How to Navigate the Legal Landscape in Digital Assets | European Blockchain Convention

That's all from me. Good morning everyone. I'm glad to see you here. I hope to see some of you again next time, or maybe we saw each other last time, and maybe you remember the last time we had a panel like this with Josh, Thomas, and me. I started the panel with, "Okay, let's start from the beginning."

And now I start with: "We start from the end." Because last time we talked about the Earth, the Moon, and Celsius. And I remember ending the panel by asking you, Josh, if SPF is the next JP Morgan, because it's really helping the cryptocurrency industry. I won't start with the same question because I think the answer is obvious. But I would like to briefly tell you two sentences about what we will be talking about today.

Let's talk about regulations. We will talk about regulations from a global perspective, as well as from a European perspective, because the so-called regulation of the crypto market and assets . So don't go out. Stay here. It 's not that boring.

Hmm, so, and we'll look at this and we'll look at it from different perspectives, from lawyers, from people who do business in the European Union and outside of it. And yes, and I think it's very interesting because we have great knowledge and I would like to start by giving the speakers the opportunity to introduce themselves and then I will ask some tricky questions. So, Josh, please start. Thanks, so Hi, I'm Josh. I work at the law firm Linklaters, where I am the US head of fintech and head of blockchain and digital assets, and I am also one of our global co-heads of the technology sector.

I have been dealing with digital assets for 8 years. Previously, I was a lawyer specializing in leveraged finance, corporate law, and securities for approximately 10 years. I do many things outside of my business. One of these is serving on the board of senior advisors at Wharton's Cypher Accelerator , the ninth non-dilution accelerator in the digital asset sector . Since 2016, I have also chaired the Wall Street Blockchain Alliance Legal Working Group and served on their board.

That's all from me served on their board. That's all from me . Hi, I'm Kevin, er, from Malta. Er, I'm a lawyer by profession. But, um, I practiced law for many years , and my primary job was advising clients on compliance, regulations, and licensing and compliance.

After a few years of doing this job, um, one of my clients approached me about changing, let's say, my hat and going into the market. And now I'm the CEO of Binair, the CEO of a cryptocurrency exchange called Kyrex. We operate in the EU and beyond . We hold various licenses and are in the process of obtaining new ones. This is a very interesting topic for us, for me, both from a legal point of view and now as an operator.

Hello, my name is Thomas Nägeli. I am a lawyer from Liechtenstein. I started working on Bitcoin in 2011 and started my PhD on the subject in 2013. I run a law firm in Liechtenstein. I assisted the Liechtenstein government in developing regulatory strategies.

I'm doing this in several other jurisdictions now. Currently, because everyone wants regulation. This was not the case a year or two ago. In addition to my legal practice, I am the president of the Liechtenstein Cryptocurrency Countries Association. I am a board member of INATBA, the European Association of Trusted Blockchain Applications.

Yes, and my entire life for over a year has been dedicated to blockchain, DLT, innovation, technology and law. Hello everyone. I'm Oliver. I am the CEO of BitMEX Global, one of the largest cryptocurrency exchanges in the world. But I'm also a lawyer.

Do n't worry, I have the right to be here. I have spent over a decade working in financial services regulatory law in the UK and Europe, as well as in the US, and have also spent considerable time in the fintech industry in the Middle East. So I joined BitMEX Global as General Counsel. And I still hold this position. We are regulated in Liechtenstein.

We have a lawyer here who is now contractually obligated to make me look good on this panel. We are also regulated in Bermuda, so we have global experience in this area . Thank you. I'm going to ask you a few questions, and you have to be very honest and direct. Nobody is listening.

This is not recorded. It is not recorded. It won't be on YouTube. Hmm, because I'll start with the United States and ask about how regulations are developing there. I've heard about Thomason.

He's a very smart lawyer, so he started asking about the duck test. You take a duck, you take it apart, you look inside the duck, and then you put it all back together and at the end, if you can trade it, is it a security or what do they call it in the States security or what do they call it in the States ? Well, Josh. I would say that one of the main differences between the United States and many other jurisdictions is that they don't just look at digital assets and the rights attached to them. It's not just a matter of that.

They simply cannot be classified. You need to look at activity, sales look at activity, sales , offer, marketing. It all matters. Your result may therefore be very different from what you might get in another jurisdiction. By the way , in case you did n't know, the Securities and Exchange Commission (SEC) has been publicly stating for several years that almost any digital asset offered and sold for fundraising purposes is likely a security.

