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Ep. 26: Global Blockchain Trade Associations and 2024 Policy (Part 1)
112 Plays7 months ago
Join Marina Markezic (EU Crypto Initiative) , Ron Hammond (Blockchain Association), Tommaso Astazi (Blockchain For Europe), and Cody Carbone (Digital Chamber) as they delve into the complexities of blockchain regulation and its impact on global policy. Explore how trade associations are shaping the future of technology governance.
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Transcript
Introduction to OWL Explains Hootenanny
00:00:06
Speaker
Hello and welcome to this OWL Explains Hootenanny, our podcast series where you can wise up on blockchain and web3 as we talk to the people seeking to build a better internet. OWL Explains is powered by Avalabs, a blockchain software company and participant in the avalanche ecosystem.
Introduction of Speakers
00:00:24
Speaker
My name is Silvia Sanchez, project manager of OWL Explains and with that I'll hand it over to today's amazing speakers.
00:00:34
Speaker
Today's podcast is a very special one because this is going to be the first of our Trade Association's mini-series for 2024. We have Cody Carbone, Chief Policy Officer of the Digital Chamber, Tommaso Astazzi, Head of Regulatory Affairs at Blockchain for Europe,
00:00:51
Speaker
Marina Marcasic, co-founder and executive director of the EU Crypto Initiative, and Ron Hammond, the director of Government Affairs from the Blockchain Association. Hi, everybody. Thank you for joining us at this Hootenanny. Hi, everyone. Hi. Thanks for having us.
European Regulatory Developments
00:01:06
Speaker
Great. I'd like to kick things off with the European side. Marina and Tomazu, could you share your thoughts on the regulatory developments in Europe and any particular issues that stand out right now?
00:01:17
Speaker
Sure, happy to start unless Marina, you wanted to go ahead and I guess usually we can very much complement each other. So I'm very happy to be here again. Thanks again for the invite. And yes, I think talking about the European regulatory discussions, especially in the past few years, I think the most important thing to just mention is that we are at the end
00:01:41
Speaker
of a legislative cycle here in Europe. We have European elections coming up in June, and so that means that we will have an institutional changeover. The European institutions will be voted in again, basically, with direct elections of the members of the European Parliament by European citizens in June, and that it's basically through a cascade effect then also
00:02:03
Speaker
updates, let's say, the people that we have in the European institutions, in the European Commission and so on. And so that's, I think, an important starting point because then we are really finding ourselves in a moment when we can look back at what happened in the past five years in this 2019 to 2024 mandate of the current European Commission. And I think what's interesting there is that the European Union has done something.
00:02:29
Speaker
has tried already in 2018-19 putting together the first thoughts about how to potentially regulate this blockchain industry, this crypto asset market. And that was done through a number of different proposals and files that came together in this so-called digital finance package.
00:02:51
Speaker
where the european commission again really looked at this new digital finance and what could be some good regulatory frameworks that could be introduced to allow for the innovation in the space to flourish while also of course as always trying to protect consumers from existing risk so after saying the usual
00:03:11
Speaker
intro into all of that talking a bit more specifically i think obviously we all know about the marketing crypto assets regulation the mica regulation someone i still like to call it mica but you know we that's a much broader debate that we may not get into now and but the marketing crypto assets regulation it's a very comprehensive regulatory framework that try to introduce the first
00:03:36
Speaker
Rules for these new industry for crypto asset service providers so these intermediaries that are providing crypto asset services in the EU to EU citizens and Coming with that then as obviously another set of important rules on the AML side of things the implementation of the travel rule the so-called transfer funds regulation and
00:03:58
Speaker
Plus, a few other interesting pieces of legislation which somehow touch upon DLT technologies, or the so-called DLT pilot regime, let's say kind of a sandbox where financial institutions are allowed to experiment with DLT technology and tokenization of financial instruments, for example.
00:04:18
Speaker
and on top of all of these than some other proposals, for example, called the Data Act, which is another big piece of legislation which together with Marina and other associations also we were quite active around because of some requirements introduced for smart contracts. Maybe I'll just stop there this intro, but I think just in conclusion of where we find ourselves right now again is
00:04:43
Speaker
We have done some good work in the European Union. We all, I think, recognize the efforts put by the institutions to try and put some rules forward for this sector.
