with that can we position a lot of stuff outside of that yeah of course we can we're lawyers that's what we do but the reality is is you know even if you were to get properly regulated and you pick your jurisdiction like yeah I'm hell-bent I'm just going to go down that path I'm going to check all the boxes I'll jump through the Hoops I'll get license registered notified whatever that is you know I don't have any client that comes to me and is like I want to be big in Lichtenstein that's it that's my place that's my jam I'm going to get compliant there and I'll just tell everyone outside of there to just off no sorry I don't have clients like that I don't think any of us do and so this idea of this sort of competitive jurisdiction is trying to like stake a claim to it and I appreciate you know Micah is great in terms of giving you access to a bigger jurisdiction but I still enough clients that are like yeah Europe that's it I don't want anything outside of that and so until we start harmonizing and actually trying to figure out what that sort of base layer Foundation is trying to avoid the regulatory Arbitrage trying to avoid people running off to the deepest darkest jurisdictions yeah all right people point to the Cayman Islands and bvis places to do that um I don't think they're quite that bad but yeah there's certainly been historically a tendency to do that and so then you see other jurisdictions that come out and say like yeah we've got a fully integrated regime we've covered everything we've got the perfect system all set up you know they're just they're just competing for market share whether it's Dubai doing it whether it was Singapore doing it whether it's Hong Kong trying to do that you know it's a competitive Marketplace we're in and you see some jurisdictions that see that as this is a business trying to pull clients in trying to do it properly you get other ones that sort of get caught up in the bureaucracy of it all of like you know we're genuinely out there for investor protection we're not pro-business we're trying to protect the little man you know I don't really think there's that many widows and orphans that are accidentally losing their life savings in crypto and so I put a lot of weight to the sort of buyer beware you should don't accidentally find yourself investing in this it's not like some of the other things that Global Regulators have tried to deal with you know with truly Global Banks falling over mortgage crisis things that are genuinely going to impact a huge swath of society um and so I think you know Hakeem tried to like let it out of the bag there that really I think he is probably a Vanilla Ice fan when his solution to this is basically stop collaborate and listen seems to be the solution he's pushing for and I tend to agree you know we're not operating in isolation this isn't regulating businesses existed 200 years ago that had all their customers and their suppliers within as far as their donkey or cart could drag them you know the idea that FTX could move from Hong Kong to the Bahamas like that um you know they didn't even bring the laptop they just switched to switch and said there it is um it's just a very different world trying to have regulation put in place and to find this competitive jurisdictions where clients can actually collaborate with The Regulators have a grown-up conversation I think the sandboxes are a great idea we've got our version of the sandbox as well um I haven't had a lot of clients want to volunteer themselves into that but I think we're still the very early days in the big scheme of things and yeah crypto's been around 10 12 years it's grown and it's evolved um but I think that sort of classification exercise of figuring out where that wrist spectrum is you know I don't think a video game is going to bankrupt someone but yeah you put all your life savings in centralized exchange I don't think that's a good idea but there's certainly a risk of that um so I think my best case scenario would be try and identify some of those sort of base layers you know if you are a custodian and you are holding people's stuff you should have people's stuff like I surely we all agree on that whether you want to use a centralized custodian whether it's an exchange or what have you that's your choice but ultimately we should be able to rely on you put your stuff there it's still going to be there the next day um and trying to have a universal global standard where people cannot run to other jurisdictions and find those weak points I think it's going to be a big step and so I'd rather we go kind of slow and steady build from the ground up and figure out where those pinch points are and I think the idea of chat tackling nfts or defy yeah it's great but that's 10 years down the road there's so many more fundamental things that can cause much more harm in the world the centralized counterparties the crypto on-ramps off-ramps you know truly tools of the trade in terms of potentially Bad actors I think is where the focus should be thanks for the elaborate answer um as an industry player when you look at everything that's been discussed or regulation more generally are you worried are you excited or what's what's your thought process when you look at regulation I will be bad guy today because I'm not an optimist why because I will share with you because it's nice it's wishful thinking it's on a paper it looks perfect in practice is a total how it works I will tell you why I think I have got a huge experience because our crypto exchange is still licensed in Estonia which is the place which is another thing the most strict in European Union we have got a Canadian license we have got a virtual asset service provider registration in Slovakia in Lithuania in Italy we are on a Final Approach with finnama so we have got a lot of regulators experience with all of them and I will share with you some some cases which shows how it works in practice because on paper it looks very well but let's imagine for a moment that France has got this territory atol muroa when they use nuclear power for some experience and for example then said they sent uh missile with with with with nuclear power and they are a lot of rabbits and they check what happens with these rabbits when they increase the number of of nuclear power I'm this kind