Welcome to episode of the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution. I'm Brian Crane. And I'm today speaking with floor and gloves for Orion is, you know, one of the most kind of knowledgeable people at this intersection of Law and crypto. He's been a guest on this podcast before actually six years ago.
I checked before, we did an episode about smart contracts, the doll and he's been, you know, deeply involved in the Crypt of space for a long time. I was organizing Bitcoin meetups back in, like, 2014 13 and he would show up there at the very beginning, and he's also the proud owner of very cool domain
name. That's kind of, you know, indicates how early he was arresting thing, Block C. Not lawyer, and so we're going to Think about regulation and crypto today like lots is going on in regulation. If you know some focus on Europe where foreign is based and where flooring is most expert but you know we're going to try to cover
is also in the global context. So before we get into that we Face some words from our sponsors, first of all course one, so securing blockchain and learning, words doesn't need to be energy intensive or complicated and by staking your
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So you can use Periscope all across the blockchain world and you can also use it directly from We can let your life if using a ledger, and they also became a doll recently. So if you have to PSP token, you can participate there. So. Yeah to learn more and check it out. Go to Paris off the io / epicenter. And with that welcome Florian, it's great to have you back on. I'm super happy to be back.
Thank you for the invitation. And yeah, I think it's about time to talk about legal again on this podcast. Yeah. Yeah, I mean there's been a few legal episodes. I think between the last time we had you on, you know, is when I was looking at, okay, it was like, just over six years ago. Long time. I think we were actually speaking about the doll and, you
know, just lock it down. I think in there in the notes, it was called, you know, I guess it was before it got it, fell apart and speaking kind of a bad. You know, what? A smart contracts in the legal contract context. I think, you know, one of the topics was, could you sue? Adult. And you know, how does that fit kind of into now?
Of course, it was questions. I think six years later or not resolved, even though decrypt the space has progressed tremendously, but I think legal and Regulatory uncertainty in questions. Still hugely important and a huge topic. Indeed and it's interesting because the space has grown tremendously since then and famously the Dow failed. But now six years later the
house. I think one of the hottest most interesting, most vibrantly developing aspects of the crypto community at the moment and so it's really kind of cool to see this full circle. I also saw I think the founder of argon say, yeah. We were pre product Market fit essential. For like four years, but now you know in 2022, the world is catching up with this vision and I think that a lot of the questions we touched upon six years ago. I indeed not answered.
And actually now I think really being considered by much more serious people than me. So Regulators actually and yeah, also lawyers in big law firms, you know. Now having clients with, you know, maybe corporations or startups alike. I'd say, hey, I want to doubt, you know, make it happen. And so yeah, it's I think it really a good time, really? To come together here again. And look at those developments and try to understand them. I went back to this original episode.
We did six years agos and I have to say that I was so clueless looking back about what this all really meant in the sense. We all were though. And so yeah, I just think it's good to talk but in law, nothing seems ever final. But then in crypto also, everything is changing so fast that that's really hard to keep up. Cool. That's interesting. I'm curious like when you went back to that old episode. What were the biggest things that I felt like? Oh, yeah. I was so wrong about this.
I think my main problem back then is that internally? I liked a really clearly defined use case for dolls. I obviously we saw the doubt, it was kind of this Venture investment thing somehow. But I was not clear, how this style would not invest into classical Ventures, which in my view, at the time, were not really doubts, but, like,
startups, as I knew them. And so, what I definitely did not see, is that etherium, quite naturally now, In fact, but at the time, I didn't see how he soon would give rise to, you know, this layer of decentralized exchanges and lending protocols and how those protocols by virtue of being, decentralized would need some interesting form of some functioning form of governance that now ends up, being those doubts. And, yeah, looking back. It's super obvious in 2015 or 16.
When we did this episode. I didn't really get it. I just have to marry honestly admit. Right. That's a good point. Yeah. Yeah. I mean, I also, you know, member and I was involved in a caring. Also kind of at this is very early on and the thing that also is like in retrospect seems so obvious and that I miss with just the ability to basically, you know, fund the development of applications smart contract applications using tokens. Like that wasn't like, even though, of course you had a
theorem itself, fun. Itself through, selling it open, but that you'd have like the applications on top, leverage, the same mechanism. Now, it seems totally normal, but it seems so obvious looking back and I think, yeah, just like we have assumptions today. They will seem ridiculous and six years from now, but that is what I love about crypto. It constantly challenges your assumptions and you can never rest on your laurels or your you know, what you think is true.
I currently have this kind of grand Theory now. Now because of all those kind of things, I didn't see that that says we're in kind of the third phase of crypto Evolution, where the first phase was the development of the settlement layer itself. So, first Bitcoin, then you theorems of the layer once now actually does layer choose in the mix, which really scale the layer once, and then what happened around, I see the kenosis ico's, kind of the baby,
the kickoff for. It was the emergence of this token layer. So I ciose new crypto acid. That we're not building their own blockchain.