00:04:54
Speaker
But we all know that we're not done yet, right? There is a few things that still need to be clarified. First of all, and I think maybe, Maureen, I can speak a bit to that, to the level two process which we're going through and some questions that still need to be answered. And I think I can leave it there with the main question that we all have right now in Europe, which is about decentralization. So what does it mean to be decentralized in Europe? What does it mean to be fully decentralized? Because that's the language used
00:05:24
Speaker
in the text of the European framework? Well, that's an important question and something that I don't think we yet have an answer to. And we're hoping to get a bit more clarity by the end of the year when the European Commission is meant to produce a report assessing DeFi and the market, its developments and the potential needs for regulating the sector.
00:05:46
Speaker
That was fantastic. Thanks for
Stablecoin Regulations in Europe
00:05:48
Speaker
that overview, Tommaso. I think that really covers very well these developments and things that we're keeping an eye on. Marina, do you have anything to add on the European side for this introduction? Yes, thank you so much, Tommaso. And again, I'm very happy to be here on this podcast the second time. Very, very excited about that.
00:06:06
Speaker
So, I would like to maybe look into the future a little bit. What we have done in the previous mandate, as Tommaso, you mentioned, within the commission was finalizing MICA. But right now, MICA is going to come into applications. So, the first part is going to be the one covering stablecoins in summer this year. There's a lot of work that still needs to be done, as you mentioned, by the European Securities Market Agency and the European Banking Authority.
00:06:33
Speaker
So, we're looking into their secondary technical standards to understand better how to apply as an issuer of crypto asset, but at the same time, specifically here, stablecoin is, and at the same time, of course, all the other, I would say, the whole ecosystem that needs to work together with the stablecoin issuers in order for it to be compliant very, very soon. So, in the previous months, the European both agencies, the EBA and ESMA,
00:07:02
Speaker
shared a lot of regulatory technical standards. We responded to almost all of them. I can say that there were around 30 of them right now. And there has been a lot of work. So the devil is in the details. We are looking forward to respond to a few others that are very, very important when it comes to MICA. So the first one is the reverse solicitation. So in which case they could be
00:07:29
Speaker
users coming from Europe using some of the services from crypto service providers when the crypto service providers are not incorporated in Europe. And the second one that is a question that everyone wants to have more clarity on, I think globally, is when is the
00:07:45
Speaker
a crypto asset, a crypto asset, and when it is a financial instrument. So those are very, very important guidances that we are looking into. And I think we will also wait for the national competent authorities to get to more clarity over. So that's something that I would say it's happening right now in the secondary process. But before we have elections, there's another one or two months, I would say, for concluding the first primary
00:08:12
Speaker
process that we have right now within the Parliament Council and of course the Commission and there are a few interesting things happening that might be new for some of the listeners but one is the payment services directive and the regulation very important rules when it comes to payments especially when we would use crypto assets most specifically in this case
00:08:38
Speaker
e-money tokens as payments. So what are the consequences of that? And again, link to Mika and the first part of Mika being applicable very soon. I would say that this is the topic number one right now. And the second one and few others are also, for example,
00:08:55
Speaker
FIDA, the financial information document that is basically sharing and regulating information that is coming within the financial industry. And in some parts, it may include even crypto as a service providers.
US Regulatory Landscape
00:09:13
Speaker
So I would like to basically end with a trend that we are observing. The crypto as a service providers are becoming a
00:09:22
Speaker
package. So whenever something is happening within the financial regulation package on data, on technical issues like DORA, et cetera, crypto service providers will most likely be a part of it. And then for the other part, crypto assets are maybe and will be regulated in a different way. So I think that that will be true also for the new mandate.
00:09:45
Speaker
Thank you so much, Marina. Fantastic journey through that. So now that we've covered the European side, I'd like to turn it over to Ron and Cody. Could you please fill us in on the regulatory landscape in the United States and any specific areas that policymakers should focus on?
00:10:01
Speaker
Yeah, I'm happy to jump in, and then it's always good to see my buddy Ron on the call, and then I'll let him follow up. I say it's somewhat in jest, but we're also near the end of our legislative cycle in the US, similar to the EU, even though our elections are not until November.