This means you should assume this is the case unless you have reason to believe otherwise . Likewise, there is a lively debate going on and I will be brief because I know there are many of us on the panel. But there is a lively debate in the US about whether something is a commodity or a security. But you know what? The CFTC said in a 2019 Telegram court letter that they are essentially all commodities.

So they can be considered both. Just because something is a commodity does not mean it is not also a security. So I'll end there. Thank you, Josh. We'll delve deeper into this topic later.

And, um, as for me, I'm also a German lawyer and a European lawyer. To me, US law seems very complicated, very complicated. Therefore, I would like to continue by talking a little about the European market. For those who don't know, Malta is part of the European Economic Area. I had a past job in 2015 and 2016, when I was still at PwC, where I actively advised people to move to Switzerland or Malta to start their business.

I think even Binance started with an office in Malta. Few people know about this . Could you explain from your own experience, not only as a lawyer but now mainly as someone who actually runs this business, what it is like to do business from Malta? Is Malta a gateway to Europe or rather a door to the world? In fact, at least our experience with Malta, because we also have other licenses in the EU, is also have other licenses in the EU, is that the regulations are very strict and very, let's say, comprehensive.

So, to be compliant with the regulations, we as license holders in Malta also feel license holders in Malta also feel , shall we say, pride in the fact that we actually obtain that license and retain it. Why? Because the thresholds, for example, are higher than what we will have after the introduction of MiCA in the EU. So in fact, we already meet requirements that are at a higher level than those that will be introduced under MiCA. I mean, now we know what's going to be introduced, and that's shaped us, let's say, into a certain culture, because some licenses are seen as a way to start a business.

I want to start a business, I want to start a business and I need a license and that's it. The approach of the regulator in Malta is completely different. We regularly visit companies and carry out numerous inspections, let's say by both the financial intelligence unit and the regulatory authority, but whenever we introduce new products, whenever something unclear in the law appears, we encounter a lot of cooperation. We meet regularly with regulators who are very supportive, which is a positive experience, but it also creates a certain culture within us. Compliance with regulations is not just about, say, checking off boxes.

We've done that, now let's take a look at the company. Even in the way we operate, from onboarding, monitoring transactions, activity, customer service and everything else, our mindset is now, let's say, focused on continuous compliance , which has made it easier for us to obtain other licenses. We are currently also filing applications in the United States. I would like to comment a bit on the American regulations, because they do not seem clear to me because they do not seem clear to me , but they are also different. Different countries, different.

This creates some opportunities, maybe Mika will harmonize for the EU for example. Something like this for the United States would help operators like us enter the market. But we found that our experience in Malta helped us a lot . So in that sense it opens up to the world as well. Thank you.

Thank you. I think it is also important to understand that Malta, Malta or Maltese business, is not afraid of risk. That's why I think the gambling industry is very well known in Malta. And uh, but I still think Malta is a good jurisdiction to run or start a cryptocurrency business and continue to run a cryptocurrency business. However, another very good jurisdiction in the European Economic Area, uh, as some of you may know, Asterix and Obelix in Gallion Village who are fighting the Roman Empire, is Liechtenstein from that perspective.

And before I ask you, Thomas, I'd like to ask you first, Oliver. Is Liechtenstein the new cryptocurrency paradise, or the capital of the cryptocurrency business, or what else would you say? Well, er, cryptocurrency paradise, gosh, who can imagine what that would look like? I think Liechtenstein has many advantages. And probably the first one is that it probably the first one is that it was probably the first jurisdiction to really establish a European system that was fit for purpose.

And they were very early on in establishing a regulatory framework that treated cryptocurrencies as cryptocurrencies. So this kind of ties back to what Josh was saying. The United States and other jurisdictions are engaged in a rather unedifying discussion, attempting to categorize cryptocurrencies into existing, old categories. Is this a commodity? Is this a security?

Is this a derivative? And the answer is: in some sense, in some sense, maybe all of them. But no, this is a separate issue, these are cryptocurrencies. And the most successful systems we've seen are those that engage with cryptocurrencies on this basis cryptocurrencies on this basis . Liechtenstein was probably the first country in Europe, and therefore probably the first in the world, to do so.

