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
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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
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