00:10:19
Speaker
In the U.S., in an election year, everyone really focuses on getting reelected and going back home to the district. So it makes legislating really, really tough. So even though we have several comprehensive bills in front of us in Congress, and we've made more progress this Congress than we ever have before, specifically on market structure. So, Marina, to your point, trying to understand what is a
00:10:42
Speaker
security, what is the commodity in the digital asset space, unstable coins, and on illicit finance, specifically in the Senate. Even though we've made more progress this year than ever before, we're near the end here. And so as members go back to their districts and their states in the United States, and they get more entrenched in their political or partisan camps, legislating becomes very difficult, except those must pass bills.
00:11:10
Speaker
So I'm looking at the rest of this year as continuing to make progress and develop those legislative proposals to ensure that we are in a good place come next Congress. Now, there's a lot happening on the regulatory side. I think when Congress isn't acting, regulators become emboldened. And so we're seeing a lot of that play out and the courts getting involved. But I'll stop there. I'll let Ron fill in some of the gaps that I might have missed.
00:11:37
Speaker
No, I think it's perfect. First off, big fan of the podcast. Thanks for having us, Sylvia. And always good to see Cody. Fun fact, Cody used a lot of me when I was working in the building over there on tax issues way back in the day. So we go back. Cody's exactly right. It's very, very tough right now in the United States. You hear the folks from the EU side here, and they are significantly farther than we are here in the United States.
00:11:59
Speaker
And it's for a variety of reasons, but I think the main factor that we're looking at is an emboldened regulator, especially the SEC, who is fine going after pretty much every facet of the ecosystem. Whether the NFTs, Exchanges, DeFi, they really have been very aggressive on the legal front here. And we're winning those court cases, at least here in the United States for many of them.
00:12:23
Speaker
But those take several years. And it's not always clear exactly what the result's going to be. And so that's really kind of frozen a lot of the activity, especially in the United States, for growing businesses and actually just creating new business lives here. It's true. We actually had the CFTC chair
00:12:38
Speaker
testified last week saying that he is seeing significant outflow of talent as well as businesses to other jurisdictions with clarity, like the EU, like the UK. So it's frustrating, especially again, American politics as Cody's point, it gets really hectic. They just passed the bill in the house on TikTok that's been capturing a lot of the headlines recently. But unfortunately, it doesn't seem like crypto is just as high a priority. But it's also for at least for Congress,
00:13:06
Speaker
can barely keep the government functioning and funded. And that's usually been a major issue is that they've been trying to fund the government week after week after week and just keep kicking the can down the road. And that's really limited the amount of bills I could vote on for crypto and everything else. And that's really unfortunate. We hopefully can see a light at the end of the tunnel, especially more on the stablecoin side. I think we're still optimistic in some form or fashion.
00:13:30
Speaker
But it's very, very difficult in a Congress that doesn't do much and regulators who will do way more. So that's been the tough spot we're in right now.
00:13:39
Speaker
Wow, thank you, Cody. Thanks, Ron, for also covering that site in the US. And I think that we can definitely see that the overall theme would be that even though progress has been made, there's still a lot of work to be done. And now, as we move forward on the discussion, Tommaso mentioned something that I think I would like to focus a bit more on. And it's the concept of decentralization. It's a very big word, and I think that also there can be a lot of misconceptions with that.
00:14:06
Speaker
The concept of decentralization is fundamental to blockchain. So from a regulatory standpoint, how can policymakers strike a balance between supporting decentralization and maintaining sufficient oversight for a stable financial ecosystem? I'll jump in because we're dealing with this battle every single day in the United States. And first and foremost, I think us at the Chamber, I think Ron and the Blockchain Association, I'm sure all the trade associations in the US and abroad
00:14:34
Speaker
We have to focus on education. What do we mean when we say decentralization and how does that correspond with the existing regulatory frameworks? It might
Decentralization Challenges
00:14:44
Speaker
not. I think so often in the United States, at least, we look at a new or nascent technology and we try to figure out how we can place it in our existing framework instead of trying to think how we can grow a new framework around it, because that might be a little bit more challenging.
00:15:00
Speaker
That might be needed with some of these new decentralized technologies. I think the issue that we're facing, and you alluded to it Sylvia, in the US, is that there needs to be accountability for US regulators when it comes to decentralized technologies. And so where do you strike that balance? Where do you find that accountability when there are so many different actors? It's very new for them when they're usually dealing with a central headquarters or a corporation or business.