of rabbit with the regulatory because Estonia is this kind of let's say experimental area for European union and I will share with you my what I think I think that those rules are being prepared by people from the old finances so they are taken from the regulations of the banks and if you are in crypto business you cannot have the regulations from the banks because it will kill your business so they're the very simple simple thing that we had last year uh we are we have got internal auditor external auditor a guy like public Moroso from from Soviet Union the guy who need to uh to go to be a spy and need to send some information to the government if we are not dealing according to to the regulations so public morals have gotta get the some some prize because he announced their mother and father being a spice in Soviet Union so we have this kind of solution inside because it's there it's needed by the regulatory but what happened last year there is one at the end of the day when we went through all those audits of course the first big floor big floor they never take the audit for crypto because they are worried skirt and they don't want to do it let's say big seven we have the seventh auditor who came to us and said okay guys I'm not familiar with the crypto let's do it together let's go through the whole outage it took one year according to the to the regulatory basis and at the end of the day there is something which is called own phones audit which will be issued according to Mika as well and what we did we invested like 4 million euro to buy shares of seba Bank seba bank is a Swiss bank the guys from sebar here as well according to the regulation we have to deduct it deduct this 4 million from our own funds so the story is if we would invest it in non-financial institutions even FTX it will be fine but if we invest in a regulated Bank we are we have we are punished we need to bring more money so of course the idea is very good but how it works in practice it is very important to to not to kill the business because most of the regulations and the regulatory Estonia three years ago was a super friendly country you can come you can have a license in three weeks now if you apply it takes one year and you will not get the license that's the story that's the true because Estonia want to be so so um strict with the regulations that the business doesn't work there so com comparing the regulations all over the world I think I'm not an optimist there will be no one regulation like let's say Swift system or something like this so so of course in Europe it will work but it depends on the regulatories and for example the Polish regulatory I cannot imagine that they will issue any license because so they are so unfriendly we had this story in Poland and we went to Malta after that because polish regulatory told us that okay guys you are so big you are developing so well but we cannot understand what you do okay you'll pay taxes everything is clear but we don't want you to be there so everything must change and the regulator is might change this Global thinking that's the most important issue because the idea is very good but how it works in practice not so good in my opinion thanks for uh explaining that I think uh reality and uh the vision of it often diverge the question I would have is what do you think us as a community as an ecosystem and also you know with the help of the European Commissioners doing their part as well is needed for them to be more open-minded is it like an age issue where you say like okay all the people dealing with it they're like from a different generation is it because they're getting forced by the government to act like that or where do you see the problem stemming from is it really something that just takes time so they smooth into it or is it like political environment or is it maybe something else political environment is is one thing but it depends I think the most important is regulation the education because the more you know the more people are familiar with crypto the more they because you know from in some countries crypto is thought to be let's say like it is a way of laundering money so it's it's crazy and so of course there is a lot of countries like this but for example Poland where the government is completely unfriendly for crypto regulation Polish people are very familiar with crypto so that that's what happens so the more you educate the more you learn that's what we do we have got a special Academy we we try to force our clients don't invest without knowledge don't don't be a let's say crypto investor without understanding the the first lessons what what it is so the more people will be familiar even I think there is a lot of specialists in in in Europe in Europe European Commission in government the issues that we need time for uh for being more familiar for the education for uh for having knowledge how it works that's the most important issue and it will change and it will it is changing already thanks Ernest Jonathan when you look at the jurisdiction you're operating in do you see similar issues is this something that is limited to a number of countries or is this like across the globe yeah I think that resonates in in a number of countries um training education I think is is key in all of this uh there are also from a regulatory perspective I think to your point um there are many Regulators that are very scared for for to to approach this and and how they're going to deal with this they they think it's very different to everything else and they're I think there are various a lot of similarities to other Financial Financial sectors that they can draw from uh and and I think there is a need for the training and educational Regulators as well and obviously upscaling the staff at Regulatory Agencies that's really important we see that a lot um there's there's again very different approaches to the way that Regulators are dealing with this some of them are um are just creating new teams for for the regulation and supervision of virtual asset service provider others are just or training individuals within other existing uh teams of financial services sectors which doesn't necessarily work so again I think it's very important for a regulator to get really comfortable with what they're doing and and get a good