 And we have three speakers, Florian Glatz, trained as a lawyer and software developer with many years of experience working full-time in the blockchain space. Florian is aware of the key issues in the intersection of crypto-accents and regulations. Florian Glatz has co-found and lead the German Blockchain Association, as president for its first four years. He advised political decision-makers at the German and European level of blockchain regulation. Marina Marquesic. Marina is the co-founder of OEC, which aims to propel UA regulation to become defy-friendly. Since 2017, Marina has been advising crypto projects on governance and legal matters with focus on decentralization. Sorry, please. If you want any questions to the speakers, you can talk outside of the room, sorry. OK. Define it. She previously lead the advisory team of Blockchain Accelerator, co-found it, co-found.it, and co-found a crowd-investment platform. And Simon Polrod, educating on crypto and public blockchain since 2050. Welcome. Please give it up to the speakers. So thank you, everyone, for joining our talk. My name is Marina, and together with Simone and Florian, we're going to talk about the crypto regulation and its influence on the open blockchains. So what do we see today? It's an increased activity of crypto regulation all around the world. Wait two minutes. Sorry. We'll just wait for two minutes, because the counter then starts. So what I will talk today is basically on the increased regulatory activities from all over the world. We are coming from Europe, and we're trying to talk about the trends that happen all around the world. But basically what we're experts is in the European law. And why this is interesting is because last week we had some new laws being finalized in Europe, and they are, I would say, the beginning of what's happening globally. So as... What's the European Crypto Initiative? Sir, of course. So Florian, Simone, and I started the European Crypto Initiative, which is a nonprofit based in Brussels exactly two years ago when the first crypto assets draft for marketing crypto assets regulation has been issued. So basically this has been leaked, and we have seen it online, and we said we should do something about it. So immediately in the next week, we basically started talking to the regulators about this topic. Okay. Sorry, there's no presentation, but I'm going to go on without it. So basically what we are doing is talking to the regulators and trying to explain what is happening in the crypto area and trying to educate them on what we're doing and what blockchain is. So what happens in generally in the last two years specifically is that there has been an increased regulatory activity from regulators all over the world. And what is very important is that this activity is coordinated. So it is happening in Europe, it's happening in the US, but what is also very, very important is that it's happening on the international level, on international organizations. So basically organizations like Fadev, Ayosco and some other organizations are very actively looking into crypto and also very actively looking into DeFi specifically. In the next, I would say one and two or two years, we will see reports from all of those organizations being published and this will be a big influence not only in the world where we're coming from, so the European Union, but basically it is going to be a big influence also in Colombia, in South America, Asia and all over the world. What it is important is that many times those regulators, they are very well intended and we are talking to a lot of them, they are interested to learn more, but the problem is that they don't have that much time. So of course we have like one hour talk with them and we need to be very precise on what we are discussing in this really short amount of time. And the problem is that many times because they don't have this, I would say, knowledge or at least opportunity to learn more, the outcome of this regulation is even more negative that they wanted to at the beginning. And so I think that educating regulators, talking to them and even educating about crypto in general is very, very important. So besides what's happening, I would say, on the international level, we have seen also a lot of bad news happening in the last year and this is not helping. The regulators are seeing and mostly reading news that are negative and this is then reflected in regulation. We have seen in the markets in crypto assets draft added a new article specifically talking and specifically being, I would say, a consequence of what happened with Terra Luna and we also can see this in the stablecoin bill that is written in the SEC. So in a way it's also important of what is the image that the whole crypto community projects in the world but also specifically for the regulators. So why this time right now is so important for all of us to talk about regulation is basically because we know that crypto exists for more than a decade, but at the beginning it was really seen more as a toy for geeks, I would say, and it was not seen as something that would be a problematic for the financial system, which is right now. So in from 2020 or for the last, I would say, couple of years, there is an increased concern from the regulator of what crypto is possible. We have seen a lot of scams, we have seen DeFi being developed but also the increased usage of NFTs and this is what is also concerning from the regulators especially when it comes to consumer protection. And so what we need to do in the future is think about really new options and new alternatives and how to have an even more increased dialogue with the regulators because the older development that happened in the last years will most probably not be just copy pasted in the future because of specific limitations that we will see coming from the regulatory world. So I'll just come up to date. So this is what I was talking about, an increased activity from the regulators in the last few years. As I said, last week we have seen markets and crypto assets regulation and the transfer of funds regulation being