They, which is Building Services on top of blockchain such as a theorem and I was a part of this, you know, as much as you and anybody who's been the space, but I always found a bit like an more like an observer because I don't see myself as you know, this big Finance genius and so I was like, wow, okay, it's super interesting what you're doing there, but understand that, you know, 10% and now in this third face that I think we're entering it's IE the the financial Plumbing is
there it works. Its great Unity swap, you know, you can use it. It's just there. It's about building institutions that use crypto for something that is not really about crypto in the first place. So this is more about, you know, Society related things that we either have or should have. But if we have had them in the past somehow, the institution that was running them. Maybe the government kind of let us down. And one, my favorite example here is maybe a CO2 price which
to this day. I just don't know. What is the price of a ton of CO2. And I don't think it's actually globally. Harmonized. It's just kind of still subject to Industry politics. Where as a global people. I mean, it's one planet if it goes down, it goes down. Why is there not a simple Global, you know, CO2 token that I can be trading as well as a retail investor in a sense, you know, and it's because government simply refused to
give us that price. They were like, no, no, no, so if we do this, everybody's going to be unemployed because, you know, steel is going to be so expensive. Well, look at 2022. Steel is very expensive now, because of, you know, so reality caught up with us, anyways, so well, good luck fixing that now now it's just, it's painful now, it wouldn't have had to be painful.
So yeah, I think this is phase three now crypto doing actually useful things for all those use cases that we've always been asked for, you know, in like twenty seventeen. In, when we started to talk to politicians and Germany's Redick, give us awesome, use cases. Who this promising technology that you're building? Yeah, ico's, you know, do you know them? Yeah, that kind of looks like a casino. Yeah, that's kind of true. Also, it was a huge speculative
bubble. However, what is, you know, even I haven't seen us and then secretly people who also benefited from this idea wave just sat down and worked for years building, amazing infrastructure, that, you know, No became the defy summer, the nft summer, the whatever summer, Dow summer, probably this year. This all the stuff financed by this is for 2017, Ico public, you know, so it wasn't all just for nothing and built on all of this.
We are now entering into a new face of crypto that is going to show the world. I think, how life-changing or like, yeah, really transformative. It can be that's, that's my auto, get them. Oh, that's I really like this mantel. Work. I think it's a nice way of thinking about it. It's funny. You also that you mentioned is carbon token, right? Because actually I think two or three episodes ago, we had the podcast with region Network, which is creating exactly that.
Right. So that's I love them. They are awesome. I saw the match selling point in Amsterdam. I was like, wow, this is honestly exactly what we need this framework for creating those assets on. Yeah, regenerative. Things. Yeah, so that's that that organs called NCT U, having anti coming. I think they're just about to launch that. Now, maybe let's talk a little bit about Regulation. And the thing, actually, I wanted to ask maybe to start off
with. So, you know, there's this organization bundes block that you were. I think one of the one of the initiators and even your president for for many years, which it was kind of the German crypto, you know, Lobby Association. I'm curious like, what was sort of how was that? How did it go there? What were the main did you guys? Yeah, like, what did you learn? What worked? What kind of impact were you guys able to have?
That is a great question to start off because really bundestag was my entry point into regulation of crypto. And for many people, actually, what we learned is that the crypto industry, this, you know, small fledgling industry. That became really significant over the past few years.
First of all, needs a voice with politics that is kind of harmonized and reflects, you know, the values and and so on of the stakeholders in this industry and putting this block, you know, fulfill this function quite well. It started off with. I think a really really nice kind of, you know, kind of a bang. I would say it was at the height of the yeah, craziness around tokens. Everybody was interested in what we had to say and we created with the help of 3040 people
kind of, as I don't know. 60-page position paper on like everything that crypto and regulation kind of has to say to one another. And I think to this day, it stays an important resource for people to, you know, understand
foundational issues. What we also learned I think, in terms of building an organization like this is that in an industry where everybody is, you know, a little bit kind of more like as a first attitude, all Regulators crate, you know, they probably Don't understand what we're doing. And actually, we're building a world where Regulators themselves play a little bit of a different role than they do
today for quite frankly. You know, when you think about these centralized systems so that it really took some effort actually to build an understanding for one another. And I think this is now repeating in Europe, where I'm now engaged in building an organization where we see similar patterns with the super engage community and a regulator
that does not know. How you know, passionate this community is about this thing that I reckon is about to touch and that we've seen play out on Twitter in the context of this TFR. What on hosted wanted man that we will talk about later, how passionate such a community can be. And I think back in 2017. It was very similar. When we start putting this block what we, I think not fail that but like weren't sufficiently.
I think capturing was all those other aspects of building an Ization, which is, you know, if you look at other industries that came before us beat the gaming industry, or, you know, they all ended up at least in Germany, creating some, you know, big tanker of an organization that is kind of below institutionalizing all of those industry, voices, and relationships to politics and blah blah.
And in that sense, bundestag always stator, you know, really Nimble kind of smallish Grassroots organization as opposed to becoming a properly, you know, top-down manage dog. A big budget. And so, in order to make room for that, actually, me and the other board members did actually choose to not go for it, you know, third term, but after two terms now actually said, hey, is there a new team that wants to take, you know, open a new chapter and so that team stepped
up? We found people in members and Community to now, yeah, welcome bonus block, any kind of a new chapter. Whereas what I have actually She started in 2020 is to look more and more at the European level. Since since around September 20 20 the EU has officially, you know, made it clear that they are working on regulating crypto Assets in a harmonized way across all European jurisdictions. And so it became clear that it is needs a lot of attention and starting.
Yeah, end of 2020 right around when you know, yeah, covid-19 Tia thing is sinking in. Before I have to cope with, it was, I guess like, yeah, during the first or second wave, I guess of covid. We're just really started to get
a lot of my attention. And now is actually that I stopped being on the board of the bundestag is kind of my main outlet for lobbying or generally like, you know, my efforts in trying to talk to regulators and and make them understand the good side of crypto, which is I've been doing this since 2014 is that Actually, very self-motivated.
