EBC Panels Archives

The Potential of Stablecoins and the Impact of MiCA Regulation

July 29, 2023 by SzuTung Chen

Panelists in this stablecoins discussion include Yves-Michel Leporcher, lecturer at European Tech School, Ewoud Barink, Business Development Director at Worldpay, Avishkar Sharma, Head of Crypto Partnerships at Checkout.com, Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle, and Radoslav Albrecht, Founder & CEO of Bitbond.

Stablecoins are one of the intense focus areas in the Markets in Crypto Assets (MiCA) Regulation that just got approved by the European Parliament in April 2023. In spite of the restrictions that MiCA may impose on the issuance of stablecoins, experts at the 8th European Blockchain Convention still support the merits of stablecoins and express optimism about the unlimited financial potential that stablecoins unlock.

Not All Stablecoins Are Created Equal

In the wake of Terra’s collapse in 2022, Teana states that the term “stablecoins” is misleading. She prefers to use different terms to refer to this asset based on its stabilizing mechanisms, such as tokenized cash, e-money tokens, or asset-referenced tokens.

The term stablecoin is terrible. We should stop saying it. It infers that a lot of different types of assets are similar and I think last year has shown us that not all stablecoins are created equal.
Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle

Teana from Circle shared her opinion on stabecoins at the 8th EBC.

Stablecoins Are Here To Stay

Stablecoins unlock endless possibilities for the financial world, especially for the unbanked that have long been excluded from the financial systems. Radoslav foresees a future where 40% of the total payments volume is very likely to be transacted in stablecoins.

They believe that the adoption of stablecoins is not cannibalizing the current financial markets but creating a bigger ecosystem that brings in people that have long been excluded from financial institutions. It unlocks a more inclusive financial world, as Teana states, “This is new economic activities, it’s not replacing or eating anyone’s lunch.”

Due to its open-source characteristics, experts highlight how stablecoins provide access to a new rail that can easily integrate with traditional banking infrastructure while offering constant upgrades.

Yves-Michel, lecturer at the European Tech School, moderated this panel of stablecoins.

Regulatory Challenges and the Impact of MiCA

During the 8th European Blockchain Convention, the panelists discussed the challenges of regulations in shaping the future of stablecoins. The focus was on MiCA, which has emerged as a prominent regulatory topic. The concerns about the restrictions and market disruptions that MiCA may bring to stablecoins were also discussed in the panel “MiCA and the Challenges of Regulating Crypto.“

MiCA aims to bring an end to the unregulated crypto market in Europe. Under MiCA, stablecoins are classified as either e-money tokens or asset-referenced tokens. While stablecoins are not banned, MiCA sets essential rules such as the requirement for private stablecoin issuers to maintain appropriate minimum liquidity as a reserve.

Teana emphasizes the value of establishing standards through MiCA. Sharma shares the aspiration for global consensus among regulators, even though it may seem like an ambitious utopian dream. Regulations provide clarity and comfort for institutions to step into the crypto ecosystem. However, Teana highlights that while MiCA exists as a regulatory framework on paper, its implementation is pending, leaving many aspects yet to be resolved.

Dive into the TradFi and banks’ viewpoints on MiCA and stablecoins in this article: Decoding Banks and Laws in the Crypto Realm!

EBC panelists discussed MiCA and the future of stablecoins.

The Evolving Landscape of Stablecoins

According to Radoslav, the future holds a lot more use cases for stablecoins. Their usage will extend beyond payments and remittances as institutions will also utilize them to make transactions. Both B2B and B2C sectors are expected to embrace stablecoins in the years to come.

Radoslav also anticipates the increasing emergence of non-fiat-based stablecoins, pegged to a diversified basket of assets. This approach aims to safeguard the purchasing power of the currencies. He emphasizes the need for competition to determine the optimal combination of assets that form the basket.

Teana acknowledges the inherent unpredictability of the market’s future. However, she highlights that the introduction of asset baskets will introduce complexity to stablecoins. Ultimately, the success of stablecoins will come down to their use cases and under what scenario are they designed to be used.

More EBC insights on the future of tokenization and crypto market marking:

Watch the full discussion to understand the potential of stablecoins!

