Funding the Future: Innovative Approaches to Financing Crypto Policy Work - Bangkok 2024

[Music] thank you very much can you hear me yes great so uh thank you very much for staying here for this presentation we'll make it fun and we'll also trying to make it interesting for you so my name is Marina uh I am working at euci and this is basically a policy organization we have been talking to Regulators for the last four or five years specifically in Brussels but pre previously to that uh Florian and with other the other co-founders Simone uh also in our specific member states so since the Inception of blockchain and crypto I could say we've been discussing with regulators and seeing those changes happening so we're going to basically show you a little bit of History what happened but also to see how can we fund this very important activity in the future perfect all right so uh we're going to be switching back and forth uh doing like different slides so the state of crypto advocacy in the last decade of crypto is well described uh by this hopefully somewhat funny meme um the builders um that sort of we were you know dragging along as these Grassroots advocacy organizations throughout Europe and the US making sure that Bitcoin proof of work doesn't get banned and un self custodial wallets don't get banned you know the builders were really focused on all these new defi Primitives the whole time and we felt quite neglected I would say for the last 10 years and uh we were choosing actually to to have this talk today as a form of therapy you know to share with you the frustrations uh of trying to have Builders be interested in public policy work and I love that this room is uh as empty as it is now because it just shows the reality is literally nobody cares while at the same time it's actually so important for this industry so hopefully those of you that are here um I hope that you will have some uh some takeaways so um just to also uh account for the tax down there um public policy initiatives in crypto 10 years you know after ethereum's birth uh are still structurally underfunded they are uncoordinated and they are still way too Grassroots uh compared to the significant of what we are doing it's like hard actually to it's it's crazy and despite all of that um initiatives like the European crypto initiative we have achieved some insane results like it's like unproportionately uh impactful compared to how underresourced we are and um there's actually a whole point to that thing that I will touch upon uh in later slides but Marina also I think you want to yeah I just wanted to give you an example because now we're talking very abstract terms but I wanted to give you an example and I talked to a lot of developers projects and they G they told me uh you know you're organizing a lot of events who will come but I'm representing all of them because they're busy making sure that their smart contract is not hacked and they're busy making sure that there are users basically using their product and that is very important and that is they need to continue focusing on that but on the other side while you make sure that your smart contract is not hacked there are Regulators that are coming in into your smart contract from a regulatory point of view so in Europe last year there was a data uh data act uh basically finalized that says and it basically tells you how to design your smart contract you cannot anymore have a smart contract that doesn't have any kind of access capabilities that sometimes you also need to give to the authorities so that is while you know while we are working and doing our stuff we also need to follow what's coming and what's what's actually happening from a regulatory point of view and trying to of course prevent something that does not go along with our values so um yes so going back to how uh basically an entrepreneur or maybe a developer thinks is cryp crypto is global blockchain is global this is all my users they are just around word and it's very important that I do something that everyone understands and can use and of course there's uh rather than thinking about law jurisdiction I'm thinking about code is law so whatever I writee in a code that's something that you know we need to follow and this is where in a way I can also present all my work but then at the same time What unfortunately we are facing is countries and jurisdiction and going forward it seems that the trend is going to be not to build one product for the whole world but basically to build a product for every jurisdiction specifically we have seen this reality happening right now in Europe with stable coins where certain uh projects that are basically working and have an um a license to to issue stable coins and to trade them uh in Europe they had to work specifically on a product that is compliant with this rules and it's a specifically product that is going to be used only in Europe the other type of uh basically smart contracts and the other type of uh stable coins that they're issuing are going to be used in other jurisdictions and that unfortunately seems to be a trend so whenever we are thinking also about advocacy and regulation we need to think okay if we fund a specific uh advocacy group where is this group working is it it working in a specific jurisdiction so that jurisdiction is going to be covered and that also means means that you have a high chance that your product is going to be basically not prohibited in that jurisdiction or at least available to that jurisdiction uh if you're not covering other jurisdictions it means that if the regulator there is very active very similarly to what happens in Europe there's a high chance you're going to have a little bit more complications or even prohibition of certain products uh like it happened in the past and I think floran will now give some more examples of what happened in the last four years and what we helped preventing so uh some examples of so I was talking about surprisingly despite all this you know tragedy of the commons type structural neglect of our work uh we had some incredible wins I just want to share them with you uh we excluded all of Defi and other decentralized use cases from this new European regulation on crypto so uh if you're running a decentralized stable coin project in Europe or if you're running a decentralized exchange and you want to access European markets you can now still do that um if you are