Of course, the biggest challenge now is MiCA. And we will have, when the European Parliament finally passes this damn law, we will have a situation where all 30 EEA member states will have the same rules. So this power have the same rules. So this power , this kind of default status that jurisdictions like Liechtenstein and Malta and, and, and, and, and, France have, will disappear. And they're actually fighting for their lives, because, you know, Liechtenstein is a small country.

Uh, when I started working at the company I spent a lot of time learning how to spell Liechtenstein. It's quite difficult spell Liechtenstein. It's quite difficult . And there are a lot of companies that think, "Okay, regulation is the way forward. Regulation is what we're going to do."

I know BaFin in Germany. I know the Dutch regulators. I know the Luxembourg regulators. Until now, there has been no option to obtain regulation in these jurisdictions. But now I can.

So I don't have to worry about Liechtenstein. I can turn to my usual, friendly BaFin. I don't think anyone would ever call BaFin friendly, but my usual regulator and get a MiCA license. It's a really interesting time because this power, this insolvency status, um, is about to be swept away. Yes, I mean, why I asked you to speak before I asked Thomas is because Thomas, I believe, supported you in entering the European markets with Liechtenstein with his law firm, and besides being a Dr.

Thomas, you also have extensive knowledge of token regulation from a civil law perspective . What I mean is that most people don't understand that the Liechtenstein Blockchain Act Liechtenstein Blockchain Act , or TVTG, is largely about aspects of civil law, but at the same time, avenues for regulation. I mean, you even defended your doctorate, if I remember correctly, on this topic, and I think you have your own publication, for those interested. Perhaps you could shed some light on how civil law and regulation from a European perspective need to come together to create the right environment for your cryptocurrency business. Bright.

So when we started in 2016, the working group wasn't asking if we should stop this whole business we should stop this whole business or just create a marketing law to attract customers, and everyone wants to come to Liechtenstein to start their cryptocurrency business outside our country. The idea was to first define the strategy and analyze this innovation. We spent a lot of time understanding how disruptive this technology could be and in which sectors. We then developed a strategy and division of the token economy. The token economy is more than just regulating exchanges or escrow providers.

It's about the vision that this technology will be used in our economy to digitize transactions, to transfer value over the internet in a much more efficient way, just as we do now, without intermediaries or with fewer intermediaries. And that's exactly the efficiency gain we were thinking about, right? Then we looked at how we should change the regulations, where we need to implement new regulations to actually enable this innovation. And that was the overall strategy with the vision of creating a legal framework for the token economy. Then we said that from a civil law perspective, we need to tokenize something, and we hear a lot about digital art, NFTs, and digital art representing physical objects.

Few people wonder what the legal name is. Lichtenstein created a framework that I call the token container model. So you could let the token represent, for example, ownership rights directly to, say, the Mona Lisa. It is therefore possible to issue a token representing ownership of a work of art. And interestingly, if you then transfer the token, ownership will also be transferred.

This is how you become the owner. If I give you a Mona Lisa token, you become Mona Lisa. I know this is a bad example, but everyone knows what the Mona Lisa is, so I would say everyone has an image in their head . Then you become the owner of the Mona Lisa, and that's huge, right? This is really huge because it's not just about ownership, but much more about other rights, such as intellectual property rights , and you can imagine many rights that could be tokenized.

And this is crucial, because without this legal certainty it will not happen. And that was the second part. We also said, "OK, if this technology can do things we've been doing for decades in a different way, and the risks are different, then we need to treat it differently." Going back to what Oliver said, this is a crypto asset, not a security crypto asset, not a security , right? But if you tokenize a security, it is still a security.

That was our approach, and then we said, "OK, we have to serve if you provide, if I store my assets myself, if I have my own hardware wallet and I store my crypto assets myself, it's my problem if I lose my key." But if I trust Oliver and I send him my key, my tokens, and Oliver stores it, that means he is a service provider. I have to trust him somehow. This has nothing to do with the use of blockchain. He provides me with services.

So yes, it needs to be regulated. It's obvious, right? And this is nothing new. And so we have developed a supervision concept that is very similar to what we have in MiCA, and we are currently preparing to adopt MiCA. We are changing our TVTG.

