MiCA Is Only the Beginning The EU’s Next regulations Will Shock Us. - Marina Markezic / EUCI

Hi everyone, my name is Lina and I'm leading the European Crypto Initiative. Uh the EUCI shortly is an advocacy organization based in Brussels. We're advocating for public blockchains and all the things related to crypto assets as well. And we've been doing this work for the last 6 years. Uh there's always very interesting things to discuss and we hope to do that uh long in the future as well.

[Music] Hi Marina. Hi. Happy to meet you.

Likewise.

Yeah. So for people who don't know you, just like a brief intro like what do you do?

Yeah. So uh I'm Marina and I co-founded the European Crypto Initiative which is an advocacy organization. Uh I'm also running this initiative now and it's basically an advocacy organization nonprofit based in Brussels and we do advocate for public blockchains and all in way cryptoreated things. Uh now it's going to be six years already so it's pretty a long time since we started uh and yeah it's always interesting because there's many challenges they're changing over time but I feel that like the need for such an organization is still present. What exactly do you does like yuchi is it correct to say yuchi a short one?

So actually maybe something also for for the audience and for us for our communication efforts everyone is uh in a way looking at the the EUI which is like in a way abbreviation and in a way saying it in in their own way. It's it's amazing. It's brilliant. It's like something very European. Every country has their own pronunciation.

So we have to do a video about that. Uh but yeah like an example mostly we really started uh the time when the markets in crypto assets regulation was published and that was six years ago and that was a very strong signal from the European Commission because before crypto assets were regulated in member states and then it really started in a way where okay this regulation is happening on the EU level in Brussels and uh me and my co-founders Simon Porto and Fian Grats they worked on their member states regulation at the time and then we said okay now it's we need to do something in Brussels that's how we started and mostly it was really the work around Mika um at the time it was also also anti- monolandering we had different discussions around the travel rule some other data regulation etc and for our work it's very important um what the commission in way is focusing on and now we do have a new commission since this year so we have new focus is uh new topics for example tokenization uh it's important because we use blockchain for it and so there's a discussion about public blockchain private blockchain being used and there are few other things like privacy as well uh the chat control has been something that we have been part of and discussion discussing a few other privacy topics that are might be related a little bit more to just the specifics of the blockchain and crypto and how the decentralized way of building things might be different from from the other ways like mostly centralized.

Okay. Thanks. And um so you talk a lot with like politicians, policy makers like

crowd of Brussels people. Yeah. How do you feel like what is their perception of like crypto and web 3 in general? Like are they aware? Are they like up to date?

Like how progressive are they? What's like how do you feel their like point of view on web 3 in general?

Yeah, like this is a very very good question. I would say that it is different across different institutions and it also changes in time. Like for example, I would say that let's say the parliament uh some members of the parliament might be more aware of crypto in the previous mandate because they were dealing with Mika. There was a whole discussion about like what is the token, what is a crypto asset,

what is a crypto as a service provider. Right now there's not that many things related to crypto and blockchain on their tables at the moment and they don't have a reason why to even like you know think about it especially the ones that are new that came in within this mandate and so it changes over time and in a way what's also interesting is that the governance of the European Union is pretty complicated. M

so you have the commission, you have the council which is composed by member states. There's 27 of them

and then we have the parliament. There's also a lot of MEPs with different opinions. Um but I would say that the governance of the European Union and the whole legislative process is done in a way where you have possibilities of interaction and you have possibilities of like having a dialogue with institutions when they are deciding about a specific topic and this is done by design. for example, they do ask you for an opinion when they write something or you have access, I don't know, you invite them for meeting or you see them at different events, you can share your opinions within papers, etc. And so that is that is super interesting.

Um just another thing a really long reply

but uh man way is finalized. uh I say many times that in Europe right now we are in a postc crypto regulatory era which means that we have regulated already uh crypto assets and service providers the work in Brussels more or less is done uh when it comes to Mika and now the important part is really the supervisors which are the national combatant authorities and Mika is supervised right now in again 27 different member states so those are very important they are not part of a legislative process but they are supervising Mika and the way how they interpret it and how they in practice uh basically in way execute even potentially um I don't know they could be uh enforcement so this is also in way an important thing from our final view

well it's really nice that kind that there is a dialogue and they kind of listen to you that's awesome to hear because you know it could be different as well

so it makes It gives me a lot of hope.