00:15:30
Speaker
And so that's where the education comes in. So I don't have a perfect answer because I think we're still dealing with the education front and trying to get regulators to understand what truly decentralized means. It's a sliding scale. There's not one perfect definition. And so until we can get that education, then we can start to talk about regulatory fixes and addressing some of the issues that our regulators and policymakers have. But until that education is understood and there's a foundation across government, we're still going to be working for a while.
00:16:00
Speaker
Yeah, I'll build up that for the United States at least. I wrote, I worked on a bill to actually craft this line, what's security, what's a commodity, what's decentralization look like? And that was back in 2017, 2018. And we've seen some elements of that in other bills that have been progressing a little farther in the House, but again, still reaching a standstill. But the focus is Congress, and that's why Congress writes the laws, and it's important to be held to them. And that's why we're, as an industry, collectively really engaging with Congress because we know the rules,
00:16:46
Speaker
We believe the theorem actually is pretty centralized. And now we've seen a reverse of that with the current administration. And we just can't be going through this situation where it depends on the person who's in charge that given day or that given year, or who's in charge of what agency. We need to have the rules in the books and the rules to be clear. And truthfully, to Cody's point, too, these rules
00:16:47
Speaker
come from them.
00:17:04
Speaker
probably don't work from the laws of the 1930s. They probably didn't have the idea of crypto in mind. So it makes sense that we need to have a regulatory framework. And it's not just the United States. Every other jurisdiction seems to understand that. But the United States has been really slow, especially in Congress, to move forward on something like that. Whereas here, EU partners are definitely a lot farther ahead in the process.
00:17:25
Speaker
And that's why we're seeing the business go there, and we have the data to prove it. So that's been unfortunate. But we hope that at least we'll have some political will to move the ball forward. Hi, friends. So we're currently talking about decentralization. And if you'd like to find out more, check out an article we wrote called Decentralization, a matter of computer science, not evasion, on owlexplains.com.
00:17:52
Speaker
Maybe to add to that, decentralization has so many aspects. There's a technical one, there's like the one that is linked to organizations and of course assets. I think what we are seeing lately in the EU is of course we have at least a mention of decentralization or something similar in MICA, but there's no explanation of what this means and how to basically interpret that. So that's what we're looking for is to understand from
00:18:17
Speaker
maybe the authorities and then later also in practice, because the cases will be looked into very case by case scenario. At the same time, we are seeing in a way the trend that I mentioned before, crypto as a service providers becoming a part of the financial regulation. Are crypto as a service providers and especially the stablecoin issuers, are they coming into
00:18:41
Speaker
some kind of a trouble when they're using public permissionless blockchain. Are there some, like, problematics that can happen just because this blockchain is so different from all the others that we, in a way, technology that we know from before? And the rules that are written for that might be different from what we would need in this case. So I think that, again,
00:19:04
Speaker
Mika was a great start, but now we're looking really into so many different laws that might be touching onto crypto service providers and stablecoin issues. And we might have problems there day by day executing and being compliant with those rules. And just another one to look into, I'm seeing and hearing more global regulators referring to the IOSCON consultation reports and their guidance.
00:19:32
Speaker
on DeFi specifically and how they were looking into decentralization there and how they define DeFi.
Blockchain Beyond Finance
00:19:40
Speaker
So I think it's really, really important to come together also as industry buddies to basically address the issues and also the questions that maybe
00:19:48
Speaker
international organizations might have on this topic. And I'm seeing that more and more local governments are using their YOSCO guidance also to regulate crypto assets, as well as defy maybe the UK or some others that are announcing new crypto assets and stable coin regulation.
00:20:07
Speaker
Thank you so much for that Marina and Cody and Ron. I think that's also the issue of it now because even though it's a very core theme of a blockchain technology, it all comes down to the educational aspect about really understanding what it means.
00:20:21
Speaker
And this is one of the biggest things that we focus on here. And I will explain this. It's OK. Before you try to regulate something, let's focus on understanding the technology. That way, we can adapt and enact context-appropriate regulation before just jumping into setting these laws, these rules, before taking the time to understand what it is. And also, talking more about the financial sector now. Because we know that blockchain's potential extends beyond finance. It's so much more than that.
