On Thursday, members of the crypto community met with the regulators at the summit in Brussels, organized by ORCA Alliance and EU40. It was the first discussion on cryptocurrencies which is currently one of the most popular, but also the most controversial innovation in finance and technologies. This is significant step, as the meeting will supposedly encourage the further dialogue between crypto entrepreneurs and law makers, providing the opportunity for successful legislation of digital currencies.
The discussion went especially well, because there was a number of respectable crypto community representatives as Jorn Erbguth (Legal Expert), Anastasija Plotnikova (Legal Adviser, ETHLend,), Martins Liberts (Co-Founder, Debitum Network,), Sarah Compani (Legal Advisor, Bitfinex). They managed to bring valid points in the discussion, creating the confidence necessary for the further collaboration with policy makers. EP representatives Eva Kaili and Sorin Moisa participated together with Peteris Zilgalvis (Head of Unit, Startups and Innovation, Digital Single Market Directorate, DG CONNECT; European Commission) as well. Though agreed, the members of ECB did not take part in the event.
During the event, the regulators presented the current problematics of digital currencies, ICOs and Blockchain. Overall, the crucial issues found in these fields are the legal background and the lack of regulations. In other words, it is more than important to encourage the implementation of rules, preventing money laundering and ensuring security of users. Due to a number of loops in the current legal system, cryptocurrencies still cannot be considered as a legitimate form of payment. Therefore, the crypto community is willing to receive the guidelines from institutions and to implement them, as this action would move the industry forward due to the significant advance in legal background.
The hosts of the event were MEPs Eva Kaili from S&D and Soirin Moisa from EPP. According to Mr. Moisa, cryptocurrencies would be about to stay for a long time and the main goal of institutions should be focused on scammers. Therefore, the revision of Anti-Money Laundering Directive is supposed to be helpful regarding these cases. Also, the importance of ICO regulation was stressed in order to meet the requirements of security in the EU. Last, but not the least, institutions are strongly requiring the exact definitions, as, for instance, the role of token. Ms. Kaili expressed the similar attitude regarding the future of cryptocurrencies, also adding that policy makers should collaborate with developers as far as the terminology of cryptocurrencies is concerned.
Amongst other issues with cryptocurrencies, the inevitable waste of energy was mentioned. As it is necessary to use electricity in order to mine cryptocurrencies (hence, no potential substitutions), both regulators and crypto community agreed there would be hardly a method to completely abolish this problem. Moreover, the purposes of cryptocurrency activities should be included in the area of regulations due to their contrasts. For example, social activities should not be taxed, whereas business-related deals could be regarded from a different perspective.
Mr. Zilgalvis, the Head of Startups and Innovation at DG Connect, emphasized that the European Commission considered Blockchain positively and noticed the benefits of this technology beyond the financial sector. Currently the institution is working on The Blockchain Observation, a project promoting the collaboration with crypto community in the development of regulations in this market. Also, such events as Blockchain information day on 19 December or the release of FinTech Action plan in March 2018 are supposed to contribute to the potential solutions of issues. However, Mr. Zilgalvis admitted that the main issue with Bitcoin from a financial perspective is the volatility of its price. Therefore, it may be difficult to legitimize such form of exchange.
Some of the participants reached the consensus regarding the activities of cryptocurrency investors. It was widely claimed that despite the fact that nearly everyone can easily acquire cryptocurrencies nowadays, it is necessary to understand the performance of digital market, including the evaluation of potential risks in this field. Regarding the businesses of cryptocurrencies, innovations are more than welcome by the EU institutions. Sandboxes can become a particularly good instrument for experiments and improvements in Blockchain, even though the procedures of data protection cannot be breached. Also, after the negotiation with national governments, each business should conduct the dialogue with the institutions of the EU due to elementary legal administration on international level.
All in all, it is excellent to see that ORCA Alliance on behalf with EU40 joined the dialogue with the European Parliament and started the talks on international level. It is only the beginning as far as the consensus and the development of technologies are concerned. There is an enormous space for actions and solutions which must be completed in order to achieve the mass adoption of cryptocurrencies in the EU.