Bitcoin In Europe: How Verena Ross, The Chief Regulator, Is Shaping The Future Of Crypto

Bitcoin In Europe: How Verena Ross, The Chief Regulator, Is Shaping The Future Of Crypto

[Music] let Scott mker I host uh The Wolf of all streets podcast and again this is uh Verena Ross first could you please give us some context maybe describe the frame framework of Regulation generally in Europe for an ignorant American like myself no thanks Scott and great to be here today uh thank you very much for the invitation so Vina Ross I’m the chair of what is called the European Securities and markets Authority which was basically an organization created in 2011 after the financial crisis to try to create a more coherent European regulatory framework within the single Market of Europe bringing the 28 at the time today 27 different member states together and our key aims are enhancing investor protection in Europe making sure that we have stable and orderly financial markets and we do that together with the national competent authorities as they are called so the supervisors and Regulators at the national level it’s very much a collective effort where we try to set the overall regulatory framework once the parliament the council so the legislators have taken a decision the commission has proposed it and then we are there to implement it and work with the national authorities to make sure it’s consistently implemented and supervised at European level that sounds exceptionally challenging because obviously you have all of the member countries and you have to oversee them and then you have your specific role at esma which is not the same even as other regulatory bodies correct yes so we as esma have the remit of the security markets so that ranges from the very beginning of uh Finance so uh an IPO a Prospectors how to get into Finance in the first place it ranges via fund management Brokers uh exchanges Post Trading infrastructure uh and it really tries to cover the whole of Europe the European Union at the same time we also work very closely with our sister organizations that are covering Banking and insurance to really create a common Financial regulatory framework across the EU and then obviously we also have close links with our partners globally so we talk a lot to our counterparts in the US in the UK and uh broadly globally and engage also in something that’s called the international commission Committee of uh Securities commissions iosco where we try globally to find common minimum Global standards crypto investors in United States face some major challenges one of them is that there’s almost no way to get exposure to the asset class inside of your traditional investment vehicles the other thing is the taxes they are absolutely atrocious what if I told you there was a way to solve both of these problems well there is and it’s with a self-directed IRA from I trust Capital guys not only can you open a new self-directed IRA and fund it with the limits each year but you can actually convert over from your 401k your Roth IRA and other Ira that you already have and you can do that taxfree just transferring over the balance and then you can go to cash buy as much Bitcoin and you want and not pay taxes when you sell it you absolutely have to try this if you are in the United States use the link down below it’s bit. l-c that’s bit.it us- SEO TT you have to try this now I spoke yesterday actually with Yan vck here and he was speaking about I think the contentious relationship between the crypto industry and the regulator certainly in the United States or at least that’s the industry’s impression right and he was saying that he viewed the environment in Europe as much more favorable of course vanc has I think1 billion dollar worth of exchange traded products in Europe so perhaps a bit of that is talking the book but he he viewed the structure specifically MAA as much more friendly for the industry than what we have in the United States currently so I I’m not sure I would necessarily use the word friendly I think what we’ve done in Europe is uh the legislators have decided to create a genuine regulatory framework specifically for crypto assets and that is MAA and that really replaces is in the process of replacing what was a bit of a patchwork of different National approaches so some uh countries already had a specific crypto asset regime others did not and covered it as far as they could under existing Financial Services regulation and Mika is trying to take the step to say okay let’s create something that is common across the European uh Union area and which basically creates a common process of for authorization and supervision of crypto asset service providers and that is where esma is currently working and where we are currently sitting underneath the high level legislation the detailed regulatory framework trying to provide guidance and clarity as to what the legal framework means for that we are in ongoing consultation so we have uh already delivered the first batch of uh regulatory standards to the commission to be now finalized through the legislative process and we are Consulting and working on further two batches and will deliver them in June and December this year year to then be ready for the entry into force of MAA in January next year is that the entirety of the plan will the full roll out effectively be done this year or there future policy or parts of ma potentially or even other you know other policies coming that might give further Clarity so first of all what Mika did was it actually provided the possibility for a transition regime because there was Consciousness that this is in industry which has not necessarily been regulated in Europe but we also have some national regimes that exist so we need to create a framework that allows for the transition to the new European regime to happen