I really back. Then I wrote a letter to the president of the German Center for cybersecurity essentially saying like yeah, they're all those problems with electronic, signatures durability and and blockchain. You should look at this. I don't know why I did this but this kind of started it off. And so I'm doing this in in such a self-motivated fashion, but have found with bundes block and that if you want to, you know, really have an impact, you need
an organization. And so when this broke was Amazing as a start in Germany and also for me personally. And now I'm taking a lot of the learnings I had in Germany and kind of try to build something in Europe that that makes, you know, that improves on the things that weren't great and kind of picks up and continues the things that were really great. And witness block, which to me, mostly is about community and kind of, you know, really using them as a resource. I talk a lot.
So I will one last sentence, but What we've always done in bundestag has asked our members. Hey, you know, your ingenious people building bleeding edge, technology. And there are Regulators who think all of the problems that are in this space needs to be addressed with the laws, but maybe, you know, there are Technologies, we can leverage to actually solve some of those problems and now that, you know, Defy is on the table with regulators and Brussels.
It's kind of the same question to me again to the community. Hey, you know, Is a Galaxy brains out there? We need you now to come up with crazy, zero, knowledge proof sand and other things that allow us to, you know, give Regulators what they want, which is, you know, mostly reasonable demands about certain, you know, assurances around fraud and money laundering and all those things.
But without violating, the both the privacy, and the fundamental way how crypto Works in Europe, which is what this and hosted wanted been really, you know, touched upon so. Yeah, I think we're back there and I enjoy this because it's a very creative movement. Also, I think the industry is now stepping up to this challenge. Once again, yeah, so I guess our organization, right? You mentioned that you starting on the European level. Is this European crypto initiative?
Maybe before we get into sort of the, the actual meat of our, you know, what are the core issues that, you know, I do want to spend Quite a bit of time on often, I guess one looks, for example, to coin center-right. As an example of like, okay, an organization that at least from the outside seems to have done, you know, like really good job and like, you know, advocating
in a good way in the u.s. If you see it kind of evolved in a similar way, we're like, I know you have like a good research staff or like how do you see this organization evolve? Yeah, thank you for that question. So the European crypto initiative is I think quite interesting in many dimensions.
One of them is in fact that we invest a lot into a research staff into senior policy experts that, you know, have experienced on the EU level, which is just so particular, but also people who, you know, have either written laws before themselves because they work for government or they have worked in Academia analyzing laws giving No, really detailed commentary on, you know, half sentences of individual paragraphs. You do this really hard core work that lawyers do in those
masochistic ways. So those people who love policy, you know, and crypto and who have, I have a passion for those, you know, really bleeding edge challenges, you know, like I have another who co-founded this organization with me, those of you who are hiring at the moment and it's great fun because I think also for them. It's an amazing opportunity to, you know, work on something that actually matters, which is not
often the case in law. You can easily be trapped, you know, being a transaction lawyer on big transactions that are very complicated and require, you know, you having a massive IQ, maybe, but I mean, you're just making rich people richer
in a sense, right? And then maybe critics that say working on crypto lobbying is similar, but I would venture to say that it's quite the opposite, I think crypto is the biggest June horse for redistributing wealth in this world that we've seen in a long time. And that's that's what motivates me to work in it, you know, so do you see I getting back to that is research heavy in that sense. But what we started out as in 2020 is really establishing relationships Regulators.
So it's hard to understand what that really entails but Regulators are, you know, there's not one type in the you, there is the commission, which is, you know, really brainy smart, kind of nerdy people who are very much all about, you know, being very accurate and information base.
Then there's the council which represents kind of the national European interest of the member states because they had Direct representatives of national governments and then have the European Parliament, which is this, you know, kind of a democratically elected organ in the EU and all of them are involved in all those different pieces of legislation. All of them are Regulators in the sense, but they are totally different. They have different incentives.
They have different education and background. They have different people. They are accountable to. And so it took us, I would say, yeah, a year and a half, two years to, you know, meet everybody talk to them. It's hundreds of people, right? So we're talking about a massive engagement, you need to have and you need to pay people, you need to pay into and this is actually what I found rather.
Concerning for democracy, in a sense, in Europe, is to even get to all those people you need to pay intermediaries that are so well connected that can even give you access to everybody in Brussels. It's not like in Germany where we could, you know, just be like hey, you know, where the term trim function Association, send us an email and then regulate us with, you know, send you emails or call call you and invite you in Brussels. You you it works differently.
And in this, in this, to, some extend, again, money question. And that is, I think Not not how politics should work. But I also understand of course that the EU is so big that there is no better solution at the moment. It's just. Yeah, also a thing that technology may actually help with in the future. Okay. Okay, cool. Well, let's let's let's get into it. Right. I mean, I probably a bunch of people listening have maybe seen some of those, you know, headlines some of those conversations.
So I think I particularly remember to Dad, you know, I think got quite a lot of attention. One was, you know, briefly. It seemed like sort of on the table for the you to basically ban Bitcoin or at least become. Mining, I'm not exactly sure how I think it was Bitcoin fully, right? And then another thing that came
up was this thing recently? Where again, I'm actually not sure where that is right now, but it sounded like, you know, pretty Extreme Measures to kind of band or at least disadvantage what they called like on hosted wallet word.
I think people in the crypto space would call all I can non-custodial wallet or self, custodial world where you are control your own Keys, which is in a way, the whole point of it, but Darkness have to start there, but I was just like, ask, like what are the most important? You know, regulatory questions that like, at the moment, or on the table? Yeah, so it's indeed the proof of work been that you mentioned which is at the moment of the table and is not likely to be reintroduced.