But uh what shall we expect from Mika and how like our life life of simple use web three users and also the life of builders web three how it would change with MA? Yeah, that's also a good question because so the crypto industry or tech exists now for more than 10 years and we have not had at least in Europe such a regulation that is like really pretty overarching like it's regulating a lot of things and so whenever you are building something that is not uh that heavily regulated and then regulation comes the effect is like pretty intense. Uh I think the effect in Europe will be definitely that there's going to be less companies that can basically have the funding and the manpower to follow up with all those rules. Uh it's not only Mika, they uh need to comply also with Dora which is about resilience like cyber resilience. Uh potentially now the discussion is around payments as well when it comes to the use of stable coins.

So there is like a very intense process of compliance. Um and before it was not like that but the positive thing is that uh you have one access to the whole European Union if all the you know ideas run mika will hold but that is the idea you go to one country and then you can service the whole uh EU that is really for centralized crypto as a service providers and very similarly with tokens like if you issue token that should be enough to to do it in one one country so notify one national covenant authority that for in a way I would say centralized entities like the decentralized ones in theory are outside of the scope they're not regulated we're not regulating the technology we're not regulating infrastructure which I think is super important and um then it will in a way depend on the interpretation of the national combinant authorities where what is the difference between a decentralized and a centralized entity so that is something that we still need to kind of figure out in practice for the users. Uh I think that's very important. Uh one of the four goals of Mika was that uh they want to offer safer services to the European Union users. So in a way it means that now the services that we are accessing as citizens are safe and they are in way they went through process of like licensing.

uh that also means that there might be supervision on certain services that might not be regulated and there might be limitation for the European Union users to access those services if they would seen as like nonregulated. So I would say that um quite a lot of changes in terms of what we can access but I think that what we have seen in the last year mostly the users uh have really seen the implementation of the travel rule which is like different from ma but is um something where you if you as a user want to interact with the crypto as a service provider with an exchange then you need to verify somehow your wallet like they they ask you is this your wallet? and then you say yes and you sign or you do a Satoshi test or something similar. So that was really something very tangible for every European Union citizen. You had to do the extra step and there's a lot of questions whatever we are offered it's even enough from a compliance point of view.

So there's a lot of questions about execution of the travel and if it's enough what we're doing right now as an industry again. uh but I think that as for users especially the ones that are in the industry for a really long time that was quite a difference in their everyday use of crypto and the trans transaction part.

Good. So a lot of changes are coming. Yeah.

We'll see. Uh you mentioned Dora. Can you say briefly like what that and also like what how it will affect like users.

Yeah. So DORA is really I would say again something like a regulation that is meant for digital resiliency um digital operation resilience act and for the users uh it's a positive thing because it it again regulates centralized entities uh and it regulates their like cyber security and their resilience. So um I think it's it is the same we don't see anything specific like as as user it's really something that centralized entities have to comply with um and so like it's something that was important for for the regulator uh it's not only for crypto as a service providers is really for the whole like financial use case but crypto as a service providers are also part of it

and u I wanted to talk about a bit like private uh my tongue. So u yeah my next question is about privacy in the relation with Brussels and people there because privacy is like

usually it's considered as something kind of opposing.

Uh so what is the Brussels perspective on privacy? Yeah, like I would say it's very schizophrenic like uh not not the Brussels point of view on privacy but just the situation we are in at the moment and how the technology in a way is communicating and reflecting certain values and the whole community and of course how it interacts with regulations that are few and different. So there are two main points like one is we do protect privacy in Europe through GDPR and that is something that is super important. We're also having this like Brussels effect that we say like regulating in Europe but then ex some somehow exposing this uh regulations in other jurisdictions and then this idea that other jurisdictions would um you know have similar regulations as the ones that the European Union has. So that was in a way the idea also of GDPR.

Um and that is a specific very interesting case because this year the European data protection board has issued an opinion a guidance uh specifically and it's just the first draft so we don't have the final version and that is also maybe a good a good case to comment on the dialogue between the citizens or the industry because they have drafted the first version and they asked anyone for opinions. They have taken in opinions and now they will see we'll see how much they will take them into consideration but they are supposed to publish them pretty soon than the final version and what's important is like you know a guidance uh says that blockchain specifically public blockchain it is really hard for public blockchain to be compliant with GDPR and specifically because there's this right to in a way uh delete delete the data private data on the blockchain um and we know that as you know public blockchains function today it it is impossible. So uh there was even one part there that was saying that you should delete the blockchain if you cannot delete the data and that is something I would say pretty you know controversial. Um then we could think about like all the use cases that also the European Union and other regulators have been supporting uh when it comes to the use of of blockchain even those will not be possible anymore. So that's also I would say very good example of how different agencies and legislators then also act and interact and and how it affects uh the the industry.

