 All right, so I will use the time while Zunka is searching for my presentation to introduce myself. My name is Nina Ziedler. I'm a partner at DWF, a global law firm and specialized on financial regulatory work and governance questions. And to just give you a bit of a background, I am for quite some years deeply involved, especially here in the Berlin blockchain scene. I'm one of the founding partners of the German Blockchain Association called Bundesblock. And I'm heading the finance working group there since its foundation in 2017. We published what we call the token regulation paper early 2018. Thank you. And built a European group from there covering the topics from the European perspective. And then earlier this year, I had been involved with the initiative by the European Commission to create a private industry blockchain association as main body for their communication with regard to blockchain topics, which is called INATVA, International Association of Trusted Blockchain Applications. And I'm also on the board in that association. We currently organize a larger conference next weekend in Malaga as our first step to establish the communication channel between the private industry and the blockchain sector and the governmental side. So, and I would like to give you an update about the financial regulatory environment for blockchain projects and tokens. So just briefly, I showed precisely this slide last year already. That should visualize what the main, from a financial regulatory perspective, token classes are defined. Not only in Germany, as mentioned above, but this definition here, which defines what a security token is, hands in most of all times, needs a prospectus to be issued prior to you issuing such a token, is actually based upon a European wide definition of securities. And in Germany, we always like to add a couple of further stuff to any regulatory requirements. So we're making it a little bit harder to do business here in Germany. And that is what we're then seeing on the other side. And also to raise this right at the beginning, we will see a lot of changes at the end of this year. There will be a couple of new laws coming up, which will be implemented as of January 2020 already. This is in a couple of months time, and we still don't have the final bill. So this is kind of a bit of guessing what comes later. Security token. Security token includes everything that is transferable. Well, tokens are built for being transferable, so typically you can take off that. Negotiable on a capital market, according to our German financial regulator Baffen, any kind of token exchange is a financial market. Negotiable means that you can trade it, and most of the tokens are built for being traded, so you can take off that as well. Standardized, things like CryptoCity would fall out, but other than that, any normal token would also fall into that category. Now, interesting is a security token can never be an instrument of payment, right? Those are two different types of financial instruments. Hence, cryptocurrencies like virtual currencies would typically not take that box, typically. So that is the criteria that distinguishes security tokens from cryptocurrencies. And then this one was a lot debated over the past years, because that's this last requirement is not really stated in the European definition for securities, but you can take it from the context of the law. The token must be comparable to classical equity or debt instruments, and that criteria, which is by now agreed, for example, by the German regulator Baffen, that is what distinguishes the European-wide security token class from, for example, the US one. So in the US, it doesn't need to be a typical equity or debt-like instrument, but it can be enough that you expect promise from any kind of efforts of others. So it might be a cryptocurrency that you're selling from its purpose, but the expectation of the investor is that it will raise in value and thereby create a profit for you. That would not be comparable to a classical equity or debt instrument, which always relies upon the fact that you have the right to receive some future earnings or interest or alike, and is not only based upon that it raises its value as such. And that is also where we distinct the security token from what we call utility token. And I know, you know, the term utility token is used in so many ways, but in my area we use utility token, not for the classical native token of a blockchain, which would typically be rather a cryptocurrency, but utility token means everything that is neither insecurity nor cryptocurrency. And what does that include? Well, it includes business models like a membership token or a voucher token, for example. That would be a utility token, and that's the only type of token that is up to now completely out of the financial regulatory reach, right? So the security token, as well as only in Germany, the cryptocurrency token are both financial instruments and caught by financial regulation. The cryptocurrency is a financial instrument in Germany because we have this strange thing called unit of account. And the bathroom has voiced already in 2013 that they believe that cryptocurrencies are units of accounts, and thereby they are in Germany only a financial instrument, not in the rest of Europe, but here. So what does this mean? Security tokens typically require a prospectus to be issued prior to the issuance of the token. If a token falls into this European definition of security token, you're lucky, because then you can actually issue one prospectus for whole Europe. If it doesn't, then you might still be caught by national prospectus obligations. So this is not the only reason for being required to write a prospectus. But that, at least, is European-wide regulated, and it's one standard. You one time need to get it approved by your local financial regulator, and from there you can passport it to all other European countries. So that was the basics so far until the end of 2020, also in Germany. Just a quick view, I already mentioned, the difference to especially the important US HAUI test that is truly dominating the whole discussion wherever you look in the internet, but don't mix it up. HAUI test does not apply here in Europe. We have different criteria. So HAUI test requires that it's an investment of money. There's expectation of profits from the investment. No matter where those profits arise from, they don't need to come from any payments or payment-like issuances from the issuer. So you don't need to distribute profits or pay interest, which would make it like what we saw on the previous page, equity or debt-like. It's sufficient that the money is invested in the belief that the instrument itself, the token itself, could raise in