finalized in Europe. And what does this mean for this community? What does this mean for the people that are building applications and they're building protocols for the people that are also using these applications and protocols? And I will only give you a few examples that are I would say quite important and again those are European examples but it's in a way only the start because the markets and crypto assets regulation is the first worldwide overarching regulation for crypto. So if you are a crypto assets service providers for example as an exchange or a wallet you will need to be incorporated in Europe and you will need to get a license from a European national component authority. What is important is that you're also going to be, need to be compliant with anti-money laundering rules. If you are not, you will not be able to issue or to offer services to the European Union which means that the European user is only going to have the opportunity to use services that are regulated and compliant are their markets and crypto assets regulation. Also an interesting part is the crypto asset issuance. So if an entity wants to issue crypto assets in Europe and offer it to the crypto asset, to the European users you will need to be incorporated again in the European Union but at the same time also write a white paper very similarly to like a very short, very similar to an IPO. And in this white paper there are a lot of rules around marketing but also there needs to be a report on the energy consumption of this specific crypto asset and the blockchain that it uses. This is going to have a very important effect on the listing of different crypto assets. So again the crypto assets that are not going to be compliant they will not be able to list it on exchanges they're offering their services in the European Union. And let me come to the most critical part of the markets and crypto assets regulation. So this regulation was basically written because of DM and so the aim is to regulate stable coins. There is a big part in the regulation that regulates stable coins and this is I would say the most critical part. There is a cap of 200 million transactions per day in the European Union that needs to be observed by the issuer of the stable coin but also by the regulator. So there are obligations like reporting obligations that the crypto issuer, stable coin issuer needs to send quarterly to the regulator which means that they need to send all the information of the number of transactions the users, et cetera. And if those limitations are not met the basically it's not possible to operate in Europe anymore. The license that this stable coin issuers would have they will lose it at that moment. And there is another part the markets and crypto assets regulation even talks about the stopping of issuers of stable coins from those stable coin issuers. This is I would say quite critical we're going to see how it will work in practice but the markets and crypto assets regulation is public so you can read it online and then form your own opinions. The last part from my side is the non-fungible tokens those are excluded from the regulation but only the ones that are unique and usually linked to an art and also issued in a very small collections. So that's all for me. I give the mic to Florian. Thank you. Thank you Marina. Oopsie. Bringer of bad news. Okay, where do I click here? Okay, perfect. Yeah, so let's talk about the positive sides of this regulation because it's not just bad. I mean, that was pretty bad, I agree, but not everything is that awful. So the scope of Mika of this market in crypto regulation is limited in a sense to centralized applications of crypto technology, meaning that decentralized finance NFTs are officially not in that scope yet. So we expect in a sense a Mika to regulation to sort of follow up in, I don't know, a few years and that's something we'll address later. Self custodial wallets survived a pretty, pretty harsh attack from the European parliament. We were afraid for a few weeks, like most of you probably, that they may be banned. So good news, Europe still accepts self custodial wallets going forward. Proof of work also survived. So there was a real chance that proof of work assets would be flat out illegal in Europe. That also was this year. And I think they got away with a slap on the wrist. So proof of work assets have been labeled as unsustainable, but there are no consequences yet tied to it. But the foundation has been laid for a potential ban later on or very negative tax implications for holding them, those kinds of things. The result is in a sense sort of a white elephant. So it's not as bad because it's sort of scoped to only regulate centralized applications, not the decentralized ones. However, it's really framing everything in the terms of the status quo and in terms of financial assets. So Europe does not yet really recognize on the legislative level that crypto is more than just money. And what we just celebrated as wins are really just temporary exclusions for the regulators. The long-term impacts that we see of the regulation in Europe that has been passed now, and that is following, is definitely gonna be looking at, that it's gonna be looking at defined NFTs much more. It's already on the radar of regulators. They are writing reports on this in the European Commission and the Parliament. And a big, big question there is what is actually decentralization? Is this a real thing? Can we actually observe this in the real world? Can we pinpoint regulators to assist them and say, look at that. This is true decentralization. This is what we mean when we say decentralization is not the same as centralized services. The energy crisis in Europe, of course, is real. Everybody knows that. And so we expect more sort of restrictions around proof of work. It's probably not gonna be a sustainable business or investment for Europeans. Stable coins continue to be the most controversial and sort of most regulated topic going forward. We expect the US, for example, to draft a stable coin bill in the next 12 months. And Europe will definitely continue to