understanding before they they embark on on this journey and again from from an alignment perspective we see that governments and Regulators are not necessarily aligned in many cases I think that's very important as well to achieve a good outcome for the for the sector globally yeah I think I'd certainly agree um in terms of Regulators treating this as a bit of a kind of hot potato not having a safe home for it not being able to sort of jam it into one of their existing departments is it a security is it a commodity is it this is it that um and you know yeah model rules from the fatf for example coming down and all right go and adopt your version of that um well there wasn't any rules against modifying that when they did adopt it and so you do get these sort of meant to be Universal regimes which are then you know sort of broken across various jurisdictions when they do put them in being enforced by Regulators that never really wanted to understand never had the desire to sort of peel the layers back and I could certainly Echo those comments in the early days we tried to sit down with The Regulators in our jurisdictions and you know help them like we're not trying to pull the wool over your eyes we want to make sure you understand this and you're gonna have questions and I know you don't want to do it publicly so work with us we've got great relations with government let us help unpack this stuff and it comes down to that challenge of you know crypto is a thing what the hell is it you know it's total spectrum of stuff whether you're pushing products you've got platforms out there that yeah a stablecoin is very different from utility token very different from an exchange very different from a crypto custodian but this idea that crypto is the thing they're trying to regulate like that's not the Common Thread it's the wrapper on a lot of this stuff and yeah if you've got a token that represents a share in a company regulate that as a security and there's already regimes to do that if it's a an ft and it's a genuine nft don't bother regulating it you know if people want to trade speculatively in digital video games cards Etc let them do it um but I think that's certainly our experience that Regulators didn't really want to embrace this um they they knew they had to and so yeah you get you hear War Stories of you know regimes in place having their whole systems there fully integrated ready to go and then people showing up knocking on doors to say all right here's our paperwork we're ready to go and there's no one there or they didn't want to touch it or you know they just keep at the bottom of the pile because they didn't want to step into it they didn't want to commit to it put their name behind it um I think we're seeing some other jurisdictions now become more competitive pushing for that you know whether it's the UK holding themselves out wanting to be the Global Hub I'm not convinced that's going to work but all right good on them for trying um or some of the other sort of mid-band jurisdictions that are trying to push for it I think um we're going to see a bit more competition for it and I think some of those Regulators that have sat on the sidelines you know there's a there's an opportunity to being missed the issue is that there is a lack of knowledge and adoption from the person's writing the regulations and also not enough collaboration between the regulators and the private sector so for example fataf rule the case in point is very evident that the person's buying the fat of rule didn't own a non-costal did wallet so fataf rule should have been implemented by 96 jurisdictions it's only been implemented by about 29 and about 11 have enforcement and this is because it's very hard to implement so the fact of rule basically obliges centralized exchanges crypto exchanges um to collect data from non-custodial wallets and vice versa so obviously the infrastructure of non-custodial wallets doesn't include these embedded compliance tools within them so how can you collect data from non-cast solid wallets obviously these these compliance tools weren't embedded so we sort of rushed to to regulate before the infrastructure was actually there obviously there markets has come up with certain products and to cater for this for this Lacuna to be able to comply and we are seeing certain Solutions in embedded compliance like to proof of address protocol and some other solutions by Chain analysis in order to be able to comply obviously users of non-cal wallets aren't very happy about this because it goes against the very fundamentals of non-custodial however if users of non-customable wallets want to interact or send funds to centralized exchanges they're going to have to at some point um comply so these tools will need to be integrated and there might be a slight shift in in culture and within the D5 community so it's either remain in pure and D5 or if you want to interact with centralized players you need to integrate some of the tools however the issue was that there was very big difficulty from an operational and a technical standpoint in terms of implementation so and it shows that you know regulators and people writing these rules aren't maybe very accustomed with using certain products and services in the market so I think this is where it stem from there's a there's a disconnect and and obviously the market will come up with Solutions Creative Solutions in order to comply and it's a very Innovative creative sort of way of thinking um however it's very very inconvenient and it does cause a lot of disruption I can only agree um a question to you is representative of the European commission I mean you guys did and I can confirm that is being involved in this whole process quite a lot I did a great job in trying to really listen to um the industry and I think not just DJ Crow but also fisma and connect and even the cabinets that tried their best to get this right how is it possible that there's this willingness in the commission and then you when you listen uh the academic term was I think show um why is this happening uh somewhere else and why can we not take your mindset in your institution and just export it everywhere else what's what's that what's hindering us what do you expect we will win and I love the the start of what James love was saying because