The Financial Market Authority conducting a gap analysis and our service provider will hopefully use Article 123 to easily change the local licence to a MiCA licence. I don't want to bore you with the details. If you have any questions, please feel free to contact me. But my point was that it was more of a strategy and a vision for the government to implement this, rather than just, "Yes, let's pass another law just, "Yes, let's pass another law ." Thank you.

Thank you for that. I would like to look not only at European regulations. I also want to look at the United States because we've seen FTX, Luna, Terra. All of this is somehow related to one thing. I would say I don't want to blame the United States and American regulators.

I want to blame the lack of harmonized regulations from a global perspective because people don't understand that many claim that FTX was not regulated. That's why everything went wrong. This is not true. FTX was regulated in Europe. It was regulated in Cyprus, in the Cypriot entity.

In fact, they were regulated to conduct their methodological activities and even obtained a passport to the entire European Economic Area. Therefore, the European regulator cannot hide and say: "It's not our business, it's the business of the United States." I think the problem is that we lack harmonization when it comes to crypto-assets, and that's what ESMA, the European Securities Markets Authority, and EBA, the European Banking Authority, have highlighted in their European Economic Area documents, calling it the crypto-assets advisory. So let's look at these documents. And now my question to you, Josh, do you think we will see more harmonized regulations from a global perspective in the near future?

Will there be any regulations in the US that don't just distinguish between security and non- security, because I think that's very silly, frankly, because we have so many other assets that are not securities but still might require some regulation from a European perspective? Will there be any regulations regarding cryptoassets rather than securities? I will answer this question in several ways. First of all, I think the likelihood that the United States will harmonize its regulations with the rest of the world anytime soon is quite unlikely. True?

The Securities and Exchange Commission ( Securities and Exchange Commission ( SEC) and other regulatory bodies take the position that they have extraterritorial jurisdiction. So, if you deal with US customers and are located in another country, or even if you do not deal with US customers but have not prevented the flow of digital assets back or into the US, the Securities and Exchange Commission (SEC) and other regulators may believe they have jurisdiction over you. And I think that's an have jurisdiction over you. And I think that's an important thing to remember. I don't see any harmonization with the rest of the world yet.

Maybe someday, but I think in the United States, regulators are frustrated. I mean, at least from the people I mean, at least from the people I've talked to, and I've talked to a lot of them, and quite often, just in their personal interactions, in many cases there's a sense of disbelief that the industry is just not listening to what they think they're clearly saying in the US. Well, you know, it varies. Reasonable people can have different views about what is clear and what is not. I will say, when it comes to future regulations, and this is something I really feel very strongly about , and it might be a little controversial, I think at times the media and lobbyists have been really strong advocates for change in our industry.

Luckily, they have a loud voice, right? And they help convince some legislators. I think it wasn't always good, because there was a lot of media coverage of certain bills, very high-profile bills in the US that were very well-conceived, comprehensive, and really well-thought-out, including, for example, the Lummis-Gillibrand Act, the DCCPA, and so on. I think people did n't necessarily understand, and it took me a long time to learn, that these bills probably would n't even be passed before FTX. So a whole bunch of people in the industry, including lawyers, were going where they thought the puck should be and where it wasn't.

And I think it's very important to remember that. I think important to remember that. I think now, after FTX, and you know, you mentioned Terra Luna, it was just announced today that the Securities and Exchange Commission (SEC) has initiated proceedings against Terraform Labs and Do Kwon, right? So the saga continues. The Securities and Exchange Commission (SEC) will come and deal with these matters, even if it takes a year.

But I think if we see any regulations at all, and I think we will, they will focus on transparency and disclosure transparency and disclosure . I think the next thing we'll see from a US federal perspective is stablecoins, right? Maybe something similar to what New York already has, mandating fiat funding and information disclosure. I don't think we'll see any greater liberalization in the US regarding digital assets anytime soon. I think a lot of legislators are feeling a little uneasy because they've had support from Sam Bankman-Fried and, you know, various other people.

But I think SBF was very closely tied to the DCCPA, and I think that while that could have been the law that potentially could have been passed, out of all the proposed ones, it's now very unlikely to happen. Well, these are my thoughts. I think, you know, we're all moving forward. But I think it's important to carefully consider that the SEC, the CFTC, FinCEN and all the regulators, you know, really recognized that the actions and events, including the numerous bankruptcies, insolvencies, etc., have emboldened them to enforce even more.