00:20:49
Speaker
So considering its impact on various sectors, how can regulators create a versatile but also a timeless framework that accommodates the diverse applications of blockchain technology that go way beyond FinTech?
00:21:02
Speaker
Happy to start maybe here. I think this is really also one of the most interesting aspects when we look at how jurisdictions, whether that's the EU or the US or others that are looking at regulating this industry. I think we need to understand it just makes sense that the first regulatory frameworks we're focusing on
00:21:23
Speaker
Let's say we're coming from the financial services area but this is the first aspect where which regulators started looking at and they saw of course that there were some potential risks associated with this new provision of financial services which is obviously different from what has been so far.
00:21:42
Speaker
And so it made sense that the Mika regulation focuses on financial intermediaries, basically, and it's basically an adaptation, actually, of the NIFID framework, which is the one regulating financial instruments, and then adapted to this new type of intermediaries, which are crypto asset service providers.
00:22:01
Speaker
I think we all understand that that's obviously a very limited understanding of blockchain, of its potential, and especially its impact on a number of different sectors, not just the financial services one, not just the transfer of assets and value. But of course, we all understand how blockchain will have an impact on different sectors, whether it's the healthcare sector, whether it's the energy grades of the European Union, and how it can help
00:22:30
Speaker
the fight against our fight against climate change whether it's decentralized platforms and social media and our relationship with content and data online and ownership of that content ownership of identity you know we all know the different many different use cases and applications which we are all working on seeing being developed and often you know we end up talking about
00:22:55
Speaker
with this policy makers, with these regulators, again, in our efforts to educate them about everything that can be done with blockchain. Now to your question, Silvia, that's a very good question, right? I think as an answer, our industry bodies, I think we all have been
00:23:12
Speaker
reiterating the importance of looking at blockchain technology on its own rather than just simply at the crypto industry and this, let's say, financial services style of interaction between users online. But I think, for example, what we have been talking about with the European Commission and Parliament in the Mika process was, for example, NFT technology.
00:23:35
Speaker
NFTs are considered to be crypto assets tokens depending on a number of factors they might also be included in the Mika framework or not but then our conversation was always like.
00:23:48
Speaker
Sure, we can look at tokens and NFTs in that sense and what rules might it be appropriate for. It's changing those tokens and so on. But should we not look at blockchain of NFT technology, let's say, with a bespoke approach, with a bespoke regime that actually just looks at how can blockchain technology in that case, in that specific application, through NFTs, for example, be applied to a number of different services,
00:24:16
Speaker
And at that point, it will make more sense to regulate that from a technology perspective rather than regulating each one use case, whether it's our collection, whether it's ticketing, whether it's...
US Regulatory Jurisdiction Issues
00:24:32
Speaker
just certification of documents and so on. So there is a lot of those applications that just don't make sense to put in the same bucket. So I think it's important to be looking at developing Bespoke regimes for this type of technologies, but I don't know if the others maybe have something else to add to this question.
00:24:52
Speaker
from the U. S. side here- you know I think. What's been. Kind of the main issues that are in the early days at least on the policies out here in DC there was a lot of talks about making a whole new regulator for crypto. It covers that to your point. You know commodities securities- more the tech side to- but unfortunately here in the United States that's just not a viable option there seems to be a regulatory land grab especially among a lot of regulators here that you know in the early days they didn't really want to touch crypto.
00:25:20
Speaker
And now they all want to touch crypto, and in some cases they're touching crypto in conflicting ways. And so that's been the major issue here. To Cody's point earlier, talking about regulators being really overzealous here in the United States, it's a very true thing. And that's been in lack of action from Congress here, lack of guidelines over what a framework looks like.
00:25:40
Speaker
When it comes to the technology side of things, that's more the FTC, the Federal Trade Commission. We're talking about more securities. We're talking the SEC commodities, the CFTC. We're talking about the theory of it, for example. Again, it's really confusing, which is the person you're talking to on this because they both have differing views.