when he started saying this is up and what whatever you use I said wow let's have a good discussion really it is but at the end of the day then you gave the answer yourself and all what I listened to here I mean at the end of the day we are discussing here a very new technology although I know you guys think in different terms of speed and are respected but we as the commission already in 2015 2016 made a public statement that blockchain is one of the four key future Technologies in Europe that we will support with all our policy means there was seven years after the Bitcoin white paper please I've never I'm an economic historian I've never seen that in this time that someone adopted this positive approach so quickly and then we have Assist that has been grown over at least 200 250 years that always went towards more centralization if you look at Banks Capital markets Etc we have Financial regulation in place that is completely fragmented that is in a myriad of services pre-trade post-trade whatever because traditionally transactions take enormously amount of time they cost a lot of stuff and now suddenly we have something that erases all of that because it creates a new space but the regulation is there the mindset is there the people that understand the technology are mostly the junior people that have a boss above them and the buffers boss has never heard of that and he is risk-averse and many of the big players are risk-averse I know that basically each and every big institutional name that you would read in the financial times at this moment is very seriously looking to in blockchain projects but no one wants to have their name in the public to to disclose what they're doing but they're bet on this and so we have we are faced with this endless array of problems because we have a couple of people understanding that and the large amount of other people not understanding that in the European Parliament we have more than 700 members and we will discuss that at the next I promised you we made an exercise that there are about seven people in the European Parliament that would understand what this panel is about but 100 of them vote and this is one percent and if this one percent understands all of that but something happens that the other the next C5 crashes or that there is a next energy crisis or whatever you would immediately have 70 80 saying that all of that is crap all of that is bad this is the uphill battle that we have in 20 30 years from now we will not have that problem because each and every one under 30 already know if they were to vote if they were to really determine what the future regulation is they would act in a completely different way but we are still busy with the Legacy system and this is why I'm not naive when I'm giving these messages and I'm listening to that I talk to a lot of businesses every day and then know each and every single word that you guys have said here on this panel we know all of that but we are still optimistic because that is our task we are responsible of giving guidance to all those people that enforce in practice to The Regulators in Poland to The Regulators in all our other countries where you deal with every day and what would you say if we were going there and would say oh yeah there's there's all these risks and let's be careful and let's wait another 10 years and let's see what Kenya does first before we in Europe move or stuff like that I mean this would not be a message what we are giving as the message is you can still hamper businesses you can be obstructive you can find whatever City reason that has nothing to do with crypto to block crypto at the end of the day you are like the dinosaurs you will die and this is the message that I'm giving and this message in this Clarity is not shared by everyone I appreciate that but this spirit is what we have within the commission people cannot always word it like that because indeed they have their trains but nothing what I say is against the spirit of the commission we have demonstrated that and the hard word is work is indeed now it's the standard it's going to The Regulators you said it there are certain countries that have been very much Pro they are now anti the government changes this is precisely why we lift this one level higher I'm not a big fan of European harmonized regulation but in this case it makes sense and then comes the point of lifting it still a level higher and this is I completely agree to all of what you had said it's extremely sensible and the only way forward also education but at the end of the day please let us apply some common sense in this matter here I've never understood in all these phases of crypto hype for example when people were coming to me really with the expectation of hey there is 15 20 whatever percentage return for free no taxation every year let's go into this business and I don't need to understand the business case to know that this is crap I mean come on this is a market how can this work at the end of the day do you think that the tax authorities that The Regulators will be sleeping this is not if I know from it will stall immediately by default and the same thing is here and other things I know that the whole world is cool someone said to me recently oh we have the strictest data protection rules in China wow come on eh go to that place and try it out perhaps on paper but not in the spirit and this is the thing you can go to some cool nice countries and no offense to any of that anyone has their Merit but if these countries are not democracies in the true sense if they don't take their people seriously if you get arrested when you are sitting in some Pub saying nasty things about the chike and the guy next to you on the table stands up and said I've been listening to you so you go to prison Etc why would you take your business there and this is why we're saying that yes Europe is the place because we have that history we have that Spirit we have the data rules we have everything we have a huge mess in practice I completely agree we need to work very hard on that but if you take a little bit of longer term perspective this is the way forward so that's not wishful thinking this is in my opinion hardcore reality and I'll be very happy to to deal with each and every one of the aspects here the colleagues as