Navigating Uncertainty: MiCA and the Challenges of Regulating Crypto

July 29, 2023 by SzuTung Chen

Panelists from different countries discussed crypto regulations at EBC23

This legal panel delved into the European Union’s new legislation, Markets in Crypto Assets Regulation (MiCA). Speakers include Robert Kopitsch, Secretary General of Blockchain for Europe, Justine Scerri Herrera, Partner of MK Fintech Partners, Ernest Lima, Partner of XReg Consulting, Joachim Schewin, Principal Economist at the European Commission, Przemyslaw Kral, CEO of Zonda, and Jonathan Turnham, Partner of Travers Thorp Alberga.

MiCA Comes Down to Individuals and Collectives

To kick off this panel, Joachim Schewin delves into the European Union’s new legislation, MiCA. He explains that the starting point of MiCA is individuals. Everyone has various identities to engage in different collectives, and MiCA exists to empower these bottom-up decentralized initiatives.

“The starting point is never regulation. The starting point is also not crypto. The starting point is how we see the world and how we see individuals and collectives.”
Joachim Schewin, Principal Economist at the European Commission

MiCA takes on a bottom-up and liberal approach and it contains three main pillars. First, MiCA is a regulation that excludes regulations on DeFi, DAOs, and NFTs because they don’t see significant risks or they consider the industry too premature to be regulated. Second, MiCA has reversed the proof of burden of utility tokens. National regulators will have to prove a project is against the laws, instead of another way around. The third main element is about setting rules for stablecoins.

The audience listened to the panel discussing regulations and MiCA at EBC23.

Challenges and Unknowns Are Along the Way

Operating in Malta, Justine has a generally positive opinion of the MiCA regulation, such as regulating centralized players and providing fair and transparent rules for trading venues. However, she also recognizes that there may be some confusion and ambiguity in how the regulation will be carried out.

Justine specifically expresses her concerns about the restrictions and market disruptions that MiCA may have on stablecoins. Justine hopes that the bigger players in the stablecoin market, such as USDC and USDT will apply for authorization under MiCA, but she also acknowledges that there are many uncertainties that will need to be addressed as the regulation is implemented.

Ernest hopes that MiCA can serve as a benchmark for other jurisdictions to follow. He argues that the fragmentation of regulations in different countries is making everything difficult and more complicated. He understands that the regulation is catching up worldwide, but it is difficult for it to keep up with the fast-evolving sector and all the different business models and services being offered.

Meanwhile, Jonathan argues that the cryptocurrency industry is complex and diverse, so he sees the need for a base layer foundation for regulation and a global standard that prevents regulatory arbitrage and weak points in jurisdictions. He believes slow and steady progress is necessary to identify pinch points and build a solid foundation.

Discover how banks and institutions are responding to upcoming regulations:

Panelists discuss crypto regulations, especially MiCA, at EBC23.

Education and Collaboration Are Critically Important

In order for regulations not to impede crypto businesses and innovation, Przemyslaw, Ernest, and Justine all believe that training and education are key to dealing with the challenges and that regulators need to be trained and educated in order to properly regulate the sector.

Joachim thinks it’s important for players in the crypto space not to view regulators as ignorant and unwilling to understand the industry. He shares that the European Commission has launched the European Blockchain Regulatory Sandbox, and will host 20 blockchain startups annually so that the private and public sectors can work together. Collaboration between regulators and the private sector will be necessary to establish sensible regulations that embrace blockchain technology’s potential.

At the end of the day, 10% of the problems that you will ever face with a regulation is the text of a regulation, 90% of your problems will be how people interpret the regulation.
Joachim Schewin, Principal Economist at the European Commission

A large crowd attentively listened to the panels at EBC23.

Keep the Hope Up and Build Something Meaningful

Imaging the future, Justine predicts that big players like USDC will wait on the sidelines to see how MiCA plays out before deciding to opt for a license and authorization. Meanwhile, there will also be regulatory arbitrage within certain jurisdictions.