So, even though we're seeing a lot of enforcement activity, I still don't think we'll see anything. Yeah, I don't blame the SEC. Their job is to be the SEC and regulate securities, and that's what they do. But I think securities, and that's what they do. But I think BitMEX Global exists for the express purpose of serving the world outside the United States.

That's why we don't allow US customers on our platform, regardless of where they are located. We do not allow entry to people from the USA, regardless of their nationality. And I think probably, unfortunately, the reason for that is that the United States will stop trying to fit things into a category that was created in 1933, so 90 years ago. It's quite unlikely, I think, that when FDR signed the 1933 Act, he imagined the existence of blockchain imagined the existence of blockchain , right? If so, he was an even greater visionary than people give him credit for.

But it seems unlikely to me. So what do you do? Well, in terms of global standards, in my opinion, I look at global significance everywhere except the United States. And we see movement on this front. So, you know, my experience is advising traditional exchanges.

The first place you go, CPSSIOSCO, is CPMI you go, CPSSIOSCO, is CPMI , which is the Principles of Market Infrastructure. And you know, if you're trading shares on the London Stock Exchange, on the Deutsche Börse, in Australia, in Japan, yes, there will be local differences and implementation, but the basic principles are the same. I think we're getting to the point where enough countries, enough jurisdictions have actually understood what cryptocurrencies do, what they mean, how they work, and all of these ownership issues that Thomas was talking about, that we can actually move forward and put an end to the regulatory arbitrage that's been plaguing the system. You mentioned that FGX was regulated in Europe and that's true, it was. The biggest problem was that very often people had no dealings with this regulated entity.

So these adjustable statuses were put on display and put in a display case to say, "Oh, isn't this great? I have 487 different adjustable statuses. Oh, only 487? I have 493." It's pathetic, isn't it?

It's a shame they were used this way. Regulation must be significant. It's about the essence. It's about quality, not quantity. And this is exactly the quality we need, and it is probably the global standard-setters who need it.

Maybe it's IOSCO. Of course, the FATF on the AML side would impose this on the rest of the world. And as for the United States, I'm... " for the United States, I'm... " Thank you, Oliver.

So, um, looking at you, Kevin. So, what would you agree on, Oliver, or what would you see, let's say, from someone running a business? Is it easier to do business in Europe, or is it easier to deal with an American regulator in Europe? So , what would you say? Honestly, it works both ways in the sense that sometimes it's easier when everything is clear and you know exactly what regulates your business and you know exactly what you need to do to be compliant and all that, instead of having different, let's say, interpretations, as we said, of a law that wasn't specifically designed to regulate cryptocurrencies, let's say, um, like we're seeing now with MiCA.

What... But I completely agree with Josh that the legal framework we're discussing today shouldn't be seen as something that regulates cryptocurrencies, because this concept of cryptocurrency regulation is... I mean concept of cryptocurrency regulation is... I mean , nothing actually regulates cryptocurrencies. Cryptocurrencies are what they are.

It's more, let's say, from a consumer perspective. let's say, from a consumer perspective. , because getting a license is a fine. You set the rules, you get a license, and you can operate. And that's from an operator's perspective.

But from a consumer perspective, especially after the events of FTX and others we've seen in recent years, protecting, say, a vulnerable user, a trader, an inexperienced person, or someone who places their trust in others. Things like having adequate reserves for stablecoins, for example, or regulations against market manipulation and insider trading. All of this is in MiCA. That's just one example. So the law shouldn't just focus on whether India regulated cryptocurrencies as a concept or the United States regulated cryptocurrencies, but on that.

I believe the law should focus on, let's say, the user experience participating in this market and how it can protect vulnerable individuals. Let's say, the user in this scenario and how they do it. We not only follow, as I mentioned, a set of operating rules, but also ensure the protection of the rights of those involved in our business involved in our business . Yes, I think the problem we're facing right now is not that We need to regulate blockchain and cryptocurrencies because most of the incidents we've seen with FTX, Terra, and Luna are not blockchain-related, they're not cryptocurrency-related. And even what's happening in the United States right now, excuse me for saying so.

Yes, you're talking about extraterritorial jurisdiction and all that, but at the same time, why do we need that for cryptocurrencies? We didn't need that in the classic, traditional financial sector. I'm talking about reverse solicitation. I'm talking about freedom of choice in what you want to do and things like that. And suddenly, because we don't really understand what it is, I mean, people are asking, "Um, what is staking?"