truly decentralized if you're not truly decentralized uh going forward you will have to comply with a lot of rules um but if you are actually decentralized project there is now a chance for you to actually exist fully legitimately outside of this new regul regulatory framework and that is an insane win for the space it's in recital 22 of the maika regulation uh there are other things we did like preventing the ban of proof of work uh for environmental concerns uh we prevented the B ban of self custodial wallets and forced the regulator to give up the terminology of an unhost wallet and we really hated this concept of an unhost wallet because it sounded like the natural state of a wallet is that it's hosted with I don't know a bank which is exactly the wrong mindset that we want to get rid of and then you know if you look at someone like coin Center they've obviously done amazing stuff in the US but admittedly they had you know celebrities like uh chck D John chck dorsy give them you know a couple of million in funding uh which as a European organization uh we unfortunately don't have successful Tech entrepreneurs that could give us Millions but that's a different problem um uh the the Mika example is interesting and I want to walk through it with you for a particular reason so in um in 2020 um the European commission drafted and published um a draft for a new law that would regulate all of crypto in Europe and have a global impact because you know wherever you are on the planet uh just like our privacy regulation in Europe you effectively have to comply with this piece of Law and there was no mention of decentralized use cases anything in that piece of Law and so uh Marina me and uh from France we were all running National advocacy organizations in Europe at the time we banded together and said you know what we have nothing in terms of infrastructure in Brussels but let's try just by speaking Our Truth in a sense to these Regulators try to convince them that they have overlooked this very small but very sort of interesting thing called Defi and the other sort of D use cases um it started off with a Workshop that had over a 100 members of parliament and members of the European Council attending where we explained for over 2 hours how defi Works compared to CI what is the difference between coinbase and Unis swap we explained that over like two hours to these people they stayed over a 100 people stayed for two hours in a zoom call that's like unheard of and uh there were many uh interventions in between but then uh in December 2020 we started an insane phase of daily calls with members of parliament and members of the European Council to really hone in on specific policy problems in MAA like really like paragraph per paragraph saying this formulation is wrong this needs to go out this is Impractical uh there needs to be something added and then uh it all ended sort of uh with a final intervention with the European commission uh in uh I think it was uh 21 early 2022 um a final intervention with the commission which then led to the introduction of this big exam exclusion uh of of defi in MAA and um yeah so that was us this was just literally three people no as Grassroots as you could possibly be and um uh that's uh all the meetings we just had from January to May 2021 uh you can see these are all different countries and each entry represents like 10 people um that you then follow up with you send documents it's like insane what you do um that's that's just a slide that summarizes some key interventions we did with the commission specifically because they are sort of the most rational agent uh in this whole European framework um that is sort of most sort of interested in the subject matter itself as opposed to to political agendas and so why were we so insanely successful despite having nothing in terms of influence or a reputation in Brussels and to me I would boil it down to this ven diagram which is that uh in the EU institutions you have like two kinds of players like careerists who literally don't care about subject matter issues and people who are in there because they are idealistic and they want to make the world better and in the lobby space it's the same you have careerists who don't care what they Lobby for they would Lobby for Coca-Cola Nike and Facebook right and then you have people who are actually sort of you know like us we're not lobbyists we do advocacy it's somehow not the same although we fight for policy outcomes like lobbyists and what we were able to do is we were able to find people that were honest players like us that were actually interested in the fact that what crypto means and that defi is a real thing and and all the potential in it and I think this explains um why Grassroots is so powerful uh Marina now I think it's it's your turn too yeah so just reflecting on that why are were we able to be so successful of course there's like different theories on that but it's very important to understand who do we talk to and how do they think and where do they learn about crypto specifically so where do Regulators learn about crypto and what do they know like at the at the time we were talking to them it was 2019 2020 so pretty early how why did they decide to regulate that as you probably know they decided to regulate that because of Libra and the fa Facebook's coin at the time that never happened but they were very determined to say we don't want a coin like that in Europe so we want to do something as soon as possible and at that time where they see and learn about crypto is First Media so what is media covering mostly Hecks whatever you see in the media is negative so the perception is very negative something is dangerous it doesn't work right it's just a bunch of people playing with this so it it will not it's not a serious thing the second one is um researchers and academics so at the time in 2019 there were not that many I remember in 2017 I went to the library and trying to get any type of article about crypto law and there was almost nothing out there but there's a lot of things right now there's a lot of Articles there's a lot of books there's going to be a lot of commentaries of MAA as well and if we go into the head of a researcher what they want to do of course is to be objective and to write something that is very qualitative but at the same time they want to be the first one they want to be the progressive one they want to be