Facing these uncertainties, Przemyslaw and Ernest both encourage builders to understand the regulations and don’t give up. Jonathan advises crypto builders to keep trying even though it means sitting down and talking to the regulators countless times or even bringing the governments to court. He believes that regulations are coming, and we can either be a part of it or sit on the sidelines and cry.

The point is don’t get discouraged. Keep trying. If you sit on the sidelines and just complain about it, the stuff is going to come in without your input, and that’s going to be even shittier than what it is now, so keep the fight going!
Jonathan Turnham, Partner of Travers Thorp Alberga

Ernest thinks it’s essential for industry players to examine their products and services and do a good jurisdictional analysis. Agreeing with him, Joachim advises builders to think about the target audience and what they want to achieve for society. Focus on explaining the benefits of the use cases to gain attention and support from regulators and policymakers.

Check out the full discussion on MiCA and regulations on the EBC YouTube Channel!

Metaverse 2.0: AI, Interoperability, and the Path Ahead

July 27, 2023 by SzuTung Chen

The panel is moderated by David Palmer, Blockchain Lead at Vodafone. Leon Lanen, COO of Bit Hotel – Blockchain Game, Lukasz Plewa, Head of Blockchain and Economy at DRKVRS, and Nicolas Benhamou Lacalle, Founder & CCO of Algoritcom provide insights from their experiences working on metaverse in gaming and business retail.

What Is the Metaverse?

Both Nicolas and Leon mention that the metaverse is a virtual space where people can work, socialize, interact, and basically do anything that we normally do in our daily lives. It’s important to point out that people are able to participate in the metaverse from different mediums, such as augmented reality (AR), virtual reality (VR), or even mobile phones. Lukasz concludes by saying that people often portray the metaverse as the movie “Ready Player One,” but he thinks the metaverse is simply another medium that allows people to interact with one another.

Are you a skeptic of Metaverse? This EBC panel is going to change your mind!

What Impact Will Metaverse Have?

David shares that McKinsey’s report, released in January 2023, stated that the Metaverse has the potential to become an over $5 trillion economy by 2030. Leon believes that the gaming industry will be the main driver that attracts users to socialize in the virtual worlds, while Lukasz envisions an interoperable digital world in which people can exchange assets and play different games seamlessly.

From the retail perspective, Nicolas shares that the metaverse will give businesses new opportunities to build communities around their brands, and they can even integrate gaming into their business to create an innovative experience.

Participants tried out the VR device at the Algoritcom stand at EBC23.

What Needs To Be Improved?

Lukasz thinks that it’s important for users to be able to access the metaverse from different devices despite the slightly different user experiences. Leon agrees with that, saying that the VR or AR devices on the market now are expensive, and thus are not really helping with mass adoption. He believes that there will be new gadgets, such as Neuralink chips, coming out and making the immersive experience more accessible.

Apart from improving access to the metaverse, Nicolas also acknowledges the importance of education. He thinks people nowadays are intimidated by the word “Metaverse,” and thus helping people understand the virtual world is essential.

What is the Future of Metaverse?

Leon and Lukasz both believe that artificial intelligence (AI) will play a significant role in the metaverse, particularly in creating generative art, storylines for the games, or non-player characters (NPCs) that can engage with users, and provide compelling instructions or conversations. They predict that AI will be used to create more natural and dynamic responses than the current decision-tree-based answers used in existing games.

We will have different interoperable metaverses. Lukasz states that users should be able to participate in the metaverse that they are interested in, no matter whether it’s a virtual shopping center, a game, or a fantasy world, and they should be able to seamlessly jump from one to another. Leon believes that having interoperable decentralized digital identities will thus be critical.

Panelists Lukasz and Nicolas shared their insights on metaverse adoption and education.

Leon and Lukasz both believe that artificial intelligence (AI) will play a significant role in the metaverse, particularly in creating generative art, storylines for the games, or non-player characters (NPCs) that can engage with users, and provide compelling instructions or conversations. They predict that AI will be used to create more natural and dynamic responses than the current decision-tree-based answers used in existing games.

In the coming months, Lukasz expects that companies working on metaverses will learn from their previous projects and create better products with different approaches. Leon thinks that there will be many new releases of metaverse worlds, games, and upgrades in technology. While he doesn’t expect a fully-fledged metaverse reality, he does believe that we will be inching closer to it, and the exact expression of it will become clearer over the next two years.