be very strict on regulating them. Funny enough, nobody talks about Facebook anymore and their stable coin because they shelved the project. Now it's just a Terra Luna as being the scapegoat. We've all seen what happened with tornado cash, so privacy-preserving protocols will be very, very highly regulated going forward. So this is definitely still something where we advise everybody to be super, super careful. Yeah, thoughts on the future. Right now, the legitimacy of the crypto space, the perceived legitimacy of the crypto space in the court of public opinion is pretty low. It's maybe at its lowest point ever. The incumbents that we challenge with this technology are super active in spreading FUD about crypto. You can read their reports. Central banks, of course, regulators on the international level, like the Financial Action Task Force, commercial banks, and national regulators. They are all sort of aligned on keeping this technology from reaching mass market adoption in its current decentralized form. And so there are two sort of problems we have to address as a community. One is the fact that regulation is certain, but the other one is that we do not have the support of the public right now. We're literally a small elite that's sort of growing, but not fast enough, and most people are not inside our bubble, and they sort of follow what they read in the news, and that's mostly bad. So we have to somehow come up with a way as a community to surface the goodness and sort of label the bad stuff as what it is, bad. So scams, hacks, money laundering, pay chills and influences, uninformed investments by the public in things like stablecoins that are gonna explode next week. We should sort of not do that, and it's, I think, a collective failure of the whole space that we haven't come up with any effective means to do this. So in the end, I want to give it to Simon to take this further. Thank you. Thank you. So, yeah, what do we do now? The future looks uncertain. The global perception of crypto is not ideal, and maybe what we thought the crypto would make as an impact to the world has not yet fully materialized. So we are at a very critical moment because, as we said, all the regulators are looking at us and the results that we are pushing forward are maybe not as wonderful as we want them to be. So what we think now is that we have to be a force of proposal, like as an industry, as a community, we have to somehow, and we'll have a plan for that, create some form of proposal, some form of initiatives that basically go front-run, the regulators, front-run at institutions and explain what we can do, what we are doing today in a very positive manner, and with actual practical mitigation proposals for all the risks and all the issues that we see today. And to do that, one of the critical things is to create some form of consensus inside of the community, inside of the industry of what is acceptable and what we can push forward because we definitely don't want to give ideas to the regulators that would be contrary to the values that we want to defend, right? So there will be difficult choices to make, and there's a lot of potential solutions that we can think about, both technological or in terms of initiatives that the community can make, but are they acceptable? Is this something that we want to push forward? And this is an open question that we will discuss later. So as an example, the European Commission launched an initiative to study whether it would be meaningful to basically embed the surveillance of the blockchain, a real-time surveillance of public blockchain in some form of a system that would be used by the regulators to basically be alerted and act on potential issues happening on the public blockchains. Do we want that? Do we support these kind of initiatives? Do we regulate interfaces? Of course, this is a very big subject and two other cash sanctions really make in China. And this is still an open question. Do we regulate, and if so, how? Do we want to circumvent that by creating shadow interfaces? Is it a long-term solution? Open question again. Do we want to leverage the IDs in some form, like creating identities that would be recognized by institutions in some way? Do we leverage on the initiatives of the institutions on the IDs? Because there are some in Europe specifically. Do we basically segment regulated and digital space? It's a potential solution. And of course, the whole sanction in general, it's a very big subject and still with a lot of different implications where there's a lot of open questions. You've all seen the discussions recently about do we need to basically sanction address at the protocol level? It's a very dangerous question to ask, but also a very practical one. And the answer has to be given at some point. So these are basically solutions that could be moved forward. Do we want that? And basically to decide this, we need to decide what are the non-negotiable values of the community of the industry today. It could be a lot of things, like credible neutrality of the public networks. Is that the most important thing that we want to protect? Is this like the composability, like the openness? So we want to basically fight every kind of KYC, things that could limit this composability. Is this the fight on self-constitutional wallets that we have to prioritize? Is it privacy preserving systems? And it can be all at once. It can be all those things, but we need to be sure that where we cross the line and what solutions we can put forward or not. And for this, I think it's very critical that we have a very clear way forward. And there's a few things that can be leveraged to move forward with the institutions in general. The first thing is that everything is not bleak and there's a lot of people inside of those institutions that know about crypto and that are interested by what's going on. They are open to suggestions. And those people, we have identified a lot of them at the EU level, but there are some of them in every single institution worldwide. Those people, we need to help them and we need to feed them with suggestions. We need