00:26:00
Speaker
back to Congress again but that's a lot of the reason why we're doing the educational pushes but also just saying look we need to have the laws down there so the regulators can stay within their bounds here but also market participants know who they need to go to because in some case there's mixed signals they're getting from a lot of folks of which is the right and proper agency- and currently that's just a very untenable position to be in so- that our hope is that the laws in the books that we hopefully get past in the coming months or years.
00:26:28
Speaker
can change that, but right now it's a regulatory land grab in DC. I'm going to add just two parts if you allow me. One is the standardization. So in Europe, we are somehow already in a post-crypto assets regulatory era, and we need to look into the implementation and the interpretation of those laws.
00:26:48
Speaker
So in a way, how are we going to look into standardization whenever this is needed, especially when there are rules that are regulating the technical aspect? And the other one is, in a way, focusing on taxonomy. There are some things that are not yet defined in Mika. We are potentially looking into something that would be
00:27:08
Speaker
kind of a dial regulation or some kind of a digital cooperative that one of the European Commission's papers mentioned in the future of regulating metaverse or the kind of ideas on how to regulate the industry 4.0. So I think that it's really, really important that as the industry we step up and we try to fix or even understand the terms within us, within the industry,
00:27:35
Speaker
and of course also convey those messages to the regulators as well.
Role of Trade Associations
00:27:40
Speaker
Fantastic, thank you. And I think that that just really synthesizes the thing that there are so many issues going on simultaneously and it's also a very rapidly evolving technology. So as blockchain technology continues to evolve at this pace, what role do you see trade associations playing in shaping and influencing regulatory policies to keep pace with innovation?
00:28:03
Speaker
I'll start with that one because I think it's been a theme throughout this entire conversation. We are the educator. All of our different associations, we represent certain member companies who are on the ground, the boots on the ground, who are doing the innovative things. How can we be their mouthpiece to regulators, to policymakers,
00:28:22
Speaker
to ensure that policymakers understand at the simplest level what our market participants, our members are doing. I think that for all of us, we all had our welcome to crypto moment. We're all probably still learning every single day.
00:28:39
Speaker
this is somewhat of a foreign language. And if it's a foreign language to myself or Sylvia or Ron or Tommaso or Marina or ever, it's definitely a foreign language to policymakers who have a whole bucket of issues they're focused on. So I think first and foremost, our priority is to be that educator, to communicate why this is important, what problems the technology is solving, and where we think the regulatory scope should be. And then
00:29:05
Speaker
I think we have to be an advocate as well. There are going to be times where there's going to be reactionary policies. There's going to be bad proposals that we don't like. We have to be the ones that are working constructively with policymakers to ensure that we can fix that and we can rectify that.
00:29:23
Speaker
Educator first and foremost and then we also need to advocate for the industry at the same time. I was just going for the US side here. I totally agree with Cody and back up everything he says. We serve our membership here. And again, I'm sure a lot of us, all of us probably overlap with several companies here that are part of our membership.
00:29:42
Speaker
But also the other time too, it's being a conduit for policymakers to the industry itself as well. So I remember being a Hill staffer when I was around crypto legislation. I'm not a lawyer personally, but at several times I needed to talk to a lawyer more on the DeFi side of things or more of a lawyer at a centralized exchange and just kind of understanding, hey, with more of the legal framework here, but also understanding how business models work and how maybe legislation or regulation affects that.
00:30:06
Speaker
Also, crypto policy in particular moves incredibly fast. There's so much happening from a number of fronts, both on United States, the state level, as well as international, as we're seeing here. So a lot of times we're also talking to policymakers and the staff just saying, hey,
00:30:23
Speaker
in plain English, here's what happened with this treasure disposal, or with this enforcing action, or something to that effect. And so, to Cody's point about breaking down really complex topics into 140 characters or less, and just trying to deliver a quick and sufficient message. And again, it's a very fast world. A lot of policy issue areas don't move as fast as crypto. I mean, candidly, I can't even think of any that move as fast as crypto.
00:30:48
Speaker
for better for worse. So it's never boring and it's never the same weight, which is exciting for me and crypto.
00:30:55
Speaker
One part that we're trying to also do, especially in Europe, I think because there's so many things that are happening, so many legislative processes and parts that might be somehow touching upon crypto and blockchain. It's being at the right time at the right moment with the right answer. So it's spending a lot of time just like trying to understand who is responsible and who is doing what and who is deciding what, and then basically really providing kind of a support effort
00:31:23
Speaker
and also a dialogue, so the outcome is the best for everyone and especially for the memberships.