We are on an evolutionary journey, not a revolutionary journey, in my view. I’m just excited to see each aspect of that evolution!
David Palmer, Blockchain Lead at Vodafone

Watch the full panel to learn about the future of metaverse!

FTX and Crypto Bubbles: Will Self-Regulation Be the Savior?

July 25, 2023 by SzuTung Chen

In the aftermath of the FTX crash, the crypto market experienced significant shifts, with developments like the Ripple v.s. SEC lawsuits and BlackRock’s Bitcoin bonds injecting energy and optimism into the community. Despite the distance from that troubling period in 2022, the panel discussion on FTX, regulations, and self-regulation remains insightful.

Led by Sebastian Becciu from Sygnum Bank, the panel includes experts like Robert Le from Pitchbook, Kevin Murcko of Coinmetro, James Ryan from GammaX, and Michael Jackson from Fabric Ventures. As the crypto industry rebuilds trust and aligns with regulations worldwide, it paves the way for institutional players to enter the space.

Could the FTX Collapse Have Been Prevented With More Regulations?

The FTX collapse sparked a debate on the role of regulations in preventing such incidents. Michael attributes the FTX bubble to FOMO and the abundance of free cash during the Covid-19 pandemic.

On the other hand, Robert emphasizes the cyclical nature of financial markets and argues that the lack of regulations allowed FTX’s founder to present the exchange as legitimate while evading legal oversight.

While Michael and Kevin believe that regulations may have lessened the damage, they acknowledged that bad actors will persist in any industry, making complete prevention challenging. Michael points out that the crash might have been caused more by internal governance and management issues within the company rather than a regulatory failure. He thinks that maybe with proper regulations, the damage of the FTX crash would have been lessened, but it wouldn’t have been stopped.

“Regulations move slower than innovation, everybody knows that saying, right? At the same time, if you’ve ever run a business, you’ll know that criminals outpace whatever you do to stop them. At the end of the day, you can try, you can lessen, but you’re not going to stop it.”
– Kevin Murcko, Founder & CEO of Coinmetro

What Are the Impact of Regulations?

James thinks that it’s inevitable that companies are going off-shore. If customers are demanding less friction, companies will move to countries where they can set up an exchange with less friction, which is basically going off-shore.

Robert responds to this by saying that in the U.S. a lot of the federal regulators are taking steps to cut off crypto from the banking system, and he believes this is going to push crypto companies off-shore.

Kevin agrees with them, stating that the current cycle of regulation hasn’t worked to prevent fraud and has failed to establish a better ecosystem. Apart from pushing companies off-shore, there might also be potential regulatory risks that come along. He states that regulations often leave the biggest companies in the world to do whatever they want while smaller entities have to follow rules, making them less competitive.

Michael complements this conversation by looking at the finance and VC perspective. He thinks nowadays VCs won’t permit their money to be invested in companies that are in shady jurisdictions, but only in reputable companies that don’t focus merely on arbitrage. He believes that this, rather than regulations, will be what brings companies on-shore.

More EBC insights on crypto regulations:

The conference room is full of the audience listening to the FTX panel at EBC23.

What Are Your Take on Self-regulation?

Robert foresees a combination of regulations and self-regulatory organizations (SROs) in the industry while Michael also thinks that the regulations will be framework regulations.

On the other hand, Kevin emphasizes the importance of self-regulation. He thinks a self-regulating system is like having a person in your neighborhood that is always complaining about everything, but after the complaint, the annoying things just stop happening, benefiting the whole community.

Similarly, he points out that it was Twitter that first disclosed the scandal of FTX. Kevin thinks that what differentiates SROs from regulators is that SROs are formed by insiders, which can also be corrupt, for sure, but they can be more powerful as well.

How Do We Get Rid of Bad Actors in the Industry?

Michael states that enforcement needs to be stronger against scammers in crypto, who often hide their identity. Self-sovereign identity systems are being developed to link real-world identities to online activities and prevent scamming by illuminating the shadows. Meanwhile, the development of insurance policies in DeFi may also improve the problem.

