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Advisor to the European Commission: “We are currently not on track to regulate DeFi”

The founders of Brussels Blockchain Week set themselves a few goals in mind when they decided to organize the event: to introduce the crypto-curious to the space, to present the Belgian blockchain ecosystem and to build bridges between the industry and the regulators.

“If there’s one thing Brussels symbolizes for people, it’s regulations,” said event co-founder Christophe de Beukelaer. Decrypt before the conference.

A Brussels deputy, from Beukaleur made the headlines when he undertook to take his salary in Bitcoin this year, a move he said he doesn’t regret despite the recent cryptocurrency crash. He and investor Raoul Ullens worked together to organize Brussels Blockchain Week.

“We are neither maximalists nor anarchists,” he said. “We believe crypto has something to contribute to the world. We don’t think it will destroy the old world, it will coexist.

“Overregulation kills innovation”

Taking place just weeks before European institutions release the finalized version of Markets in Crypto Assets (MiCA), a key piece of legislation that is expected to unify approaches to crypto across all 27 member states, the first-ever Brussels Blockchain Week was positioned as a kind of peace conference between digital innovators and financial regulators.

On the first day, the mood regarding the upcoming settlement was mixed.

Image: Brussels Blockchain Week

“We have strived to be regulated,” said Martin Brunncko, executive vice president for Europe at Binance, pointing to the company’s recent approvals in France and Italy. He said having a “single market”, as proposed by MiCA, would be hugely beneficial. Under current plans, companies could gain approval in one member state, and with it a pan-European ‘passport’ to offer services across Europe, saving them from having to comply with each regime individually.

“It will be a lot of work [to get the initial license]said Laura Chaput, head of regulatory compliance at Brussels-based market maker Keyrock. “But we are adopting the regulations, we want to have a clear regulatory framework.”

But for others, there was a fear that regulations would put an end to the party before it even had a chance to start.

“Over-regulation is killing developers’ appetites,” said Darius Rugys, general partner at Maven 11 Capital. “It kills innovation.”

Talk to Decrypt, De Beukelaer characterized the preventive regulation approach as a European problem. “In Belgium, in Europe, the problem is that we are too conservative and risk averse,” he said. “We are too concerned about what may happen.”

Speakers repeatedly spoke of ‘educating’ legislators, the prevailing idea being that they don’t understand the industry but still try to impose rules. But it is not clear that many politicians and political professionals are open to education.

“I would really like them to be here, listening to us, mingling with us and learning what’s going on,” commented Jonas Wenke, director of venture capital firm Commerzventures. This was after he took a poll of the room (admittedly the smaller of the two in the room) to ask which attendees were from the EU institutions. No one raised their hand.

Eurocrats were not entirely absent from the conference, however. Peter Kerstens, adviser for the digitization of the financial sector and cybersecurity at the European Commission, gave a talk in which he quickly established which side he was on.

“I myself am very, very optimistic about blockchain and Web3,” he told the audience. “We believe that the broadest [use] ledger technology is transformational.

“We are currently not on track to regulate DeFi as it is very rare to have anything truly decentralized. But that could change.”

—Pierre Kerstens

Since MiCA has already been under discussion for years, there is still some confusion as to what the final settlement will look like. Kerstens said that while discussions are ongoing, current proposals would “most definitely” include NFTs. The status of Web3 more generally, however, is less clear, because as Kerstens pointed out, the legislation targets intermediaries like exchanges – imposing rules on a truly decentralized finance project would be much more difficult.

Image: Brussels Blockchain Week

“We are currently not on track to regulate Challenge because it’s very rare to have something truly decentralized,” Kerstens said. “But that could change.”

He added that the European Commission had “a lot of bad ideas” on how to regulate DeFi, and “no good ideas” – encouraging participants to make suggestions if they had any.

Calls on the authorities to act faster and slower

As always, the slow pace of change in government and financial institutions has led to frustration. Pierre Person, a French MP who spent his last day in office at the conference, used the slowness towards the launch of the digital euro as an example.

“The ECB says that in three years there will be a digital euro, but we can’t wait that long,” he said. “We need to open up the regulations to have a private stablecoin in Europe.”

He added that if European companies were unable to build a euro-backed stablecoin due to uncertain regulations, he feared that someone outside the eurozone would end up controlling the form. dominant in the digital euro. Last week, the American company Circle announced the launch of a euro-backed digital asset called Euro Coin.

But at the same time as there was a desire for faster clarity on regulations, there was also the prevailing feeling that it was too early for governments to make these big decisions.

“We need to open the regulation to have a private stablecoin in Europe.”

—stone person

“The reality is that we over-regulate Web3 because we’re scared,” De Beukelaer said. Decrypt. “We try to regulate before we know the use cases.”

He added that while the bureaucracy is frustrating, there is a small upside to a slow system: “Things could still change.”

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