00:31:30
Speaker
And I guess I may just agree with most that was said so far. I actually really wanted to make the same point Ron was making. Because yes, it's true that our main job in the end is educating or talking to policymakers and explaining to them what is happening in the industry. And bringing actually, because I guess our function in the end is really to bring the technical expertise that we have in our membership in front of the policymakers. Because in the end, yes, we're all
00:31:59
Speaker
a bit of a, I guess, degence if we're in this space and we all love the technology, we all understand it, we all can play with it, but of course, the real experts are the ones that are working in our member companies in each of our associations. So, first of all, it's important to bring that expertise at the table of the policymakers. And then, as Ron was saying, I think there is a lot of work that we need to do in the other way around, because these industries often
00:32:24
Speaker
you know, let's say skeptical of regulation in general, of regulators and their perspective. And so it happened quite a lot in the past few years that maybe a certain development in the European Parliament was somehow
00:32:39
Speaker
reported online on crypto Twitter or X now, and then suddenly everybody was talking about it, not really understanding what had happened, or whether the decision was actually taken, or whether it was just an amendment that was being discussed in a legal text. So, you know, we, I think, Maureen and I and the other colleagues that we, let's say, that work in the European trade association space,
00:33:04
Speaker
we often had to come together and try to also manage those reactions from the industry itself because maybe they didn't really fully understand what was going on. And so I think our job is also very important in that regard, right? To try and explain what exactly are policymakers trying to do, why they're trying to do certain things. Sometimes, as we all just said, they might not fully understand what they're actually doing or the impact
00:33:30
Speaker
of their proposals and rules but often other times there is maybe there is something behind that right there is a reason why certain proposals and certain regulatory frameworks are proposed in that way and so it's also important for us to
00:33:45
Speaker
As we were saying, you know, let's say, dumb it down, right? Or under it's plain in simple English, simple language, what exactly is happening for both sides to really understand each other. So I think that's probably the, you know, a nice concluding remark on what we need to continue doing in the coming years.
00:34:02
Speaker
especially now with the new institutional changeovers on both sides here,
Advice for New Policymakers
00:34:07
Speaker
right? So both, as we say at the beginning, but the EU and US are going to go through an institutional changeover in 2024, which means new people, new faces, new needs to educate, to talk, to have the two sides talk to each other, understand each other. So, you know, quite excited about the next few years and all this work that we have to do.
00:34:29
Speaker
Absolutely. And I love that statement that it is definitely a two-way process. It's about engaging both sides of the conversation, both those that are setting forth these regulations, but also the innovators and just making sure that there is no room for misunderstandings, miscommunication, because I think that the education
00:34:47
Speaker
The educational aspect is definitely something that needs to be covered on both ends and ensuring that there's some constant engagement. So I love that both of you highlighted that and mentioned that. So as we conclude, I just wanted to focus on, okay, what would be your message to this new wave of policymakers about blockchain, about Web3? If you could just give us like a little takeaway, what would it be?
00:35:15
Speaker
I'll go first. Come approach it with an open mind. Approach it with an open mind. Don't get overwhelmed. I think when you know we mentioned this earlier but we talk about the technology. We often focus on the financial services aspects but this technology is really underpinning so many different
00:35:35
Speaker
areas, supply chain, education, health care, music and entertainment, gaming. And so it's very easy to get lost and to get overwhelmed when you're looking at all of that. And so try to focus on something specific, focus there, learn the basics. And then with that open mind, continue to look at all of the different areas this technology can play. And I would say the way I think about it and the way I try to communicate it with every policymaker,
00:36:04
Speaker
is okay if we're starting with blockchain technology and we're starting let's say in gaming. Think about it what problem exists and how can blockchain technology solve it. If you think about it from that point of reference it's a lot easier to understand it and then to think about what are the regulatory solutions if any are needed. So that would be my my one piece of advice for the new wave of policymakers come with an open mind think about the problem and think about the solution.
