Cesare Marzo - The Legally Compliant Crypto Future is Closer than you Think

Good morning everyone. Thank you so much for being here. My name is Maria. I work at Bybits and I will be your host today. Uh to start, let me introduce you to Chesar Marco.

He's a legally he's a legal expert in web 3 and he works in Namia Eipa. The talk he will give us this morning is about how the legally compliant crypto future is already here. Please give a warm welcome to Chessa Rearco. Thank you. Thank you all.

Uh good morning. I'm Chesmano. I work for Namibia as a compliance specialist and research and development analyst. As you can see from my first slide and in this picture I was uh on a business trip in Brussels where I go every now and then to uh you know discover the latest updates on European policies about not only blockchain, normally crypto but also many other things that have to do with the digital sphere uh in Europe and beyond. So let's start my presentation.

My presentation will be about the story of Luca. Who's Luca? Basically, Luca is a guy who wants to tokenize some assets and he wants to do it just because he doesn't have all the capital that he needs to achieve his dreams. So what's the main problem that Luca will have to face uh when it comes to raising capital from tokenized assets? Basically it's trust.

It's the fact that no one trusts someone who doesn't have you know a corporate organization beyond behind someone who is not known in the industry. he just would have to need some reputation around his personality and then he would be able to raise this capital. But since he just started with the decentralizing uh trust is the main problem he has and he has to deal with and we what we do at a is exactly that. We build trust on top of the digital services that we provide and that other builders provide. So let's meet Luca.

Luka is this kind and smart guy holding the ether token in his left pen. He's a 30 years old guy living in southern Italy uh with a lot of interests such as music, old apartments that he inherited and he wants to renovate but doesn't have capital to do it. So he needs to tokenize these assets to raise capital and to achieve his dreams. But he wants to do it without selling his soul sees which is why he needs uh to build trust around his personality and he wants to keep control of his artwork. So he starts thinking, what if I could turn my home into tokens that fund its renovation and my art into NFTts that share future revenues with early supporters, which is something that you know in the art uh ecosystem always have.

uh you know there is a a new artist who wants to raise capital to support his own grow and so they start tokenizing the future the right to uh have a share of the future revenues coming from these NFTts and from the art that they are making. And so he thinks maybe I should uh start issuing security tokens for my apartment and NFTs for my songs and for my artworks. But what's the first problem that Luca is just a person no he has no company behind him no lawyer supporting him and no guarantees. So as soon as he starts uh proposing his tokens to potential investors, the main problems and the main concerns that these investors raise are, but where is the real legal protection when we buy these tokens with these tokenized uh portions of uh the the artwork of Luga or tokenized portions or of the apartment? What if Spotify deletes these songs?

What if the house does not even exist? You know, we should trust the fact that Luca is actually the owner of this apartment. And here comes the compliance part. The compliance is about unlocking trust and not only uh you know uh putting uh useless rules over uh the the builders and over the developers. Um actually the European regulations that is something that we work with a lot are the legal trust layer.

This means basically that once Luca starts deploying his smart contracts, he can do this on a decentralized blockchain. Uh that is the place where all the business logic will be running. But he needs that this business logic, every single step encoded in this business logic has legal value. And so he needs to unlock an identity leader that is governed and recognized by the European rules because we are in Europe. Luca lives in southern Italy and therefore he needs to abide by uh European regulations and we do it at Namriel by using uh by leveraging the possibility offered by Eidas.

Yidas actually uh tells us that whenever Luca authenticates himself uh against like the system, Luca's identity is verifiable. His signature about the existence of the artwork, about the contract he's going to sign with potential investors, about the existence of the house itself is legally binding. It means that Luca is responsible for what he's stating and for what he's uploading onto the blockchain. And so the tokenized assets origin is authentic and auditable. We have this guar guarantee and we have it because we are leveraging the potential of this European regulation called Eidas which works as the identity layer for Lucas infrastructure.

So what do we have when we use Eidas? We have basically trust as a service. So we have first of all Luca can prove that he's really Luca. So Luca exists. Luka has a verified identity and Luca is using the system himself.

Luka can sign smart contracts. So these smart contracts whenever they are linked to Luca's identity, they're not just code. They are actually legally binding contracts and agreements signed with the investors with which uh Luca is offering uh actually legally protected rights. Then he can stamp his creations uh stating that at a certain point he performs some actions over the artwork or the house he wants to renovate. He can tokenize with legal certainty so no one can dispute ownership launch offerings that the investors actually trust because now we know that Luca exists that the house exists that the artwork he's organizing exists and won't be deleted until Luca or the potential investors want so and maybe we can anchor all these pieces of code into what is called and what is defined by the regulations themselves as a qualified electronic ledger which can become the new trust layer for web 3.