Is staking some kind of act like trading securities or something like that? I think that's a big problem and I think that's also the problem we face when we look at you, Thomas. Just drink some water because now it's your turn. What we were facing when we talked about what we need on the one hand, I think appropriate regulations, such as balanced regulation. But at the same time, I think it's also some educational work that we need to do for legislators and authorities to explain to them what is the business, what is the cryptocurrency business business, what is the cryptocurrency business that you're trying to regulate here?

I'm looking at you, Thomas, because you're now talking to other jurisdictions outside of Liechtenstein that want to introduce new regulations, and I think that's also very important to help those legislators make the right decision. And then we'll talk about Mika, because we've all said something about Mika, but before we do that, maybe you can expand on that a little bit. Imagine talking to these regulators, and it really depends on whether some of them are well- educated in the blockchain field. So they have an idea, and some of them are really well-educated them are really well-educated , even legislators, but there are also some who are now just given the task of, you know what? Over the next 9 months, you need to create the best regulatory environment for virtual assets you can imagine.

This is going to be the world's leading, best legal framework for digital assets, and then this legislative team looks at you and says, "I have no idea how blockchain actually works blockchain actually works ." I never sent a token. I've never owned an NFT or anything like that, they just don't understand it. The problem is , and I think it's absolutely true. The regulator should educate himself first if he hasn't done so already, right?

Because if you don't, you'll be creating regulations that are based on the same principles we've had for decades, and for service providers, that might be accurate in some ways. But when it comes to the details accurate in some ways. But when it comes to the details , the challenge is that you have to understand that you don't have to regulate, that the technology itself creates a solution to the challenge and addresses the risk accordingly. And that's why yes, definitely...And and and and it is actually possible.

You can educate yourself possible. You can educate yourself . It just takes time. And that's what it really is... Right now, that's what I hate about this situation.

It was obvious that we would have a huge scandal. But the problem with the scandal we have now is that the problem with the scandal we have now is that everyone wants regulation now. We don't have time. We need to have our framework within 6 months, within 9 months. The problem is that they are not taking the time that is actually needed to create a solid legal framework for digital assets.

And there's a saying that bad cases make bad laws, and I really fear that's happening right now around the world in many jurisdictions. And by the way , I know that's not what you were talking about, but if possible, if we take a moment at the end to talk about staking, I'd love to hear it from a US perspective. Let's talk about staking. We know we have about 6 minutes left. We'll talk a little bit about Mika and how Mika is intervening in this and how we regulate staking in Germany and Europe.

And then we'll see how it works in the US. But I just wanted to follow up on what you said, Thomas. What I mean is that bad examples lead to bad laws. That's true, but I think a lot of lawmakers, because of a lack of understanding of cryptocurrencies, are somehow trying to re-regulate cryptocurrencies, but we also have other problems in the world, which brings me to Mika because we had a good start with her. Mika is a bill that has been in force for two years and we had really good communication with the European Commission, with Eva Kaili, before she was dismissed as president.

And so, looking at Eva Kaili for example, if blockchain were used for these donations or monetary settlements, we wouldn't have this problem. One can also argue in this direction. In any case, we hope that MiCA will come into effect with its publication in April. Yes, let's hope it doesn't get postponed again. We will introduce, at least for the European Economic Area, harmonized regulations for crypto assets, not securities, not NFTs, but real crypto assets.

Looking at the gentleman on my left, you are all aware of MiCA. So do you think that the implementation of MiCA will be something positive for the cryptocurrency community? Or rather something difficult and inappropriate? Yeah, I think everyone I think MiCA is a step in the right direction, a big step in the right direction when they actually start handing the damn thing over. And look, we at Bittrex Global, one of our key principles is that regulation is an essential part, a feature is an essential part, a feature , not a bug of cryptocurrencies.

This is something we need for the industry to succeed. And that's something that, you know, back in 2013-14 when Bittrex was founded in the US, was an incredibly controversial thing to say. You know, our founders literally received death threats from people saying, you know, this is anathema to cryptocurrencies, we don't support regulation, we don't want it. I think we've been right over the last decade . Regulation, people are trying to say that there is a tension between regulation and innovation, aren't you over- regulating, aren't you suffocating them?