so there is the possibility for uh individual member states to retain their National regime and have a longer transition period uh up to June 2020 uh let me could be correct 2026 so uh we are we however as esma have in October already said to the member states we would prefer if everyone could reduce the length of that um transition period to make it feasible for people to apply to get ready but ideally not to extend all the way out to June 26 because otherwise you will remain a bit uneven across Europe as to what the regulatory regime in your specific country is so with that we the the kickoff is basically in January next year and then there will be further implementation and uh over the over the next year probably beyond that there’s also a plan to look again at the MAA legal framework because this market and this industry continuously changes and we are conscious of that and so we are also planning to provide some advice to the commission um probably by the end of the year next year to explain where we see maybe a need to further look at does the regulatory framework of MAA as it was originally designed after all quite a few years ago still fit or do we need to make any adjustments there’s a bit of a joke in our industry like the crypto years are like dog years you know it takes 10 years somewhere else is one year in crypto so how do you as you just alluded to how do you deal with an industry that’s moving so fast and changing so rapidly when obviously regulation takes a long time to put in place and it needs to be done right with a very long time Horizon in mind that is definitely a challenge and it’s something that we’re very conscious of which is also why we are doing so much work with the national authorities daytoday to try to make sure that we understand where are the challenges that they are facing in the day-to-day decisions they have to make whether that’s about do we authorize this entity or not do we go for potential enforcement because they hav’t met one of the requirements and we try to make sure that we talk to each other to really have a common approach as to how to deal also with some of the maybe novel developments that can come over uh the period and uh try to find a common way of doing that so from my perspective the key clearly and that’s a call to everyone here for the industry is be prepared talk to your National Authority make sure that you understand what the requirements will be when Ma kicks in so that we can make sure that we have an industry that is compliant with MAA when we have the legal framework from the beginning of next year another I think overwhelming idea in the crypto industry certainly in the United States is that they’ve said come in and talk to us come in and register but that’s effectively been proven impossible but I’ve heard in Europe it’s different uh we certainly expect to authorize and register quite a few um and we’ve also been very clear uh in our communication that if you want to provide services in Europe to European customers uh don’t underestimate that there will be a legal regime and therefore that you do need to be able to comply with that so we have for example also said that there will not be a very lenient interpretation of you know how you approach your customers as soon as you approach customers you need to be sure to be properly a authorized and supervised so uh we are trying to make sure that people understand that and that we also as a regulatory and supervisory Community are creating the right boundaries both for investors to be properly protected in Europe but also for those who are actually willing to be compliant and properly enter into the spirit of being regulated by m to not be undermined by players who don’t play by the rules what is the overarching view of how consumers should be protected did specifically in this market is it about not allowing them access to certain parts of the market because they’ve been deemed too risky or is it more about making sure that the consumer and Retail are well aware of the risks and that you have proper disclosures so it’s it’s a bit of a combination of the two I would say because it is ultimately first and foremost about making sure that when a an investor is interested in investing in the crypto markets that they fully understand whether the people they operate with the people they are linking up to are properly authorized and supervised so that’s the first step then it’s also about through the regime making sure that they have the proper information about what am I actually getting myself in for what are the risks that I might be taking and having a clear understanding that um the there are operational risks as well associated with um entering into this Market um exposing yourself to one one of the players so from our perspective it’s very important that uh investors consumers citizens properly understand what they are letting themselves in for and that the framework provides at least a step forward to ensure that client assets are properly protected that there are complaints mechanisms that there is a Clarity of what actually is in this product and what the risks are so that’s the framework that we’re trying to create ultimately to help protect investors better at the same time I keep on saying you know guys be also careful you know this is not a magic want that you know protects you from losing money there are risks in this market and you need to be aware of that so don’t assume MAA creates a safe it’s not right and there are risks in all markets so this is not unlike the other markets that you regulate and the other problems I’m sure that you’ve seen there as well um yes of course there are similarities in some ways but we’ve also seen certainly over the last few years a few things which you know really make you as a regulator and supervisor worry about whether you can