Now in this very context in which it was originally raced. So in that sense, it's kind of you know, the warning is is off, it is yeah. Yeah, we were able to convince and the people in the parliament were able to be convinced that It's not a good idea and then the other, yeah, really controversial proposal. That came from Brussels recently, was the so-called TFR or travel of funds regulation. It contained. After the parliament looked at it and made Amendment proposal to it.
The transfer funds regulation contained, what effectively could be, you know, said to be a ban of an host of wallets. And Let's maybe start with this concept of an elusive wallets, which indeed I would agree is a deliberate framing. I don't know who came up with it, but it's non-custodial or self custodial or just a wallet since every, you know, hosted wallet. If you want to call it, that it's also a non-custodial wanted for the person who hosts it for you. So I don't even understand.
The concept of always did want it to be. It's just an account that I have with a bank. I mean, you wouldn't My bank account hosted, wanted with my bank. It's so I think it's a framing device to make it seem like it's unnatural and that the opposite of it is the natural one. And that is, of course not the case. I think that wanted source of custodial, walnuts are how crypto is supposed to work.
But I do agree that, you know, we're still lacking great technology to keep those private Keys secure and I do hope that, you know, lat Large-scale social recovery systems actually will save us from having to keep Hardware devices somewhere. I don't really believe in. You know, everybody having, I mean, I love letter and treasures and I have them, but, you know, I am not sure. Every human will end up having
them. And so, social recovery is, hopefully something will see and then I hope that Europe is still around and has not banned, you know that technology because I think it will become the mainstream way awful Krypto. The top tips. I hope at least and the other element is, you know, why would you even go into this territory of making rules around those wallets and the motivation
behind it originally was? Well, the financial action task force in 2019, made some guidances around money, laundering and terrorism, financing countries, and Europe itself, as a, you know, a nation or a supranational. Mm are free to implement those guidances and most countries do it. It's like a broad consensus. And so this T FR is originally from this 2019 recommendation.
And for reasons that I think are also related to this framing Tropic of the unknown said, wallet Europe has adopted a very strict kind of interpretation of this original guidelines and ended up in the parliament version at least with this. Yeah trick Kind of rules around how on hosted wallets need to be kyc. Identified how the source of funds need to be identified despite there being virtually. No standard around doing how to do this right now.
And so it would leave crypto as it service providers. Be almost unable to comply and with kind of simple incentive to just tell people. Hey, those wallets. You just simply cannot use them with us, at least, for the moment. Maybe never again. All those other walnuts. Basically, the ones you have with us where you don't even have the private key, you know,
that's easy that's accessible. And so just through that affect it would lead to a strong disincentive for people to use it and it would kind of counteract, you know years of efforts of people telling telling people to withdraw funds from exchanges on to their what it's you know, I remember how this was four years or still is, you know, a general recommendation and there's a recommendation you could not give any more in Europe. That's really frankly ridiculous. So that is T of our In a
nutshell, the good news. I think that everybody listening to this is, this may be happy to hear. Is that so far, the signals we receive, is that now after this initial shock, the conversations and the trial Oaks where this is happening now kind of negotiation between commission Council and Parliament. It's they there's a growing kind of understanding why it's, you know, just not wise to do.
Without corresponding, you know, industry practices around how this could even work in privacy-preserving Manner. And so I think we may actually not see this wanted bandwidth. Typically what we still are fighting for though is simple renaming of of this and hosted quality into. I think more, you know, maybe personal wallets, maybe just wallets, maybe self custodial, or non-custodial wants to. That should be terminology that is neutral right now.
We don't believe it is. Is regardless of whether now there is this effective band contained in this TFR regulation or not, maybe the last but maybe even most important regulation to mention that's on the table is the markets in crypto as its regulation. We have not really touched on it
yet, but it is at the moment. Also in the kind of finishing stages in the so-called trial Oaks where all the three institutions negotiate, the final version of this text and again, Parliament. And I mean, that's probably its function to some extent has brought in a lot of new Concepts that were not originally meant to be in this regulation.
And when I looking with mica at a legislation that may potentially make decentralized Finance, completely unviable in Europe. And so this is the stuff that currently Keeps Us awake at night in you see I knew European
crypto initiative since we are. Yeah, effectively drafting decision, papers, statements and recommendations, you know, after every meeting and before, every meeting of the people negotiating, we let them know that very particular things that you shouldn't be aware of when they negotiate. And so, you know, guiding them through this process right now is what we're doing in the mica, in the TFR in, in other aspects.
There is an AML regulation. Now that sets up a new, a Mel, Oversight and of agency in Europe. So yeah, these are maybe the most important things right now. And in the future, we see already more things coming around, texts around data economy. All kinds of things actually won one thing, you know that comes up as a big question for me, right? I can mean for example, you mentioned this me coughing right? Any mention like, okay, maybe that would mean some kind of band, right?
Of let's say defy in Europe, but then of course like the interesting question is like what does that you mean? Like, what is D Phi in Europe? Right? Because then like let's say you have this units of thing is there and it's on Ethiopia or you know, like a lot of these things. So they're so like what would that imply with that imply? Like I don't know. Like for example, you couldn't have, you know, often maybe there's some legal entity. That is all. Mutations have maybe a foundation.
