“EU shoots itself” (Pierre Persson, MP from LaREM)

After a cold sweat over the weekend, the French crypto community breathed a sigh of relief on Monday. Since Friday evening, the alarming tweets of majority MP Pierre Persson (LREM), the community has been in turmoil due to the latest version of the text of the European Directive “MiCA” (market in crypto assets). The much-anticipated text, which was voted on on Monday 14 March by the European Parliament, already sets out the first regulatory framework for the resale and custody of crypto assets in Europe.

and this is on the brink of death That the modification that prohibits the computer protocol (Proof of Work System, proof of work) on which two major cryptocurrencies, Bitcoin and Ether, are specifically based, have been rejected by MEPs.

“Less than 48 hours after the adoption of MiCa, the final version of the text questions the issuance or offer of crypto-asset exchanges based on Proof of Work (Bitcoin in the first line) protocols. Banning Proof of Work is a very unique insight into this blockchain topic! Convicted for example on the LinkedIn network, Céline Moille, a lawyer at Deloitte. “ Has the European Union decided to commit economic suicide? We are still concerned about the networks.

So it’s time to rest after voting. But for Pierre Persson, a majority deputy, who is very committed to defending the French crypto-asset ecosystem, if this risk is eliminated by withdrawing the amendment, there is not enough yet to cry victory. The text must enter into force within 24 months.

LA TRIBUNE – After alerting the community this weekend about a MiCA amendment that was intended to ban Bitcoin in Europe, it withdrew it on the brink of death Undoubtedly a victory?

stone person – We have avoided the worst. However, the latest version of the text leaves many questions unanswered, as it refers to a document that will be completed … later. A quick reminder of the facts: the version published last weekend flatly condemned the future of cryptocurrencies in Europe. Initially, with MiCA, due to the energy consumption of cryptocurrencies, and under pressure from the Greens and Socialists, it was about banning the “Protocol”proof of work“(PoW) (i.e. a computer process – used in particular by Bitcoin, the oldest cryptocurrency – that validates transactions and mines new tokens in the blockchain in a secure and decentralized manner). Editor’s note). So this excluded the Bitcoin and Ethereum blockchains.

In the end, Parliament did not approve of this amendment. Europe has chosen to support the Bitcoin protocols with the rules of sustainable finance. It is a political message sent by the representatives. But concretely, this remains legally ambiguous. The only victory is that it no longer leads to a ban on bitcoin, ether or other cryptocurrencies developed on proof of work. Where does cryptocurrency come from? How is mining promoted in Europe? If there is still hope that the text will be clarified before its application, these questions are cleared for the time being. At this point, the technology should respect the rating, period.

Especially since other problems still remain. First, with MiCA and NFTs (Non-replaceable code) are not considered crypto assets but are financial assets. Thus, in a video game, a sword purchased in the form of a unique digital commodity (NFT) will be subject to the rules of financial markets … We will have to review the copy. Then, with regard to Decentralized Finance (DeFI, i.e. these blockchain-based automated financial services, ed.), it remains legally ambiguous. Basically, we’ll have to wait for ESMA (European Securities and Markets Authority, the European Financial Markets Regulatory Authority) produces a list of regulatory standards that it will decide as is. It is a huge problem that aims to expose the nature of the current systems of cryptocurrency. Hence, this will increase legal instability.

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Is there a pro-crypto lobby that has convinced European parliamentarians back home?

There were not many lobbyists. It is mainly individuals, via online forums, who are expressing themselves, not the traditional corporate-led lobby. Moreover, the lobbies are those of the already established industries, particularly the banking sector. The latter are working hard so that the innovation sector and crypto assets do not hatch. Also, they rarely know the regulatory side of crypto assets.

I think in the end, the MPs must have found the Green Party’s arguments too dogmatic. Therefore, the rapporteur found a compromise. He didn’t want a ban. However, there is still a fundamental problem. Parliamentarians know nothing about technology. We always focus on the environmental damage of cryptocurrencies. By sending such a message, the European Union is shooting itself. We did not understand at the European level that technology works with new standards. Previously, we were thinking from the perspective of third parties and intermediaries (banks, advisers, authorities, etc.), and for the Commission it was always a question of transferring the main lines of this frame of reference into a completely different reality. Another model had to be invented. But reinventing a new role is more complicated. We prefer toggles. While the Joe Biden administration has announced that it is accelerating the matter and adopting crypto assets, for our part, by this logic, we will not create European champions. We are losing the battle.

Should the environmental issue be placed at the center of the debate on regulating crypto assets?

This is a simplified and caricatured view. The standby position of Stefan Berger’s draft guideline is to align cryptocurrencies with the classification of sustainable finance. But this leads to enormous legal uncertainty. I repeat, the issue is not the energy consumption of Bitcoin but the origin of this energy production.

This will be the subject of a report that I will present in ten days, on the new economic models of energy production, particularly the discontinuous. Concretely, it would be more effective to ban fossil fuel mining activities and encourage those players who use surplus energy production (via hydropower, wind energy) to make the technologies more efficient. But the Greens and the Socialists engage in ideological politics. It is the uses that should be regulated by the policies, not the technologies themselves. MEPs believe that they are protecting citizens. In fact, they would likely harm the continent’s competitiveness.

International tensions seem to be giving fresh impetus to Central Bank (MDBC) digital currency projects. Is this move likely to harm the development of other cryptocurrencies?

There is a desire to tighten regulation of cryptocurrencies. But ciphers and MDBCs navigate two parallel worlds. They are actually not interoperable. In a world where, I think, the two can coexist, the challenge then is on – the new global technological standard. However, decentralized finance today is only denominated in dollars.

If legal uncertainty slows the development of cryptocurrencies in Europe, it will be a mistake for the greater benefit of the dollar. There is a real need for central bank digital currency. But we still haven’t decided whether this should be a wholesale or retail currency. Should a citizen have a bank account with MDBC? How do you do while commercial banks against, fearing that their deposits go to the central bank? How will the state enter into these projects? At the European Central Bank (ECB), Christine Lagarde has not yet decided.

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