The MEP returns to the urgency of regulating this sector in Europe, going further than the current draft regulations.
The bankruptcy of the giant FTX is causing an unprecedented shock in the cryptocurrency ecosystem. As US President Joe Biden calls for global regulation of cryptocurrencies after the fall of FTX, BFM Crypto reports with MEP Aurore Lalucq on regulation in Europe.
BFM Crypto: The MiCa (Market in Crypto Assets) Regulation, which allows Europe to regulate cryptocurrencies, will enter into force in 2024. Are you satisfied with the final version? Do you think we should go further?
Aurora Lalucq: This is a first step, but we need to go further, especially to create a regulatory framework for NFTs. More broadly, cryptos are financial assets and should be treated as such. I have always argued for their integration into the existing regulatory framework. The current situation reinforces this belief. Indeed, I have repeatedly warned of the dangers of this unregulated finance. And unfortunately, it’s clear that my fears turned out to be correct.
Can the regulation be further modified by the time of entry into force so that it adheres to reality, especially in the context of the FTX collapse?
The reality of the sector is the bankruptcy of FTX. It’s that of Voyager or Celsius, and thousands of customers who find themselves unable to recover their money. It’s the breakup of Terra/Luna, but presented as one of the strongest stables on the market. Every time, these are blocked accounts, bank executions, Ponzi pyramids, lack of capital, market manipulation, failure to comply with the best execution order… not to mention the most basic scams. It is therefore an urgent need to fix and really fix, because PSAN in its registration version is above all a “fix wash” issue. The urgency is to apply MiCA as soon as possible.
What will this regulation really change for investors?
Until now, the crypto market did not meet any of the most basic regulations of the banking and financial sector. This is an important first step in implementing a framework for crypto-assets in Europe. Initially, it aims to define what crypto-assets and crypto-asset service providers are in order to create a single framework for these providers. There are a number of obligations regarding best order of executionconsumer protection, the fight against market manipulation and money laundering.
The European Parliament is expected to draft a report on NFTs this year, which will be forwarded to the European Commission. Will you be involved in the development of this report?
I can’t tell you yet if I will be in charge of this matter or if it will be one of my colleagues. Crypto trolls and self-proclaimed experts seem to have made me their prime target. However, the crypto fix issue only represents a fraction of the files I manage on a daily basis. I also work on insurance regulations, banking supervision, accounting standards and taxation, to name just a few work topics.
Isn’t the US smarter than Europe as they wait to see how MiCa plays out so they can perfect their regulations?
Wise, smart, clever? It seems to me that the role of the legislator is not to play “the smartest”. Its objective should be to protect the general interest – and not to protect the private interests of a few – to protect consumers and financial stability or to fight against the many excesses of the sector.
Do you realize that the crypto ecosystem in France and Europe fears the United States more than Europe so far?
Above all, I understand that consumers should be afraid of this market as it is, because it is not regulated, and invest in it only what they are realistically willing to lose.
Web 3 is already changing our relationship with financial products (decentralized finance that also enables the granting of loans or credits), with payments (cryptocurrencies that promote financial inclusion in certain countries, etc.) with real estate (tokens)… How can you not see the revolution in progress?
The revolution in progress? Financial inclusion? Like what happened in El Salvador where nearly 80% of the population believes that the state should not invest a penny more in bitcoin? Not to mention that with the fall of Bitcoin, El Salvador now finds itself struggling with its creditors. Or in the Central African Republic, where only 14.3% of the population has access to electricity according to the World Bank… Two countries that really have other priorities than investing and tying their fortunes to a highly speculative and volatile financial asset.
Let’s be a little serious, if this sector is going to flourish, it has to come up with linguistic elements, permanent self-promotion. The gap between rhetoric and reality discredits it every day a little more… Then there are useful applications of blockchain, in terms of auditing and systematizing tax practices, e.g. But this technology is used too often to justify not respecting the most basic rules. Under the pretext of not holding back a new sector, we have long accepted that it does almost anything.
More and more American banks are offering cryptocurrency services, why do you think French banks are not following this path yet?
I think we have to be careful with the figures presented. Furthermore, I do not see the connections between regulated and unregulated finance as very favorable. If the many crypto-crashes that have occurred this year have not had dramatic consequences for the rest of finance, it is precisely because the bridges between crypto-assets and traditional assets remain quite limited. And that’s good. Otherwise the contaminating effect would be much greater and financial stability would be at risk. Globalized finance is already part of a precarious balance that we are somehow trying to secure through regulation and regulation. Let’s avoid adding a destabilizing factor by pairing it with an even more volatile sector. As long as cryptos are not regulated, the links between crypto assets and so-called traditional finance should not grow.
Economy Minister Bruno Le Maire wants France to be the “base camp” for cryptos and DeFi in Europe, what do you think?
That he is definitely a great visionary. It is this Minister of Economy who did not know what superprofit was, right? Unlike all European and international institutions and even our legislation. The government repeats the same language tirelessly: it wants to encourage innovation without forgetting regulation. The reality is that it only fills half of this guide. No doubt the government is eyeing crypto players, President welcomes Binance boss. But at the same time, the regulations implemented with PSANs are absolutely insufficient. Worse, it gives the illusion of a regulated sector, which is always the best way to do nothing concrete and send consumers up the wall.
I have also written to the minister on this subject, noting the fact that only accreditation effectively imposes standards in terms of transparency, good governance and consumer protection. However, no platform has been approved. Worse, they play on this ambiguity between registration and approval to deceive consumers, claiming to have the AMF label, without any serious obligation.
In April, you said in our columns that you would work on how crypto-assets and blockchain present new challenges in the field of taxation. Have you made progress on this axis?
It is clear that work is needed to better adapt our taxation to the arrival of these assets, which are financial assets and therefore should be treated as such. A certain amount of work has been done, particularly by the OECD, to try to better define what they call taxable events. Simply put, when is value created and how should it be taxed. These are also the questions we are asking ourselves in the European Parliament in an effort to ensure a uniform framework at European level.
Last October, the European Parliament adopted a resolution, for which I was co-rapporteur, on the issue of new forms of taxation related to blockchain and in particular the issue of taxation of crypto-assets. This is definitely a first step. Our goal is to continue working on this topic. This is why we have asked the European Commission to launch a series of assessments regarding the tax treatment of crypto-assets within the EU, in order to highlight a number of good practices and move towards unified regulation at scale European.
The giant Binance wants to help Elon Musk promote the adoption of cryptocurrencies on the social network. How do you see this initiative?
Binance and Elon Musk, It Really Makes You Dream: The Man Suspected, According to Bloomberg’s Investigation, of Promoting Money Laundering Through His Platform, And The One Who’s Sabotaging His Own by Blurring the Lines Between Fake News and Debate Just a Little More of ideas. . This however raises a central question: in such a problem, how independent will Twitter be from Binance? My view is that of a person attached to democracy and concerned about such an alliance.
Perhaps it would be better if Elon Musk stopped messing with Twitter and for Binance to start following the most basic rules of traditional finance. This would be a really interesting and innovative initiative. But let’s wait and see how these two companies will be in a few months.