to feed them with actual proposals. So this is the main leverage we have. Then do we have all the good, obviously good use cases of crypto that we need to push forward and to move forward quickly? That we've talked a lot about with DeFi, about Deci, public good fundings, non-financial use cases of crypto. All those things together, they bring forward a very positive way of doing crypto and this is something we need to welcome. And of course, there's the constant innovation improvement in the space that is already happening and that we need to leverage. So being sure that there's the constant information, transmission of information to the regulators and to the institutions. And maybe to do that, I would like to end with a call for community intervention. So basically it's a call to you in general and all the participants here, you came here so you're basically interested by regulation and what's happening in the future. You can help, I mean, all of you can help because we need to, there's so many paths open today. There's of course the path of regulation is bad per se and we want to basically crypto to go dark and just don't care about the regulation. This is a way forward. We want to fully embrace regulation and basically cancel decentralization, meaning abandon all the values that we are trying to build today. We can create new standards. We can self-regulate, like creating entities that bring rules forward that are followed spontaneously by the protocols when they want to be compliant. We can push to make CASPs, maybe the crypto assets are provided to gatekeepers of crypto. This is for now more or less the approach of the regulator but do we want to push in this direction? Do we want to create a DID standard for DeFi all together? Do we want to create a list for name and change, cameras, hackers, I don't know. There's a lot of things that we can do. We have IDs, we have proposals of course at EUCI but we would like you to contribute and to help. So please join the conversation. We have a telegram, we have a Twitter account, we have a website and we organize a big event in Lisbon from November 1 to November 4. Feel free if you are in Europe at the time or nearby, feel free to come and work with us on these solutions. Thank you very much. I think we have time for a few questions. Thank you so much. It was very great. I have one question. So you mentioned that NFT is now currently excluded from micro-regulation but if we take a look and we just browse what European Council says, we see that European Council is aiming to do some assessment within the next 18 months. So the regulation is coming but we don't know in which form yet. Therefore my question was, what in your opinion do you think in what shape or form the regulation on NFT will be coming and perhaps if you could just share some insights what would be the best way in your opinion to shape that regulation on NFTs. Thank you. Thank you. So for concretely on the NFTs at the moment there is a loose definition of what an NFT is in the Market Syncropotasas regulation and then every time there is going to be a new issuance the national competent authority will need to look into and do an analysis if this is really again unique enough and if it's issued in a small collection so it will not be regulated and it is excluded from Mika. What is coming next? And we were just talking to one of the MPs from the European Parliament that is going to lead this effort into regulating NFTs and we're also writing some positions on this topic but it has started already and there are a lot of thoughts and activities especially in the parliament at the beginning to just start with a general proposal and opinion on this and then I think in the next few years we'll see more activities. As everywhere the European Union works in cycles in mandates the European Commission that usually propose the regulation will finalize their own mandate very soon in a year so we'll wait for the new commission to have more ideas how to move forward. Do you think that the European Union is going to be at any time at now? And I'm here Florian. That's a beautiful question. I do think that the idea of a DAO is uniquely aligned with European values. So I, for example, I think Europe is the continent of cooperatives. I don't know if there is continent with more and I think cooperatives but also associations are sort of the old world equivalents of what DAOs are shaping up to become sort of inclusive cooperative ways to work together. Yeah, so is the European Union itself fit to become a DAO? I don't think yet. They are clinging to their hierarchical design, systems design but I think citizens of Europe are ready for DAOs and so I do hope that they are gonna front run the regulator on this one and then potentially just, I don't know, swallow the EU and I have no idea. But yeah, I would support the EU becoming a DAO for sure. Let's go, okay. It's another question over there, or many questions. Maybe a microphone to these gentlemen over there. Here, sorry, okay. Hi, my name is Charlie. From a regulatory perspective, if a cryptocurrency exchange goes bunker up, what's the best approach? You mean a centralized or a decentralized exchange? Both. Okay, I don't know for a decentralized one. There are now regulations in Mika that the money custodied by users needs to be protected from insolvency, right? So this is really important so that, so I think Mika as a regulation protects consumer interest quite well vis-a-vis centralized business models and crypto asset service providers. So in this case, Mika really does help, right? The problem really is where Mika touches upon more decentralized applications and where the rules don't fit the use case anymore. So yeah, I think solvency of a centralized exchange in Europe is regulated now with the Mika regulation. I'm not an expert on insolvency law, so this is where I will stop giving advice. I don't know if Simon has anything more to say on that. No, but I see that the time is out. So I think for the next questions, feel free to reach out to us and we'll be happy to help you. Thank you everyone. Thank you very much.