someone that Regulators would take into consideration another problem that we see is that most of the academics that are coming from a financial or at least legal point point of view they are very known in the financial sector already so they are coming with a bias of this like Financial regul regulatory framework that they're then applying to crypto and that's not very useful we already know and we can identify uh some of them that are writing articles and they are very much in way on their own way advocating for certain outcomes when it comes to regulation and the Third Way is basically advocacy policy law lobbying groups mostly nonprofits working on that and what is very very important here is what is their goal what are their values and what are they representing so whenever you're talking to someone that is basically representing the industry you need to look into their on their website and see what their what logos do they have on their website who is their member and who is basically the one paying for them to exist and this is also how they're going to basically address regulators and what kind of values they're going to um show so those are our uh members we're very happy and proud that they supported us over the years so that just uh just a minute to say thank you to them uh we're very happy to get some grants from optimism as well and gitcoin Etc um eum Foundation as well so that's I think something that we were working really hard for and that is also something that we really try to continue with with another very important thing for us is to understand what is our impact whatever we do it's a very very long-term thing so the relationships that we're building it's a long-term process uh the kind of opinions that we are sending any type of meetings that we have we always need to be you know kind of ready and talking to everyone to have something as a long-term impact so for us it is important to basically first have block chain and crypto and in general the knowledge about this industry spread around as many Regulators as possible International All European uh they need to learn exactly the facts and what's happening what why we are here that this community actually exist this events exist that there is more than just um you know Meme coins or I don't know uh people there using Bitcoin to evade taxes this is a very uh kind of I would say pretty intense process and the other one is we have limit capacity so we need to know which regulation which bill which um basically directive to focus on and I can tell that the example that I said at the beginning when it comes to regulating smart contracts none of the other associations in Europe were focusing on that because they were coming a little bit more from a business perspective not that much from the technical and there's so many things happening in Europe that it's very easy that something very important like that just slips your like mind or you don't have uh a lot of focus uh on on those topics so we have told you a little bit about the basically our history but it's just one example to show what all the associations in the world are facing and I think uh ours might be a little bit more interesting because we have already regulated crypto so in Europe there's not much more when it comes to crypto regulation we are in a post crypto regulatory era everything is regulated more or less we can have of course a little bit more regulation on defi I think our Regulators want to do that or they're looking into maybe regulating a little bit more on the technical side uh when it comes to I don't know reviewing the code ET but everything more or less that we use and we have today is already regulated in Europe so uh we have 10 minutes left and we want to give you room for questions um but to speed through some more slides so how could we scale the success of UCI up without changing the nature of why at least I believe it's successful um so that means how can we retain the good parts of the Grassroots type advocacy uh even if we scale it up and to me that means like retain the truth signal and you know not have too much sort of corporate special interest creep in and um uh you know that that translates like how can we massively increase the fun increase the funding available for like these honest players how I would describe them and one concept to think about here is retroactive uh or outcome based funding uh which we've just learned about which you know optimism does and we've received actually grants from optimism for this and um I've been following the hypers projects by the filecoin foundation and uh I I kind of like this idea of an onchain certificate that certifies the impact people people can sort of uh fund the creator of this initiative of of such a certificate by buying fractions of of it on some market place at least that's the logic how I understand it and so if I would make a a a certificate out of this recital 22 um I think this could be you know a really nice way for UCI who's actually done this work and can prove it uh to receive adequate funding for um I mean uh this is sort of a just a condens timeline of what we've done you can see it started in September 2020 and ended in June 2023 so that was just on one law there were many law many initiatives happening in parallel on money laundering on transfer of funds on the data act so much so many levels we did those things all in parall three people unpaid so um it this is all like theoretical and nothing that we should even determine the issuer of a certificate but if I would have to give an economic value to recyle 22 to meets in the hundreds of millions or maybe in the billions because defi would not exist anymore in Europe without this exclusion that we introduced and what is the value of defi I mean it's insane and then there are even second order effects because if you look into the fit 21 bill in the US you will find an exclusion for decentralized finance activities yay that's recited 22 to which they actually copied when they traveled to Brussels a couple of months uh before they drafted this law so um the the potential impact of this is huge and so I was thinking through this retroactive uh uh funding uh case for for Public Policy the benefits I see is that it is inclusive or me the most inclusive method I can imagine for Grassroots organizations because you just come with a outcome you produced nobody cares if you're wearing a suit or you