Maybe that couldn't be in Europe. But well, actually, I don't think they are not mostly and on your anyway, or like how, you know, how does that sort of? Interface with, you know, the rest of the world, you can people say simply kind of, you know, circumvent that by, you know, domicile in outside of Europe. Yeah, that's a good question. And the answer is not really, the solution is not to leave Europe. It's kind of like the GDP are this General data protection
regulation. That everybody's familiar with even if they don't live in Europe, simply because Europe says, hey if you interface with European clients, you need to adhere to those rules and it's going to be very similar with with mica people. In the center, know it from method two, which is kind of the equivalent regulation. For traditional Securities. Where also when you address European clue, you know be regulated. You need to be licensed and Miko stipulates.
All those licenses for crypto acid service providers, which of course is a new term. And then in the understanding, it's almost everybody, you know, who touches crypto is a crypto
as a service provider. And so, you need some sort of license or regular contact with an agency, possibly a new one, or not a new one, but Kind of a centralized one in Europe asthma to get the permission to do it. And the question now with Defy, is that if it's a properly decentralised energy, it will have a hard time doing that even because it's not a legal entity doesn't have a, you know, CEO. It doesn't have anyone who can speak on behalf of this entity officially.
It cannot be regulated. Can it doesn't have a domicile. It does not have a postal address. So all those things. This is what daos in their pure form. Don't have. Of course. Some of them have legal entities that accompany them. So it's very hard sometimes impossible for decentralized projects to comply with the stipulations in this regulation. And so, what would it ban mean? It could mean a number of things.
So, just straight out violating this Mica thing could result in, for example, your domain being banned like European clients, European eyepiece. Cannot reach. The website of let's say you need swap. For example, that's a random example, it would be blocked on the, you know, on the tail coat layer just like, you know, I don't know child pornography or other kind of really bad websites or band. The same would be for, you know,
D5 websites. Of course, you could still use those Services protocols through a terminal, but it would just make it, you know, impossible for normal people to use. I would say so. This is what effective ban would look like a more indirect band, you know, would be in the sense that this asthma there's European Securities and markets. Regulator could potentially start enforcement procedures like the SEC did it with uni Swap all that. I mean, it's not an enforcement procedure with unit swab.
It's like an open exploration. I think that the SEC does so as my could do the same with projects either inside of Europe, or outside of Europe, but targeting or in their mind targeting European customers, and then potentially arrived at you, finding you and saying, hey, you know, If you continue doing this you need a license. And for what you did in the past. There is a fine that's possible. That would also be effectively ban.
But I think that may be the most important thing would be the chilling effect. It has right.
If you're a permits to such a pass, it would just prevent so many, you know, 18 year old or 16 year old kids who have heard of crypto who are nerdy and want to try the stuff out to just never go into it because they think they end up in jail, you know, or they think, I don't know it just, it creates chilling effects that When people from even approaching, you know, that that that line that has been drawn Beyond which you're a criminal now in Europe. It's not the right.
I think attitude to approach the topic.
But yeah. Yeah, I'm still I'm still kind of like, you know, I'm still sort of struggling to see, you know, this, this kind of like play out because like, for example, I mean, if you look at the ACC and then the sort of enforcement they have done, you know, I mean one thing that's also like very clear is that their ability to then go after projects is like very very limited, you know, because there are limited resources, Limited. For so they can I don't know
make some examples but by and large, it's just way too much going on. It's moving way too quickly people creating new things. So I think this whole idea you can kind of you know control it that way, put it in the Box.
It doesn't seem that plausible and I think with Europe, That's probably going to be. I mean, that might be even more extreme know, because probably is going to take years for even this kind of regulator to be there for food for this, you know, to go from the European regulation today in actually. Okay. Now we are going to try to enforce this go after projects. I know some kind of decentralized applications that you know, running out some blockchains that, you know, they targeting Europe.
News has I mean, probably not. I mean, they're just there for anyone to use, right? It's not like particularly targeting certain jurisdiction. But of course, there will probably would be many European users. Right? Just by the fact, there's a lot of people in Europe, Australia to see how that actually plays out. Yeah, I think the danger is of Europe, becoming a digital Backwater, you know, a staying,
staying one. Maybe in the sense that the US China, maybe not that much, but maybe other regions, you know, around it. India looks more promising. I just recently been in South America and was very, very Blown Away by the crypto doctor in Brazil. So, there are other really big regions, not just small countries. You know who played this game?
Oh, It's with Regulators, but big regions having a totally different attitude to crypto and I think them embracing this and Europe, you know, staying not staying in this even becoming more hostile than now by really, yeah. Implementing the laws as they stand now and forcing them to some extent. Even of course if I agree with you that it can always ever be them, you know, doing examples almost, you know, communicating publicly how Um, one receives a
fine, maybe a very high fine. They cannot go off to everyone so they try to send signals like this, you know, so if all of that happens and the other big regions have a different story than I just think Europe, mrs. Out and will in the end Implement just like today already, you know, all of us in Europe are using, you know, US dollar denominated stable coins. It will be all other kinds of Innovations will be tied to.
And maybe a US dollar or two companies or treasuries, you know, outside of Europe. So I think this is the real danger of Europe falling behind. It's not that much that defy would, you know, stop existing? I accidentally Europe. Even has that power. Another perspectives on this to me, is that, you know, those Regulators in a sense have been around longer than us, and they've seen other, you know, supposed revolutions before and they've wrecked.
I hated them and it all kind of worked out and I think they looking at it a little bit like this, you know, maybe we are under estimating or overestimating the effect of Regulation. Who knows? But I think rather what they are under estimating is just you know, the nature of crypto and how disruptive in a sense it is and disruptive is its kind of what does it even mean, right. It really means that crypto gives us an opportunity and in particular regulators and lawmakers.