value. That's sufficient from the US perspective. And then the profit must come from the efforts of a third party. Well, that's typically the case. When you buy a token, for example, any kind of native token in a new blockchain project, then you might do it because you believe that the team is a great team and will build this whole project and in the end, your token will rise in value. Switzerland adopted that view in 2018 already. My Swiss colleagues were telling me back then there was no need to do so, right, because it has no grounds in the current laws of Switzerland, but nevertheless, they went that way so that the pre-financing and presale, when the token does not yet exist or is not yet usable, in the end creates a Swiss security in that the results are very similar to the US Howard test. So, upcoming now is the implementation of the fifth anti-money law redirective. You might have heard about that already. It is required to be implemented throughout Europe until January 2020. And it will include for the first time also cryptocurrency and tokens into its reach. So, everyone providing access to crypto tokens will be required to apply the KYC rules. That's tough enough, but in addition to that, in summer, the Financial Action Task Force issued even further going recommendations. The Financial Action Task Force is a group of global regulators agreeing on standards with regard specifically to anti-money laundry rules and anti-terrorism financing rules. And they strictly observe that all of its member states implement their recommendations. So, you might read recommendation, well, you know, who's observing that? The countries will, because otherwise they will be kicked out of that group and will exit the group of compliant countries, which will make it their financial system way harder to interact with the rest of the world. So, they are not only asking for banking level AML counter-terrorism financing regulation, which is already anticipated by the EU anti-money laundry directive, but they are going even a step further. They are asking for license requirements, right, so that not only crypto exchanges and wallet providers, which are all access provided from the fiat into the crypto world, will need to do KYC on their customers. In addition of that, they will need to get a public license for doing those. So, that's even a step further. And we in Germany, we anticipate that already for 2020. And then, what is also a problem is this travel rule. What does that mean? The travel rule is currently only known in the US, right? So, we don't have any travel rule in Europe yet. We will get it through the FAT recommendations. It means that in case of a doubt or suspicancy, the KYC providers, in our case, exchanges and wallet providers, will not only need to report any suspicious receiving of funds to their clients, to the public authorities, but they will have to show where the funds are coming from. So, if somebody is now sending any crypto funds from one wallet to the others, they will not only have to report about one side of that deal, but both sides. So, how do crypto exchanges are able to make sure that they can not only state that one of their customers did any transaction, but also where did it go to, right? And the identity of the receiving side of that transaction need also to be insured, to be known to those access providers. And that's creating a problem, because that doesn't really match with how the technology currently works. And there is much debate, you know, how can wallet providers and exchanges actually make sure they are not only knowing the identity of the one initiating the transaction, but also the identity of the one of the receiving end of that transaction. So, we'll see. Yeah, in Germany, we are using, unfortunately, the obligation to implement the fifth AMLD and the FATF recommendation to introduce a new definition into our common banking laws, and that is the definition of crypto assets. So, deviating from this year, we will get a fourth category. And the fourth category will comprise of cryptocurrencies and partly also of utility token. So, the piece of the unregulated tokens will get even smaller down here. Crypto assets are defined as tokens which are used either due to a contract or because the public simply uses the token as such as a means of exchange or payment while not being issued by any public government or alike. Or, and that is new, so that's basically old. That's what the cryptocurrency had been seen so far as well, the unit of account. But in addition to that, the crypto assets will also include any token which is expected to be used for investment purposes. And by that new criteria, we in Germany also take a step towards the how we test. So, we are leaving, unfortunately, the objective criteria which you can assess fairly easily and are moving into the more subjective space by adding expectations and certain views to that definition. So, unfortunately, the crypto asset as we will get it as of early 2020 will include any kind of token which is sold or bought from an investment perspective. Yeah, and in addition to that, that new type of financial instrument that we're getting, Germany intends to introduce a new license requirement and that is for crypto custodian-ship. It's pretty unclear what that all includes because there are so many technical solutions which you could describe as custody. But at least during the past months of debate, there seems to be agreement that this will only really include custodian wallet providers or service providers which means that they will need to have access to the private key, right? So, if the private key remains with the user, those technical solutions should not be touched by this. So, by introducing this new license, Germany tries to already answer to this requirement and goes beyond the mere European requirements, which I think is problematic. I believe in Germany we should simply stick to the European rule because otherwise we will never be able to create a true European whole wide financial markets. All right, just quickly jumping through this. A list of typical license requirements applying throughout Europe. I'm not going into details here. In Germany we're adding some stuff atop of that due to the fact that we make cryptocurrencies and in the future crypto assets a financial instrument, so any dealing with that, any service offering you build surrounding that will require a license. Plus the new crypto custody license. And what is also coming next is the electronic registers for the new electronic securities. Currently by law the securities formally need a paper in Germany and that will be amended. But the discussion is that the electronic registers, which, funnily enough, are called in the position paper throughout blockchain