Kevin argues that bad actors exist in all industries, there will always be people that outsmart the system, and it’s impossible for us to ever get rid of them. In crypto, scammers exist, but they represent a small percentage of transaction volume. The problem is the media focuses on sensational numbers without comparing them to other industries. The solution is to establish norms and standards as the industry grows.

Watch the full panel to learn about the expert’s opinions on the FTX crash and self-regulation!

Regulations Unmasked: Decoding Banks and Laws in the Crypto Realm

July 29, 2023July 20, 2023 by European Blockchain Convention

This panel about crypto regulations was moderated by Jose Luis Perán, Head of Delivery for financial services at VASS. Coty de Monteverde, Blockchain Center of Excellence Director at Banco Santander, Francisco Maroto, Blockchain Lead at BBVA, and María Ñiguez Olalla, IT Lawyer at EJASO, provided valuable insights from the perspectives of banks and law.

Regulations Are Coming

Francisco compared the upcoming regulatory changes in the crypto market to the regulatory wave that occurred in the financial industry after the 2008 crisis. He believed that the crypto industry must prepare and invest to comply with the upcoming regulations.

All speakers highlighted the need for regulations in the crypto market to attract institutional money and protect retail customers from fraud and bankruptcy. Different countries are approaching crypto regulation at different speeds and in different directions, with some like Singapore and Switzerland already having regulations in place and others like China forbidding the use of cryptocurrencies.

The European Union’s regulations, such as the Markets in Crypto-Assets (MiCA) regulation and Digital Operational Resilience Act (DORA), aim to provide legal certainty, protect consumers, prevent market manipulation and financial crime, and professionalize the crypto sector.

Healthy markets need liquidity, protection and security. This is mainly brought by two factors: institutional money and regulation.
Francisco Maroto, Blockchain Lead at BBVA

Law and banking experts discussed how crypto regulations are reshaping the banking industry.

MiCA’s Impact on the Crypto Industry and Banks

According to Maria, MiCA regulations introduce compliance regimes for issuers of crypto assets. Different types of investments have different levels of risk and requirements. Issuers of e-money tokens (EMTs) face the strictest regime, while asset reference tokens (ARTs) require authorization and whitepaper approval. Other crypto assets are considered to pose lower risks, and while the issuers still need to present a specific substantive whitepaper, they don’t need the approval of the supervision.

On the other hand, crypto service providers, such as exchanges and custodial wallets, need to obtain a MiCA license and comply with governance and transparency obligations. Specific obligations depend on the type of service provided, such as having a custody policy for custodial wallets.

Maria believed that MiCA regulations can protect the customer and at the same time, give certainty for the institutions that want to start providing crypto services.

Coty, from the bank’s point of view, shared that MiCA regulations will impact the financial sector and crypto asset service providers. Banks must adapt and seize opportunities, while service providers will face challenges, including risk management, capital requirements, and compliance procedures. Therefore, collaboration between banks and service providers will be necessary.

“Regulation is key for market development!” Watch the EBC interview highlight with Esther Teuber to understand how regulations will change the crypto industry from a law perspective.

More EBC insights on MiCA and crypto:

EBC aims to bring together TradFi experts, crypto startups, and law professionals to discuss the future of finance!

Other Relevant Regulations for Banks and Crypto

Apart from MiCA, there are three additional regulations that influence banks in the crypto space. The travel rule, which requires all financial institutions to pass on certain information to the next financial institution, has expanded to crypto asset service providers, requiring them to identify transaction sources and destinations for anti-money laundering reasons.

Another regulation is the Prudential treatment of crypto assets, which establishes standards to classify and manage assets, ensuring financial stability and setting appropriate capital levels.

The third relevant regulation, according to Coty, is the Pilot Regime. It is similar to a European sandbox that provides a safe environment for financial market infrastructures to test DLT applications, particularly in trading and settlement systems, for a duration of six years.

The panelist agreed that regulations will bring a positive impact on the crypto space, as they will provide more confidence to institutional players, protect the market with legal certainty, and offer protection to retail customers.

Watch the full panel to understand the coming regulations in the banking realm!