Restructure some basic things in this Society for its benefit, and I just don't know whether they will be able to see this in time in Europe, but that's, you know, in so many words, what we are really trying to tell them and you need to really benefit from crypto. You need to attack it at a more fundamental layer than just looking at, okay, you know, same risk, same rules. That's what we always hear from Brussels. And you know, of course it it makes sense something on some level.
You cannot have the financial world, the traditional Financial world, you know, follow all those rules. And then in crypto, you can do whatever, you know, this is obviously not what it is about, but I think it's about acknowledging that decentralized Financial applications. They just, you know, take care of the financial needs of people who have been vastly, neglected, in the past, by the traditional Financial system. It's just, it's accessible in a
totally different way. You know, you need a mobile. Phone pretty much and that's it. You can start using crypto assets. And there are a lot of people on this planet for which this is everything they can really. Actually, you know master in terms of access material. They don't have passports. They don't have bank accounts or credit history. So acknowledging this fundamentally would allow Europe to really I think take advantage of this at the moment. Yeah.
They may be creating this digital Backwater by. Yeah. Creating at least the illusion of of a ban, even if it is not even if you cannot properly enforce it, I it may agree with you there. Yeah. Actually, you mentioned you mentioned before like, you know, sort of other topics coming up and you mentioned topic of tax and I've been thinking, you know, a fair bit about this this topic of tax because to me, it feels like actually quite a different Beast, you know, in
one particular way, right? So when you talk about, okay, regulating the five, right, you talking about, you know, this, you know, this, this all these regulations are targeting, you know, the protocols themselves, right?
Even though the cat may be paradoxical but you know, the protocols or crypto company, so things like that, but now we've tax well, now you have people using crypto, you know, and they're you know buying and selling crypto and just aching and maybe the buying any fees and then doing this and that and then the whole bunch of transactions result. And then, you know, I was reading an article recently where I think there was some in this was fate in the u.s.
Case, right? Some public accountant, you know saying like what a nightmare is coming to us because he had been doing this accounting for some kind of 20 year old friend of his who's like in college, you know, and it was always like took like 15 minutes. Now, the guy's been doing some crypto trading and he sends in this spreadsheet and he was like, what on Earth am I gonna do this?
So, I think you have this kind of weird situation when it comes to tax, that is just going to be like, pretty much impossible for people to actually sort of file, their taxes correctly. And of course, it's often, it's not even clear what on what the taxation should be of those things, but like that. So that's things like a weird feeling, right? Because then you all of a sudden have kind of million Has tens of millions of people who are all kind of like adults with the
government. So I'm curious like what are your thoughts on on Taxation and how governments can kind of will deal with this? Yeah, it's it's such an important question also, and we see great comparisons in Europe
itself. For example, Germany, which has you know, this everybody knows it somehow that in Germany after holding as a private person, those crypto assets for year, the gains you make they are tax-free and those kinds of rules, but then, you know also in Germany, every transaction that you do even crypto truecrypt, okay? Be potentially, you know, a taxable event and that creates this really awful situation that you just described where, you know, a 16 year old kid. That is just doing some
innocent. And if the trading maybe, I don't know what those kids do. You know, they end up with massive lists of transactions, the French have, I think an amazing solution for it, which is just they say, well, you know, we don't care about crypto to crypto transactions. We look at the moment you cash in all your cash out.
And this is when we try to assess your tax burden, just based on that, you know, there's a massive simplification doesn't require much technology, technological sophistication for countries like Germany, and I think the u.s. Is similar where every, you know, transaction can be taxable in principle to make this work for a government and you know, to not criminalize your own people and really make them, you know, criminals without them wanting to you need to actually
approach I think taxation. From a totally different perspective, which is a software perspective, a data interchange and standards perspective. You need to say that as a government. Hey, I'm interested, you know, and getting a taste on all those millions of transactions that
you guys are doing. However, I'm also willing to put in the effort to Define how we're doing this and that's effectively means, you know, that exchanges maybe even defy protocols or whatever or services around those protocols, you know, they Can Implement some simple interfaces, some simple, kind of data standards that make reporting basically Autumn automatable. And then we could arrive at a point where, you know, the government sends you, your text
report. I think, Denmark and Sweden and some other countries have this where the government just has an overview of what you did and then they just calculate your tax burden for you. You know, of course, this is this, maybe not what people want from a privacy perspective. I'm not saying this is the favored solution, but it's like if you want to self, Sort of corporate taxation, need to make it a software problem. And then solve it within
software. It's problematic, when you start with the legal obligations, like everybody needs to declare all the relevant things and and pay the taxes on this according to those rules, but then the rules and everything else is so unclear that even the best software in the world will produce a tax return, as that is wrong, you know, and this is the case today, and I was involved in some consultation with the German. Mint where I made this position,
very clear. And we're now at least at a point where some of those things they wanted to do around staking and so on are not coming but addressing this fundamental issue is really what they have to do, which is looking at yeah. In looking at this as a software problem or doing the French solution, honestly, which I think is doing both, you know, look at it as software, but also say, hey, Krypto to Krypto. I don't know, you know, that's that's that's tax.