well I know from you Robert and blockchain for Europe and everyone involved in Opera sitting here the European blockchain convention I mean look at who is in Europe and what you are doing you all need to become much more assertive you need to become much more confident of yourself and not be leaving all that crap that is beings that engage with the right people and then it's a hard process but we will get there thank you I think it's worth an Applause as we have unfortunately only a couple of minutes left um I would like to have like a final word from every one of you on everything that's been discussed today I mean we went from you know like a famous show to everything will be great and all be in between um where do you see the role of the ecosystem and you know it's an ecosystem event here where I think a lot of people want to participate and sometimes don't know because they never dealt with the regulator policy maker what advice could you give them and I want to start with premisovaf you know from an industry perspective as your founder what would you tell your co-founders in the audience on how they can engage and what they should do to make everything that you are him outlined reality yeah I I always say that never give up that's that's the story I'm still thinking that it is not it will not be very very easy and this is good that it will not be easy because it must be a little bit regulated a little bit complicated at the end of the day I completely agree with you having with you but I think in Europe there will be still because you are absolutely right there will be be one or two countries will we which will be leaders even issuing this kind of licenses the last one thing exp everything depends on people how it will be implemented they're like we have got the situation in in Switzerland with finma we can sit and we can discuss we try to issue our own token there and we were sitting with finman they told us look guys it's for us it's super sexy but we are not prepared for it come in three years and okay we did it somewhere else yeah and we'll come in three years but I want to have this kind of officer that I will be able to discuss with him and he will tell me don't spend your money on something just wait or let's talk that's that's the future and that's what I would recommend go to the jurisdiction when you have got wise friendly officers and educated people sure thing um with that comment that say that we even though there'll be harmonization within Europe we will see sort of this regulatory Arbitrage within certain jurisdictions so jurisdictions like Malta the obtain regime in France Lithuania and Estonia I think are well positioned because they have a framework a licensing regime The Regulators are well accustomed to the regulations but all other jurisdictions which just have AML registration I think are going to go through a very tough time so maybe won't be the most Optimum place of choice um for a license because it might be a lengthy process um I think we'll see a lot of embedded compliance tools you know that's okay it's a for for complying with these new regulations from a tax perspective we're seeing the curve oecd which has recently been been announced the the fat off rules um and also we'll we'll see um also some some regulatory Arbitrage with some key play key players like Switzerland and UK who are not in in Europe so don't have to abide by Mika so let's say the settlement of payments Could Happen through there and also I think we'll see a lot of the big players like usdc wait in the sidelines to see how Mika will roll out and play out before deciding if they want to opt for for a license and authorization on the Mika so I'm excited nervous what um we'll we'll see so thanks um Ernest so um we've talked about regulation catching up there's been a lot of new regimes that have been developed over the last few years we're going to see a lot more regulation coming up I think it is important for for everyone to understand there's going to be a lot of challenges and have a have a look at your products and services do a good jurisdictional analysis I think to what everyone has been saying there are different regimes with different Regulators different appetites so at the moment I think there's there's definitely a right home forever everyone and hopefully with more harmonization in the future things will become easier for everyone thanks Jonathan I'll keep it quick here I think as Echoes the point of don't get discouraged you know keep trying um I think the point is if you sit in the sidelines and just complain about it the stuff's going to come in without your input and that's going to be even shittier than what it is now so keep the fight going and what that means whether it's sitting down with a regulator for the 15th time trying to explain to them what you're building or engagement might mean suing them you know take them to court make it public make it awkward make it difficult and they may not want to hear that but you know change is coming you can be a part of that or you can sit in the sidelines and cry I think you gotta you gotta sort of put your money where your mouth is thanks for that one very last remark everything has been said but when you talk to politicians when you take the policy makers when you talk to Regulators explain the benefits for normal businesses small and medium-sized Enterprises but especially citizens don't expect that you go to a regulator explaining that very ugly pictures of board Apes that make people rich in one minute are cool and should be supported public authorities are there to support the public and when you have a use case that has some meaning that addresses a Mobility problem that addresses some local problem as regards people getting together to have Finance some problem of let's say Greening our economy whatever is Meaningful even at the lowest scale that people were listening to that is a use case and that will give you much more attention so think about the audience think about what you want to achieve for society that will make them really an upper battle thank you on that note guys you know what to do uh I want to thank the panel uh for this great discussion and uh hopefully everybody has a great uh second day of the European blockchain convention thank you guys thank you [Applause]