And the second one is really privacy where now you know I think the industry would want more privacy but there's like regulations and directives etc that are limiting this perception of like what we think privacy is. One is definitely the financial privacy that we do have or we do want we have in deps in applications in crypto and the way how the reporting when it comes to anti-moneyaundering and the terrorist financing should be happening. So that was a whole work we did with the anti-moneyaundering package. There was four different documents there. So pretty interesting there.

And I think the main discussion was really how do we perceive the self-hosted wallets as they call them and should they be identified or not and in which way and should there be identification when transactions are happening between wallets. So I think it was a really big win for the whole industry when our association and basically other associations as well they prevented this um identification of wallets and transactions when the transactions are happening between self-hosted wallets. So that's not happening and and I think that we need to be aware that that is a win. We we had some really good wins. Um and the third one is really related mostly to chat control and to in a way uh privacy that we have within applications that are uh a aimed at communicating not really transacting crypto assets but I think it's still important for the community to acknowledge to see what's going on there and uh we had this it's just the right time to really be active on the chat control topic because it's being discussed in the uh yeah in castle at the moment.

Okay. Um, your hot take on network states and not only yours but uh I mean it's a big hot topic but I'm curious about the position of like Brussels or or people like actually do laws like do they even consider the existence of that? Uh do they perceive it as a threat? Are they doing something on legislative level to oppose it or support it? I don't know.

Mhm.

Super interesting uh actually question. So I don't think they are aware of network states as a notion that we kind of discuss about uh in this industry that much. I would say that there is definitely one person that knows about it and it's very curious about it. Uh but I would say that in general it's not something that they know and they are exposed to. Um and I think that it's kind of a good and a bad thing in a way but uh in in personal opinion that is very personal.

It's not like the organization opinion or something like this. I'm I'm a very like I would say realistic person and I have many more questions about network states than than answers because the state in a way as everyone knows is defined by three elements the population the territory um and and basically the sovereignity the right to to be a state and right now if there's no territory what it what does it mean etc. So there's so many questions we are in a way living in this uh digital world. I think we most of the time we really do live there. uh but at the same time the physical part is also important and there are some very interesting use cases with maybe countries that are disappearing like Tuvalu and similar that are just not going to exist in few years because of the sea rising sea levels rising and it is a very like you know imminent question for them like what do we do like is now the country just disappearing and I think in this case the global community and all the states that exist in the world they will need to take a decision when the land of Tuvalu will be underwater like is this still a state or not and are we going to recognize this as a state or I don't know if there should be a recognition but there should probably be a reaction like are they still going to be part of the UN uh are they still going to be able to you know represent the country and the questions there are for example can we live digitally then where are the servers where are they located like on which territory which land which country and like super super interesting questions but I think that it's definitely a notion to discover you know discuss research on would say that uh the mere existence of a state also gives existence to regulators so I would say that you know if they choose they would rather not just like dissemble or like you know not have states anymore but the digital aspect of of this state and just like citizens living digitally it's it's important Yeah, the tuo case is super interesting one.

I would like to explore it but maybe next time because we are short on time and it will be last question and I would ask you to answer like under one minute. So question is about the future like imagine we are I don't know 10 years from now and we are going with this the most positive scenario and like we have the internet and web three that is private secure uh it's about human rights and like we want right so we have the internet that we want to that we fight for how would it look like and how the life would looks like

yeah um very easy Russian problem. I would say that uh the citizens would be definitely empowered. They would be uh you know tax savvy. They would have a lot of options on how to communicate, how to transact. They could connect online in a safe and privacy preserving way.

But I think that you know thinking about AI, robotics and everything else when it comes to surveillance um I would say that they would they could live in a in a safe and also not surveiled uh systems. So you know from homes to the bar where they go to thinking about like even you know uh escalations that are happening globally like really having our human rights respected in digital world as well.

Okay.

Thank you. Thanks for joining us in this talk. Uh thanks for watching. Ciao.

Bye. [Music]