registered. They are supposed to be organized by licensed entities. So, I wonder how that plays along, right? So, if you have a licensed entity running a blockchain, well, we'll see. There is no draft law yet in that regard, so we're still waiting for that. You could get the idea that this whole crazy regulation, which is really complicated, even for a specialist by now, and getting even more complicated now, is truly stifling any innovation in Germany, right? So, how did we get here, right? Why is there so little understanding about the positive opportunities the blockchain technology can deliver? Well, actually, I think the reasons are here. So, where did we fail as a community? We again, we started with Bitcoin as kind of a true public digital infrastructure project, usable by everyone, open to everyone. And from there, new projects started and they realized in order to speed up, they would need to pay developers and marketing and stuff like that, so they were needing funding, right? That started the whole ICO craze, which was really damaging the community and also how this whole blockchain movement is seen from the outside. That, in the end, triggered the tightening regulation and it also ended up in a complete loss of focus. So, most of the projects I know by now are not building public infrastructure anymore. They are building their own private revenue-based system, right? And we simply must be honest. We cannot expect any regulatory release from any rules for private profit ventures. So, we really need to start to be honest. Are we actually building something decentralized? Are we actually democratizing anything here? Typically, even with the non-traditional blockchain structures, you're not democratizing anything. You're plutocrotizing the world, right? Everything that is token-based and is based upon the idea who has more tokens earns more and stuff like that, so staking and all of those things has nothing to do with democracy, right? And I really, you know, be cautious if you're using the terms democratizing or decentralizing, right? Explain what you're honestly doing. So, in my view, we need to join efforts to return through the core values to also acknowledge the importance of off-chain governance, right? So, in any kind of system that you're building, there are decisions being made prior to setting the code into the Internet, right? And this off-chain part is typically neglected. Why is that? Because people don't want to bear responsibilities, right? They don't want to talk about who's actually responsible for what. They, you know, often the scene is trying to hide behind the shield of decentralization, but even if you're looking at Bitcoin or Ethereum, if you're honest, there are certain circles determining where to move into, into what direction those systems go, right? They are just, you know, trying to hide behind the code. But that is not convincing to regulators and politicians, right? Be honest. Disclose the holistic governance of your project, not only the on-chain part. So, and then I believe if we, again, focus on really creating decentralized public infrastructure with public access to everyone, you know, same rules for everyone, objective criteria for nodes, and that includes, to be honest, you must close data processing agreements somehow because there is data processing going on, and GDPR simply requires that. And if you want to have any industry player on your chain, then you need to have that. And it's not that painful, right? You need a tick box for downloading. So I still believe you could classify those things as permissionless, right? But the people who want to play along, they need to agree to certain standards. Otherwise you will never get mass adoption in this area. And then transparent and inclusive governance, including the off-chain part. There is quite a lack of research in that area. Or maybe, yeah, on this slide, I'm again trying to argue how we got there and that funding is the main problem and that we need to think about new funding mechanisms which might not be token-based, but maybe more copying, like, tax-funded projects like the streets, the real streets outside. So that will need some new thinking. And I wanted to give a hint to the crypto governance. Disclosure questionnaire we are working on within the Wharton group here. I added some links there and I summarized for you what this disclosure questionnaire is about to give projects the opportunity to assess their own project and their own governance if they actually took a look into all of the questions which are important and on the other side to build up a database for more research in that area and also to give users the opportunity to assess how decentralized and democratized is a project, actually. All right, I was given a hint that I need to come to an end. So thank you very much and we'll be here for questions. Any questions? Is it just because there has been some non-honesty from blockchain people or there's also like a contraction from the other side not to allow that movement to grow too freely from the existing financial and legal structures to try to control back, maybe? Yeah, certainly. So the current rules, especially in the anti-money laundry and counter-terrorism financing area, they are built around the current financial system which is trying to close loopholes, right? And obviously a system that is building up in peril to that is somehow contradicting that purpose, right? So there is much thinking giving currently in that field, you know, how do we handle that? And I personally think we need to go beyond the known traditional mechanisms. A colleague of mine and I, we wrote a piece about this FATF recommendation, especially the travel rule. And I think the current system builds up on the banks actually doing work which is owed by our states to the whole community, right? It's a governmental purpose to prevent money laundry and terrorism financing. And in order to deliver on that task, they are leveraging the banking system and said, hey, you have all your customer data, so you do that for us. And in case you observe anything suspicious, please report back to us, right? And I doubt that this will be a valid system in the future when more and more is run on technologies like blockchain. I believe the regulators will move like in the US, the SEC already does to gaining that data directly. So that's why the SEC started to run full nodes of Bitcoin and Ethereum a couple of months ago. And then to work with data analytics firms, encrypted analytics firms to find those suspicious transactions. I think that's where unavoidably we are heading to. But not many states acknowledged that yes, we in Germany, we are far away from those ideas. So we are currently really sticking to the traditional system of KYC.