Navigating Uncertainty: MiCA and the Challenges of Regulating Crypto

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!

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

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

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

Regulations Unmasked: Decoding Banks and Laws in the Crypto Realm

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!

Custody, Wallets & Exchanges: Keeping Your Crypto Safe

Custody, Wallets & Exchanges Keeping Your Crypto Safe

A very enlightening discussion took place during the 8th European Blockchain Convention with Maria Apogeni, CEO of BITMarkets, Serra Wei, Founder & CEO of Aegis Custody, and Clarisse Hagège, Founder & CEO of DFNS to discuss wallets, exchanges, and custody.

Not Your Keys, Not Your Crypto

Clarisse believes that owning your private keys is important for crypto ownership, but contrary to what people think, she argues that physical ownership is not necessary to keep assets secure.

In her opinion, key management is difficult and can easily lead to loss of funds, not to mention that many users still record their private keys on cloud service after purchasing a hardware device. With the advancement of technology, Clarisse envisions decentralized custody with a focus on recoverable proof of user signing power.

The audience listening to the panel discussing custody and wallets at EBC23.

Segregation of Funds Is Important

Serra points out that qualified custodians in the United States now have to demonstrate that they hold private keys to customer funds while proving customers’ funds are segregated. Clarisse thinks that centralized exchanges were a response to the difficulty of interacting with blockchain technology, but technological advancements, such as multi-party computation (MPC), can help rebuild trust and increase security. She suggests that segregated wallet infrastructure is crucial to guarantee the safety of user funds in case of bankruptcy.

The panelists discuss the importance of custody, wallets, and exchanges at EBC23.

The Future of the Crypto Space

Serra thinks that the collapse of FTX highlights the need for better risk management and infrastructure in the crypto space. Companies are now focusing on differentiating themselves by providing institutional-level solutions and complying with regulations. In the long run, this will set a new standard for sustainability and growth in the industry.

Clarisse expresses optimism in the future of the crypto space despite the fact that the institutional U.S. market is currently facing regulatory uncertainty. She believes that decentralized finance (DeFi) will come up with new solutions to deal with the situation.


More EBC insights on crypto, regulations, and privacy:


Watch the full panel to learn how to keep your crypto wallet safe!

The Future of Crypto Tax and Web3 Infrastructure

The Future of Crypto Tax and Web3 Infrastructure

This infrastructure panel was moderated by Oskars Jepsis, CEO & Co-Founder of ALTER Network. Berken Menges, Head of Marketing of CoinTracking, and Antoine Scalia, Founder and CEO of Cryptio, contributed to the discussion, providing insights from B2B and B2C perspectives.

What Are the Current Tax Regimes in the Crypto Space?

Antoine believes that the current tax regimes in the crypto space are generally clear for trading, capital gains, and swap tradings, but there are still complexity and uncertainty in new use cases such as staking and rewards on lending protocols. 

After the FTX collapse in 2022, some media is claiming that the auditing firms stop doing audits for crypto clients, but Antoine disagrees. He mentions that many companies pause Proof of Reserve until they find better ways to do it, but they are still conducting financial statement audits. 

Berken shares that even though the tax regulations are relatively complete in Germany, the public is still hesitant to invest in cryptos. His company has been actively communicating with policymakers and educating the public to increase people’s trust. He also believes that making the infrastructure more user-friendly and automated will be crucial in helping the public adopt digital assets. 

Oskars, Berken, and Antoine discussed infrastructure and regulations at EBC23.

What Are the Challenges for Enterprises and Retail?

Berken identifies several challenges from the B2C side. Since different transactions belong to different types of taxation, aggregating and classifying all the data is the hardest part. It requires distinct methods to obtain data from centralized exchanges and decentralized finance (DeFi) platforms. Also, Berken acknowledges the importance to keep up with new blockchains and trends while prioritizing.

Complementing Berken’s point, Antoine thinks that the B2B side also faces challenges with coverage and integration with exchanges. It takes lots of time to collect accurate and complete data in an auditable way. Since the existing data analyzing tools, such as EtherScan, aren’t designed to be used for accounting purposes, there are missing features and a lack of consistency.

Antoine points out that, for conducting both Proof of Reserve and financial statement audits, there is an obvious lack of adequate tools. While auditors are normally not familiar with the latest technology, he thinks there are many market opportunities for companies providing tools and infrastructure to ease up the process.

Berken shared his insights on crypto audits, regulations, and institutions at EBC23.

What Is the Future of Web3 Infrastructure?

Antoine argues that the emergence of new use cases is too rapid for regulations to catch up. It’s thus important for enterprises to collaborate with experts in the field to navigate the evolving tax landscape. He emphasizes the need for reliable data infrastructure that can provide clear and easily understandable data for new use cases, in order to rebuild trust in the blockchain systems.

Berken thinks it’s challenging to understand and comply with different tax requirements in different countries. The process of evaluating tax reports and interpreting regulations can be time-consuming and complicated, especially with new use cases. However, he believes that once there is a clearer path and more clarity in tax regulations, it may ease up the challenges for institutional adoption.

Watch the full EBC panel to navigate crypto tax and Web3 infrastructure!