And people actually make real profits and not, you know, maybe temporary profits in some unstable cryptocurrency that could, you know, just evaporate any moment. This is another element. Of course, that doesn't make much sense. But yeah, it's maybe two aspects of the problem, right? But of course, that's a tricky one because then, okay, now you cash out the stable coins, and then, is that what about that? And then, of course, also, it's
the sort of makes sense. To the extent that people actually need to go back into the, you know, Fiat system to then use that money, right? But if that's not the case, then how is so I think another and this comes with the software statement stating the problem as a software problem is like you need to be able, you need to kind of accept certain inaccuracies, you know, and the question is, what yields the
best pragmatic result. You know, where do you have the least discrimination between But why do you have the most, you know, effective, you know, deployment of government resources against, you know, I don't know. It getting some amount of text from this and I had a very utilitarian view on this. I think which is just should
just go for something. That makes it so easy for crypto people that they don't have to, you know, spend sleepless nights over this and make it such that governments, you know, don't feel like they're missing out on, on whatever and I think the solution is Somewhere in more of a software Direction, then then anything else or a massive legal simplification, which I just don't see Germany doing and they said yeah, no way.
We're going ever going to implement this French solution in Germany, but that was the old government, you know, so we don't know if this could hopefully come still, I don't know. I mean, you know, another thing that actually seems like, you know, easy to comply with is like a wealth tax. You Swiss. I know it's pretty easy to look at.
Yeah, I mean but you know, insistent, of course it's written in, you know, if they still ambiguity or staking and you know, maybe that's still taxed differently and stuff like that. But at the very least, you know, to go at the end of the year and be like, okay what all the characters I have, what all the things that have. What are they worth? And then you get paid?
If you get taxed something based on that, like that's something that's, you know, that's like sustainable writing, people will be able to do this with a reasonable reasonably low effort. I agree. There are ways to solve it even legally. But if legally, your assumption is everything is taxable. Then my God, you know, you really do creating criminals because nobody can track and I actually I have friend of mine. You know. I left him his from from what
key. He tells me about it, you know, he's like, okay, you know, we're takes so much time and effort to implement just one decks or oneexchange. And, you know, it's like a hundred mutex is a Day created somewhere on the blockchain that people can use for trading and he needs like half a year for one of them to make sense in his. So what he is, this bookkeeping solution. So, I mean, it's doesn't make sense. It needs a different solution.
Run. One thing I also wanted to touch on is you know, we have I guess we have, you know, different countries. Take very Divergent, stances towards crypto and crypto regulation. You have out. The extreme cases of sort of all. We like Banning this thing, then you have, you know, something like your which is well, I guess a little bit open still, but tends to be on that, you know, not so friendly side and then You have other countries, right?
I mean, I think we've all seen the headlines Riders. El Salvador, you know, declaring Bitcoin legal tender. I think there was an accountant in Africa, Central African Republic, doing the same thing, just recently and then of course you have other countries that have, you know, try to create regulatory environments attract crypto. Now that that has existed for a while as well. You know, multi-tone point was one of those you have a bunch of different places. Now you have new ones like UAE.
I think which one of those are actually going to be the ones that like, you know, work in the long run, I guess is to be seen, but I'm curious like, how do you think of this this factor of, you know, different nation states competing on this regulatory playing field. It is very interesting because it's so many developments in parallel, which is you know, on the geopolitical stage. Now with also the Ukraine and Russia conflict which had a big impact already in Europe on
crypto regulation. And you know, either by really Expedia Ting, for example, the TFR which became his wallet ban regulation massively it would have actually happened in the few months. But that you speed hated it because they were like, oh my God, Russian oligarchs are using crypto to as vet sanctions which. Again, there is no data for this. It's actually not true. But they've been told there's repeatedly by by people who just want such a strict crypto regulation. And so, that's it.
So what do you think about those, those, you know, countries and and the competition I think geopolitics is, you know, kind of one of those big topics of the 21st century again, suddenly and nobody maybe really expected it, but it makes total sense. And what's happening in parallel on the digital realm is, you know, the emergence of crypto. Crypto acids. There are people again. Now, talking about digital nation states, you know, back in 2014. When you see room did, it's icy.
Remember, it was already then they were projects that we're creating digital nation states on blockchain. So it's all kind of repeating and repeating until it. She finds yeah, maybe product Market fit, so to speak like
dials and are now. And so I think we're seeing just within a branch of the, of the Multiverse, you know, of of all possible Futures. We could have been in where, I think a lot of crazy things are going to happen in the next 20 years, and as Salvador using making crypto legal tender, as the first country on Earth. And now other countries, following I think is, you know, looking back somewhat a natural move, that could have been expected. But of course, then You know, years ago.
Nobody knew what would come of Bitcoin. The fact that the EU is kind of slow in adoption of this and then now doing it in a way where it's, you know, so all encompassing and kind of too detailed and maybe too obsessed with consumer protection. It's totally expected that the u.s. Is really, you know, after some, let's say initial confusion around this kind of tuning in on this. And I think now more and more kind of somewhat legitimizing maybe in Nation from the private
sector, like u.s. Denominated US dollar. Denominated stable coins, you know, becoming more and more legitimate. There have been moves like this this year. And last year. What China is doing is the most opaque to me. I have to say, I know that in India, there is renewed interest in crypto assets. You mentioned some African countries. I know that in Australia, they have some the community there was able to somehow bring this.
The idea of a law for dolls. Through the highs, regulator somehow know, there is a law in effort of drafting a product. The first reel lawn down is not this kind of fake stuff from
Wyoming or whatever. They did some kind of Dow L NC, but the real dialogue with, you know, really addressing those questions of decentralized, governance of that's in Australia, Australia, and it's going, or it's based on the work of the koala group around Primavera who made this Dow model law and they've used parts of this. Is now successfully. It seems so you know, it's really everybody. Somehow is moving somewhere. Geopolitics has become very complex.