Of course, these are concerns, but if implemented correctly, and I think MiCA in many respects does indeed do that. Properly implemented regulations can foster innovation because they can create an innovation-friendly environment that allows people to generate new ideas in a safe, robust and respectful way. This means that both individuals and institutions with risk committees can make informed investments in cryptocurrencies with the same confidence as in other financial services. So I think that's where we need to get to need to get to . MiCA is a big step forward.

The only problem is time. Realistically, 2025 is a very distant prospect, and I, I, if you think about the next two years, in the next two years, then… you two years, in the next two years, then… you have to be Nostradamus to have any influence on that. People are already talking honestly about MiCA 2, about what might be next, so you see these possibilities, other jurisdictions are saying, "Okay, we'll do it better and faster." Britain, Dubai, you know, all these actors are coming in and saying that the EU is really risking snatching defeat from the jaws of victory. Do you agree?

I mean, I'm counting on you, Kevin. I 'll be very concise. Yes. I definitely agree that this is a step in the right direction. Especially for operators who want to operate in the EU, and it makes it easier to understand where we stand, what we should offer and how we should do it.

I also definitely agree that it will be a bit dated in the sense that we're already seeing regulations being introduced, which will likely be introduced in Mika 2. Well, what I like about Mika, at least from what we've seen, is that it's not trying to control the market itself, it's just regulating it. In the sense that I completely disagree, for example, with Canada's reaction to FTX and limiting margin trading to certain limits, etc. When the law becomes, I think, an attempt to control, let's say, that wouldn't happen on a classic stock exchange, for example, you know? When you try to control a field, say you try to control a field, say , the market, I think that's when the law becomes oppressive.

So the law must always regulate, but not try to control, because ultimately it is not made up only of, say, amateurs or novices, nor of professional traders. It's also a big market, so let's respect it. Can I take some time with Josh and ask a question? If I have a duck and it 's not a safety net, and I put it up myself, then it's not a safety net. But if I give my duck to Oliver, and Oliver puts my duck on my behalf, that's insurance.

Did I understand correctly insurance. Did I understand correctly ? Well, let me just say this . I think Kraken's staking-as-a-service was an obvious hedge in my opinion. If someone had done an analysis they would have noticed this.

Hmm, I just think this whole SEC incitement thing trying to destroy staking is wrong. I already had experience, having worked with FinHub with clients using proof-of-stake for years. I worked with some of them over the years at the SEC. It has never been said over the years at the SEC. It has never been said that staking your own digital assets to secure the network is unacceptable.

It is unacceptable to combine digital assets and invest them without disclosing them. That's what registration is all about – risk disclosure, right? And then to ensure a return that is nothing like what the digital asset has achieved. Whether Coinbase has a different model, which they themselves claim, is all facts and circumstances, but I think we should distinguish between them. The SEC, at least these people, have a lot of experience with digital assets.

They have a wealth of knowledge. And I think instead of saying as an industry, "Oh no, no, don't attack staking," we should be saying, "Wait, this is native staking. It's more like mining, right? It's about the consensus mechanism." Those large companies that offer staking as a service can defend themselves.

They have a lot of money, you know, and they can do this if they get attacked by the SEC, and they have a defensible argument. And honestly, at the end, and this is a very controversial thing to say, but I believe it, or at least I think it's worth considering. You know, Gensler openly said in relation to one particular digital asset that had previously, you know, been designated by the Securities and Exchange Commission (SEC) as not being securities that part of staking was like lending. Well, you can kind of distinguish it. I'm not saying he's right, but there's a distinction to be made between pro-staking, natively staking a digital asset on a secure, working Proof of Stake system with the token locked in, and receiving interest when there's no Proof of Stake system yet.

So I think we should distinguish between these things, and this is the last thing I'll say: in our industry, we often have these terms that are very helpful in some ways, but you know, look at another term, for example, " at another term, for example, " stablecoin," which encompasses everything from Terra Luna, right? And this algorithmic stablecoin, whose algorithm might not even work, could be minted twice, you never know, from ecosystem to ecosystem, all the way to a fully fiat-based currency. And that doesn't help regulators. This makes things less clear for regulators. Thank you, Josh.

Thank you, gentlemen. Our time is up. We thank the audience for listening to us and see you next year. Thank you, Aaron. Thank you.