00:36:30
Speaker
There's a reason why people, some of the smartest people I've met, work in this space. And there's a lot of reason why people have moved from other sectors, a lot that Cody just highlighted, to crypto. And I think that's like, for me personally, that's the reason why I'm so engaged. Because I see so many sharp people of all ranges of age and backgrounds who have come to this space and have dedicated their livelihood here. And we've had some folks in Congress, especially,
00:36:55
Speaker
talk down on the industry itself. But you have to remember that there's people who've dedicated their lives here, thousands of people. And the job creation is amazing. And the benefits of society, we're really starting to see those play out. And we're just scratching the surface. And I think it's really amazing that we want to have those in our own respective countries, or the EU in particular, for some cases. But we want to be the leaders here. The United States especially has seen itself as a leader in tech. And it seems like we're missing the boat here, especially on crypto.
00:37:24
Speaker
But, you know, even things like AI have been now kind of the hot scrutiny on Capitol Hill. So we'll see how this all develops. But to those who were policymakers say, look, just meet some of these people and let them explain because I think it's really empowering to have folks, you know, from all ranges of the ecosystem to engage with the Hill and to at least just show folks this is who I am and this is why I'm in this space.
00:37:45
Speaker
And maybe I'll just connect to what Ron was just saying, because I think it's interesting also that the European perspective is basically the, I don't wanna say the opposite one, but it comes from a, let's say a different position, right? For us, for the European Union, this race to the web tree, let's say, is considered to be, let's say, the first one that we may actually have a chance in, right? After losing the races in the web one and web two, then we believe that there is a real potential for the European Union to be
00:38:15
Speaker
A leader in the space doesn't mean that has to be the only one. But as we were saying at the beginning, the move, the actions taken by the European Union in the past four or five years, well, these seem to be putting us in a very good place. And again,
00:38:32
Speaker
I think the recommendation for the newcomers, for the new policymakers that will basically come to Brussels over the summer after the elections will be for them to, again, be curious about this technology, talk to us, talk to all the different associations that are active in this space, try and educate themselves about these new things that if they don't really understand them yet. But I think the one main point that we are now reiterating in our messaging is
00:39:00
Speaker
let's just let it play out because we do have a framework now, right? We have Mika and we don't know what exactly still needs to be fixed or what else needs to be done because Mika still has to come into
Future of EU Regulations
00:39:14
Speaker
force. As Marina was saying, the first set of rules will apply on the 1st of July 2024. The full set of rules will only apply on the 1st of January 2025. So until we see the impact of those rules, whether those rules actually will be working
00:39:29
Speaker
and fix the issues that we have or we may have new ones to address. Well, we need to give them time, right? We need to actually let this regulation play out. So let's say we are calling it a bit of a regulatory pose here that we hope to see in the next few months just to really see what is the impact of what has been developed so far and what else needs to be done, if anything.
00:39:53
Speaker
I think that even coming from Europe, basically adding to what Tommaso was saying, there was a digital financial package that we had in the previous mandate. And in a way, digitalization is so important when it comes to blockchain and in a way tokenization, et cetera. It could be just the next step when it comes to digitalization. So it's in a way providing
00:40:16
Speaker
more secure trustworthy system that we can use and in a way all benefit. It is very important as mentioned before when it comes to in a way competitiveness in the EU and trying to look into what are our important things, important industries that we want to develop in the next months and years. And definitely I think blockchain should be a part of it, not only crypto blockchain as well, being used in so many different industries. And I think that we're all here to support
00:40:45
Speaker
and continue with the dialogue, share all this information and updates. There's going to be a lot of them happening all the time. As we know, this industry is really, really active. So, we're very much looking forward to also meet new MPs, to meet new people from the European Commission and to start a new mandate pretty soon.
00:41:09
Speaker
That's great. I think that was just so full of power, each different takeaway statement. I think that we're definitely going to be highlighting some of that because there are some overarching themes, even though the challenges are different. And we find that the US and Europe are in different stages. I think that there's a lot of learning to be done. But thank you so much for joining us to the four of you. It was great to sit down with these different representations from different trade associations because it's clear that the world of blockchain, of crypto,
00:41:38
Speaker
a very vibrant ecosystem full of innovation, challenges, and endless possibilities. So thank you once again for joining us, and thanks everybody for listening to our Owl Explains Huturani, and we'll see you next time.
00:41:54
Speaker
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