Regulations will make cryptocurrencies mainstream

Regulations will make cryptocurrencies mainstream
Regulations will make cryptocurrencies mainstream

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Robert Kopich is the Secretary General of Blockchain For Europe, the European lobbying association of major blockchain and crypto companies around the world. It is based in Brussels and represents global blockchain companies at the European Union (EU) level. It does three things: it educates policymakers about what the industry does and what it needs to grow; lobby for legislative changes and coordinate the pros and cons of a proposal; conducts webinars and conferences. Among the most famous members of the association are Binance, Crypto.com, Ripple, Web3 Foundation (Polkadot), Ava Labs (Avalanche), Aave and others. Before joining Blockchain For Europe, Kopich worked at Raiffeisen Bank and APCO Worldwide. “Capital” spoke with Kopich during the BlackSeaChain event organized by Quanterall and held on September 1 and 2 in Golden Sands.

What is the most important feature of Blockchain For Europe?

– When there is a legislative proposal, we analyze the texts and propose amendments and improvements. For example, when a cap is put on the issuance of stablecoins, after which you have to stop. This is actually the case with dollar-based stablecoins, where if you issue more than $200 million per month, which is the cap, you have to stop using the currency. Obviously for the industry this is impossible because Circle, Tether and Binance use their currencies to provide liquidity to the market. In this case, we are talking to the politicians.

In which area do you think there is the most interest in the development of blockchain legislation, regulations and initiatives?

– The European Union is interested in three things: consumer and investor protection, market equality and financial stability. The EU is interested in everything that these three things cover or touch. Consumer protection is the easiest because if I stop you from losing your money, every politician will congratulate me. That’s their job. However, when it comes to market equity and financial stability, it is much more difficult. If stablecoins, for example, produce market volatility, this is a problem for medium- and long-term financial stability.

Let me give you an example: stablecoins are a topic of great importance for financial stability and consumer protection, because not every stablecoin is fully secured. So regulators look at individual coins and say which is fully collateralized and which isn’t – like TerraUSD just collapsed because it wasn’t collateralized. They don’t want such cases and want koins to be licensed.

Is there currently an EU licensing regime for stablecoins?

– MiCAR (Markets and crypto assets regulation; European regulation of crypto assets – note ed.) has such a regime in itself. The regulation will enter into force in the second half of 2024. Inside there is a segment for stablecoins, which enters a little earlier, at the end of 2023. MiCAR is a large-scale regulation that includes all kinds of services on exchanges and trading platforms, stablecoins , NFTs when they have financial significance, as well as decentralized financial platforms that are not fully decentralized but have some kind of central unit.

Where do you think companies stand right now: do they want the Wild West to last as long as possible, or do they want regulation to tell them what they can and can’t do?

– Certainly the second. To get to the next level of development, you need traditional investors. Because of MiCAR, companies like Blackrock are starting to invest heavily in the industry. It is also important for consumers who will now know which risk is covered and which is not. Regulation is the foundation that will make crypto mainstream. Because if you just had the Wild West, the average user wouldn’t get into crypto. He will go to the bank consultant who will tell him not to invest in crypto because there is no protection. Once the banks say that there is protection and even they themselves can offer you to invest through them in crypto, it will be a huge step forward. People still listen to banks for their investments. And if banks cannot invest in an asset themselves, then it is not safe and not advisable.

How do politicians in Europe see crypto? As something innovative, but scary and difficult to regulate, or as something more traditional, now that it’s been 13 years since bitcoin was created?

– The first one. They still don’t get it – at least not entirely, let’s say. Crypto and blockchain technologies go against many things they are used to, like banking. Crypto assets are something that is outside of their reality. There are many companies that practically provide banking services without having a banking license. Accordingly, traditional banks are complaining. Staking, for example, can be considered an evolution of the deposit. And the deposit, by definition, can only be in a bank. The debate today is what to do with exchanges that allow deposits. The answer for the EU is that they must have a banking licence. With this comes new requirements, new criteria and all this is very complicated and costs a lot of money.

Accordingly, the question arises for the companies “how important is Europe for us”, because banking licenses are expensive, slow and difficult. You decide whether to remove your products or keep them and become a bank. Many companies issuing stablecoins are now trying to get a banking license because they offer banking services. Like Circle, the company that issues the USDC stablecoin. They are practically a bank. Yes, a different type of bank compared to Raiffeisen, but in the end they are a new kind of bank. Little by little we see all this happening and at some point there will be a modern kind of new banks that were originally crypto exchanges. I am convinced that at some point Binance for example will have a banking license and they will take a very large part of the consumer business of the traditional banks because their infrastructure is better, their prices are lower, their services are better and the interest rates their are higher for deposits.

In Europe, there are currently active companies that I personally call “cryptobanks” – such as BlockFi, Nexo, Cake, etc. They offer both loans and deposits, but are not yet licensed as banks. Will the time come when this becomes necessary?

– The moment MiCAR comes into effect, they will have to get a banking license. It is mandatory, otherwise they cannot work. So they have about 18 months to get a banking license, if not they can’t work in Europe. They won’t even be able to advertise here. They will have to go somewhere else. I assume that any such platform is already thinking about obtaining a license.

What about decentralized platforms, like Aave for example, where there is no company to be licensed?

– The question is whether you are truly decentralized. The moment you can name a company that is responsible for running a platform – and that makes money from it – then they come into MiCAR and have to follow the rules. If they’re really just a smart contract platform with no central entity, then that’s the situation. We’ve been waiting five years for another DeFi legislation, and when the time comes, we’ll see what it looks like.

What do you expect it to look like?

– This is a good question, but it depends a lot on the political situation in the future. If MiCAR turns out to be a positive thing that helps innovation, then we’ll probably have more DeFi-friendly regulation. It also depends on who will be at the head of the EU at the time. Will it still be people who are now over 40 years old and are used to classic banking, with the more conservative approach to financial services. These people have an interest in keeping things the same simply because that’s how they grew up, that’s how they understand the world, and they don’t want to change it too much.

The article is in bulgaria

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