uh how you can best protect investors in this environment where there’s also a lot of a fear of losing out a lot of uh gamification a lot of very aggressive marketing and that is something which uh you know worries us as regulators and supervisors we’re all aware of the collapses of the last sort of cycle of the industry that you’re alluding to if a centralized exchange for example based in Asia wants to operate in Europe now what’s the process for them to actually do that are you the first Authority that they approach they approach the individual countries and how do they make sure that they’re working properly within the existing regulatory structure so indeed they should first and foremost go to the uh relevant National Authority that they believe they want to engage with uh there again we are making sure that all the national authorities talk to each other because what we want to avoid is that you have the so-called uh regulatory Forum Shopping that people basically go and and try out and then they go to the next one and say but actually those they would allow us to do this so why don’t you allow us to do this as well and so you get into a kind of uh as you say Forum Shopping so we are trying to make sure that that cannot happen that we properly exchange information amongst each others but the authorization decision sits at National level we will sit behind that at esma to make sure that the national authorities exchange information that they have a common approach for doing the authorization considerations and so on now what if they’re not a centralized product it’s a decentralized product you don’t know who necessarily the owner is it’s launched by an anonymous person how can they operate within a regulatory framework or can they not so MAA actually um excludes genuinely decentralized Finance products the question is you know what does that actually mean and we actually put out some consultation and some guidance to try to consult also the market where is the boundary there because um one person’s def is another person’s actually no it’s not defi there is someone behind it and you can actually point to some responsibilities so it’s a very uh difficult judgment call but it’s something that indeed we also will continue to monitor that boundary of what is within the M legal framework and what is not there there’s a view I think in the us actually that if you are deemed a security it’s a death blow which shouldn’t be right being a security should be per perfectly fine is that sort of a shared view in Europe do you have the same way of classifying uh the actual assets so we have in existing pieces of uh legislation definitions of financial instruments but they are then um implemented at different National levels a tiny bit differently sometimes so one of the th decisions of why Mika came about was to say look let’s cut through that and let’s actually create a common EU regulatory system for crypto assets that then is a common definition for everyone in the European Union and on that basis we can move forward that doesn’t mean that there are not further questions of where the boundary is and what is a financial instrument and what’s not but that’s our equivalent discussion to the US discussion I suppose so you brought up the idea of seeking a favorable regulator we call it regulatory Arbitrage in the industry of course how do you stop that or do not even try are you only concerned with their operations under your jurisdiction and if they want to go find a more favorable regulator and operate there kind of not your problem so regulatory Arbitrage is a big issue for us and within Europe that’s one of our core objectives to make sure that we have a consistent and harmonized approach to whatever regulation uh there is and whatever sector we are talking about but on top of that as I said earlier we are engaging in the international debate as well because we are conscious that this Market is not Regional it’s not National it’s actually Global and so there are Global players out there and so we do a lot of working with our fellow Regulators around the globe whether that is US UK or the Asian regulators and we have also tried at International level to find some common minimum views of what is a proper approach to crypto assets and to the market of crypto assets and that is something which iosa has pushed that the financial stability board has pushed and that we as esma Al actively engaged in well our 20 minutes flew by we have less than a minute so I have to ask you then how do you view the future of crypto in Europe the future of this industry I’m not someone who uh has a c ball I’m I’m just a humble regulator and supervisor so I will not predict uh how I’m not asking about price no no bull market Bitcoin predictions top um but I think what is important for us is that we actually with the MAA regime we now Implement that properly that we make sure that there is a proper common regulatory approach in Europe and with that we will see how the crypto Market will develop from there I think we’re very hopeful so thank you so much everybody please Round of Applause for Vera Ross thanks so much [Music] let let do

Verena Ross is the Chair of the European Securities and Markets Authority (ESMA). In this conversation during Paris Blockchain Week, we explore how European crypto regulation differs from that of the US and discuss the future of crypto in Europe.

Verena Ross: https://www.linkedin.com/in/verena-ross?

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#Bitcoin #Crypto #Regulation

Timestamps:
0:00 Intro
0:30 What is ESMA
2:59 iTrustCapital
3:57 European crypto environment
6:10 MiCA
8:10 Dealing with crypto
11:00 Protecting consumers
13:40 DeFi
16:00 Security problem
17:00 Regulatory arbitrage
18:30 The future of crypto in Europe

The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.