look like a hippie if you're able to sway Regulators to into some outcome you know you've made it happen um outcomes uh yeah obviously outcomes based funding is more effective and in and being less wasteful I mean that's kind of logical and it is very transparent because uh if you come with such a retroactive you know policy impact report you really have to show what did you do and how ethical were you in your conduct you know how how did you actually get people to do it did you you know did you bribe someone into doing it well that's then probably nothing we want to fund some of the feedback though that I got which I think is you know worth uh considering also is that well if if you're you know if you're if you're going that route you are financializing political impact and people outside of crypto might actually just consider that another proof Point why crypto is cancer to society and should should be eradicated you know it's like I don't know right so I can't give the answer here what I want to sort of and obviously there are maybe Alternatives you know like a meme coin for for for Public Policy or you know whales stepping up more or you know um uh whatever um the the what I think should should be happening here is that we need a broad discussion in this industry how do we want to solve public policy as an industry going forward are we becoming like web 2 industry with Google and Facebook doing their corporate interest special place or are we acting like a decentralized ecosystem that focuses on public goods and funds organizations like UCI uh you know I mean we need to stop pretending this isn't a topic that matters and we should have a proactive discussion where people can you know where we can form an opinion as an industry and I think we need to solve this coordination crisis around funding public policy work um uh because up up until today I would say many are not interested in engaging at all with Regulators they think we don't need them others are scared of engaging with Regulators they think if they talk to them they will look into their companies and put them all into jail um others are committing something but it's too little and too late and it doesn't allow an organization for UCI to run uh sort of like a normal organization would have to with a financial planning Horizon and um yeah many are not even aware of what's happening but they like to complain on Twitter which is honestly the worst maybe just adding a little bit here as well um just thinking about like why this is important and why not other types of of funding as well so if you have an hour with someone from the European commission and they don't have much time what are you going to communicate in that hour are you going to basically present the interest of a big crypto exchange that is a centralized entity that is now by the way also regulated in Europe so you know they have their own specific interest are you going to communicate something uh that is important to a layer one so you're going to basically communicate that they should not really over regulate staking or me or something similar are you going to talk about any type of community grants uh initiatives or anything like this so like that's why it's very important because we need to be very prec prise and sophisticated in our communication and we need to understand again what are the values that we are in way conducting and sharing with regulators and where do we want to be as a society uh just an example again we are having now this regulation about crypto assets crypto asset service providers but just few weeks ago few months ago the European Securities Market Authority just called us and said we want to talk about these other topics as well we want to do this research on this other topics that might be a little bit more linked to the technical to the layer one you know uh things and basically those those um those things that are very important for the existence of any type of crypto industry and they hear different things and different I would say wording and terminology that we're using that is probably coming from the traditional Finance as well so we're just helping them with this terminology to think about oh yeah I should go the tradition Finance route and regulate in that way it's not really something specific or different or very technical so this is just to basically show a little bit how complicated these things are and hopefully just to give you a little bit of a thought about um yeah what we're doing and and how the future would look like thank you very much yeah um we do a lot of other events now in the couple of days you can find it all under this QR code if you want to ask a question we have space for one or two questions NY I just want to say I'm a big fan of what you do and I'm I truly appreciate what you guys are doing cuz I uh I feel uh that web 3 has a lot to do in this particular sector of interfacing with government I was just speaking with some other people at another panel we have focused as a as an industry on NOS and Community organizations which is great and a valuable skill but that skill is different from interfacing with governments like you mentioned just now you have one hour with these people they have like zero time for you have to be very precise and it's just a different type of skill so one of the things I have been also thinking about is how do we in the web3 industry develop this skill MH in people and uh because I've been attending these popup cities uh and there is a long history of how popup cities came into being and it's it it it comes from popup urbanism which was a very grassroot way of the citizens interacting with government so when we use popup in web3 that means by uh by by by uh default we are interacting with governments so do you feel that we could in some way leverage this popup City movement to our advantage with people like you who have had the experience at this scale um and uh use that popup cities and that platform as a sort of uh to to to to sort of build the skill you know and at least start thinking about it that's just one of the questions but thank you so much for the comment actually you can shortterm uh answer is you can do that on on Tuesday at the at Devcon we're leading a workshop it's called Bridging the Gap how to effectively talk to Regulators is it uh 3 like 4 4 p.m. afternoon but yeah long term definitely thank you so much everyone [Applause] [Music]