So qualified electronic ledger this is a legally binding definition is a legally recognized digital register provide by certified qualified trust service provider under EI2 and what's the benefit of using the qualified uh electronic ledger from a legal standpoint is that its contents every statement every signature uploaded onto the ledger is presumed to be legally valid. It means that whenever someone wants to challenge the statements uh contained in the ledger claiming that they are not true, that whatever Luca is stating is false. The burden of the proof won't be on Luca. It will be on whoever is claiming that those statements are false. This is very important and this is contained in this provision of law that is article 45 of the new version of the IDOS regulation theos 2.

So whenever we talk about centralized services and centralized systems in these uh in this industry in the crypto industry which is an industry that I love and that I started uh studying like many many years ago by now um we are very very concerned about privacy. So, uh, let's think of one of these potential investors, Paulo, one of Luca's early investors, who asks the question, uh, if I use your system, does a third party know about my tokens because, you know, what every web 3 investor wants is actually privacy and not surveillance. They don't want to be uh, you know, surveiled or controlled by centralized authorities and so on. So what's the guarantee that we have from Yidas about privacy? It's that privacy is built in the code that Luca is deploying.

And whenever Luca uh decides to deploy his smart contracts onto a qualified electronic ledger, these ledgers have to respect the privacy of whoever is building on top of them or whoever is using these ledgers. And these are all the regulations, legal norms or technical standards which are even more important and even more complex to implement. And I'm telling this because we work with these standards a lot mean it's a lot like we spend a lot of time uh on understanding the actual content of these standards and then on implementing them into our solutions and these are all the uh specifications and all the provisions of law that guarantee that whatever we do on the blockchain using this system will respect the privacy of the users. and of the builders of course. So whenever we think this way that we can use a even a centralized layer for digital identity uh that respects all those rules and we think that this way we can have uh privacy and trust built in the code.

At the same time we are giving actually Luca uh the possibility to show his legal identity, some trustworthy contracts, some transparent processes as we saw uh they have to be transparent in order to comply with all those regulations that I showed in the first in the previous slide. Now we have confident investors who trust Luca and who trust actually what he's stating and what he's signing on the blockchain and these smart contracts. Uh they are um they trust the fact that uh Luca's actual offline um assets exist and are uh compliant to with all the statements that Luca has um uploaded onto the blockchain. And this way this way we can actually unlock a lot of potential that comes from the the web3 industry once we achieve this uh trust that we uh strive to provide through our services. Um my final statement here is just is that we are have like a culture a cultural background rooted on digital identity that is uh actually a good um a good ground for the growth of the industry of the web 3 industry because actually the only little piece that we're missing in my view in this industry to make uh crypto actually work in in real life is this identity layer.

And we can become I think as Europe, as a continent and as uh 27 member states um the the hub for the growth of the web 3 industry and we can help builders raise capital, tokenize assets with legal certainty and build actually lasting investor relationships. And this is my final statement actually. Compliance isn't the death of decentralization as we saw like the business logic will still run on a decentralized blockchain if we want. So if we are just adding a new layer which has to be centralized because traditionally it's always been decentralized. The dig the identity layer has to be decentralized because whenever we are uh interacting with someone regardless of offline or online we have to be sure that we're actually talking with a real person that uh is claiming to be interacting with us and therefore by adding even in a centralized fashion this identity layer to the web 3 industry I think that this is how we can make the web 3 ready for the real world by building smart building legal legally compliant but uh building transport building trustworthy solution that actually attract investors.

So we're doing it by uh providing our services in all these countries that you see here all the in the uh 27 uh member states and also in other continents. For example, we have a huge presence in southern America and in Asia also we have as a um as Namir and as Namir group also offices in India. We provide solutions to uh to the LATAM region uh massively as I said and if you're interested in building compliant uh solutions and in building solution that would unlock an additional level of trust please get in touch with me. Here are my my contacts. Uh we have a standard uh uh zero ground uh upstairs and yeah, let's stay in touch because we we'd love to listen from you to to start building together and to add that identity layer to whoever is interested in achieving a greater degree of trust in their solutions.

Thank you. Does anybody have

Don't be shy. Don't be shy. Don't be shy.

Don't be shy, guys. Any questions on uh trust as a service? Okay, Chesare,

we have a question.

We have a question

from the audience.

Um, it's not true.

Chessare. Uh, thank you so much for such great presentation and if anybody wants to get in contact with Chesare, uh, he will be at the conference. you can reach out to him and ask any other questions you may have. Thank you so much.

Thank you guys. See you.