We also see corporations stepping into this kind of more and more nation-state like Behavior almost you could say, you know, like Facebook, building, the matter versus to me. You're very obviously, Mark Zuckerberg is continuation of, you know, world domination there. You know, companies like Amazon, which have such a global scale. We don't even know they run the internet. Effectively.
There are others, you know, Microsoft that the level of intelligence they have and so, you know, it's a crazy future, nothing in a sense, seems certain anymore and I think crypto has a chance to establish itself. Also among those big. Powers. Big forces as a stakeholder on the table and I think it's really important that as a crypto Community. We retain those original values, you know, that that were important to us before all the money came in.
And I think we're now at the point where we're in this phase 3 institution building. Well, I see a lot of kind of, oh, geez, you know, people from the early days kind of come back, you know, they don't care about any of these that much maybe, but they care about kind of there is this Renewed Energy. I feel that cryptos really moving into new, you know, new plateau. And so, the regulation that is happening is relevant. I see it mostly going into positive. If we don't look at Europe, it's
mostly positive. I also see the UK playing a super important role. Now, with them being outside of the EU and kind of having to prove that. This was a good idea to their own people. And I think they will become very crypto friendly for example, so, Yeah, that's kind of my big picture view, maybe on this. Is there one way or one question, around this discussion that has been on my mind, quite
a bit. So I you know, many people have probably heard of this book called The Sovereign Individual Services book in the written in the 90s that was actually predicting a lot of the things predicting dolls. Predicting, you know digital currencies, that would be privately issued by like, lots of different people.
So, like incredibly prescient. Unlike so many different levels, but and you know, they they were like, okay do we, you know, technology is going to bring all those things and they're basically write about so many things.
Now, one thing they also predicted which has not happened yet, is that they predicted there would be many more Nations and that kind of, you know, that you'd have this erosion of the power of, you know, large nation states and that would cause this kind of like splintering up a large, you know. Which countries and Dane, you know, you'd have kind of much more of this, I guess ability. Also to like innovate right on
that level. Like if somebody can go and create a new country with like a new Constitution and you approach a new way of thinking, which is pretty much impossible today. So that that's that's always like, for me, that's like one of my big questions. Is this gonna happen? Like I do right now, I think in a way that nobody expects, you know, I think in a way that nobody But expects in the sense that we just like Bitcoin made us question. What actually is money and nft
has made us question. What actually is Art? You know, I think dolls or whatever comes afterwards will make us wonder what is actually in nation-state. You know, what is, actually this country? What is it actually, giving me, you know, and one of the reasons why an F Keys could, you know, take off now. That much, I think it's just because people culturally value, Information and artifacts so much more now than it did 10
years ago. And so, you know, more and more whatever resources that you know, nation states of today that they govern just people don't care about anymore. You know, it's like in the old days governments could basically, you know, enslave you as a yeah working man or woman if you wanted to own a car because you know, you needed a credit and then you you needed a job to get to Credit.
And then somehow you end up being, you know, a taxpayer today, just nobody wants a car anymore, you know, and it's kind of like that's, it's in the sense. This what happening? And I think we may very well be looking at a lot of new, you know, Nations or sinks that call themselves Nations, but they will not have physical land to speak of. They may, you know, they may buy property, you know, we healed our house. We have crypto castles. We have big land being bought by
crypto millionaires or whatever. So The certainly happening, but this will not be Sovereign land. This would be, you know, whatever. It's some big nation states and and but when it comes to paying, you know, Universal basic income, health insurance, you know, retirement.
I don't know, family support. I think all those payments could in the will in the future come from totally different networks, and those networks were not be government nation-states anymore with that, you know, shit coins, but it's going to be I don't know digital communities of people believing in different things and this is going to be possible because I don't know if that's what technology seems to allow us to. That's kind of a trend that I see coming.
If you want to call those things, digital nation states. I don't know. I'm, you know, and if you look at kind of the state of medicine and the fact that we don't have longevity at, so people still die, you know, this whole nation state game could be over much sooner than we believe because You know, everybody at least, you know, at around my age have to meet as someone who cares about nation states as a thing.
I think this is over, you know, this is, you know, something that our parents still need as a crutch to understand the world, but I think all of us, we don't even really need it anymore. I mean, of course, if they would just be gone now, we would be it would be bad surprise, but I think kind of slowly moving towards an understanding of the world where we kind of transcending this. Really weird Antiquated idea of how the world is, you know, with borders and so on.
And so, this whole Ukraine Russia will, I think every young person is like, what war, you know, shooting each other over borders in the in 2022, is this real? And so I really feel this is, you know, our parents generation going out with a bang and it's like, okay, you know, goodbye. Let us run this world. He now so that's you know, my big Vision made me on this. Okay? Okay. Well that was beautiful way to to wrap this up, if it with a rally cry to the
revolutionaries. Thanks so much for in. It was a pleasure to have you on. I've been excited about, you know, the work you're doing right? Because I guess they still that kind of. I mean, it's interesting because you Talking about. Okay, you know this leaving these old structures behind but then of course you are also very much at that intersection, right? And trying to actually find ways that, you know, maybe crypto can, you know, coexist Thrive within the existing structure?
So I think that's like, you know, super important. And I'm really excited about the work you're doing there and to see what will come out of it. Thanks so much Brian. It was a real pleasure. And I hope to see you again in six years on this podcast to Rebecca. Yes, absolutely. Thanks so much for watching and thanks for listeners for tuning in and we look forward to seeing you next week. Thank you for joining us on this week's episode. We release new episodes every
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