13th August 2022 > > Eva Kaili.

tl;dr

Eva Kaili, vice-president of the European Parliament shows us that there is at least one sensible adult working in the civil service bureaucracy.

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Stock market aficionados cannot have failed to notice the rally in tech stocks of late.

Does that mean interest rates are close to their peak?

Occasional Series – Watford F.C.

A hard-fought home win, top of the league, and my all-time childhood hero – Luther Blissett – just a few seats down the row. Life does not get any better than that.

Curious Cryptos’ Commentary – Eva Kaili, vice-president of the European Parliament

The EU is currently proceeding with two key pieces of crypto related legislation – Markets in Crypto-Assets (MiCA) and Transfer of Funds Regulation (ToFR). For more details, please refer to the CCCs dated 1st July and 19th July, but the headline news is that MiCA is excellent regulatory work, whilst ToFR is simply not fit for purpose.

Eva has been the rapporteur for much of the legislative work in the arena of blockchain technology, fintech, AI, and all those other exciting new worlds just opening up to us. Not only a skilled bureaucrat who gets things done (a rare and welcome trait in her chosen profession) but she has specialist knowledge of these topics.

She has stated on the record that her role is “… to give the EU a considerable first-mover advantage in the new digital economy by facilitating technological advancements and testing the blockchain convergence with other exponential technologies.”

There is a lot to like about Eva it seems.

…

Decentralised Finance (DeFi) is out of scope for MiCA, an approach that has come in for criticism and scrutiny.

Eva explains why this decision was made:

“DeFi, by design, lacks the characteristics of an “entity” at least in the way we are used to. Hence, in this decentralized environment, we need to rethink our approach as regards to what would constitute “the entity” that would bear the liability in case of misconduct. Could it be replaced with a network of pseudonymous actors? Why not? However, pseudonymity is not compatible with our legal and regulatory tradition. At least not so far. No matter what is the architecture, the design, the process and the characteristics of a product or service, everything and always should end up to a responsible person (or persons). I would say that the DeFi case reflects exactly the problem of lacking who to blame. So, decentralization seems much more challenging for policymakers.”

I told you; she knows her potatoes, and she is pragmatic about it.

I am no crypto maximalist – I remain convinced that cryptos and fiat are complementary to one another. I have long supported regulation of cryptos, as this is the only viable path to wholesale adoption, a process that is under way right here, right now.

However, the regulatory issues around DeFi are profound and extensive. The very nature of the beast suggests that those working in DeFi will continually invent ways to circumvent any proposed or actual oversight. Eva’s approach is the correct one to take, for now.

….

Which brings us back to one of the issues raised by the sanctioning of Tornado Cash earlier this week (see CCC 10th and 12th August).

Until yesterday, only Tornado Cash – simply a piece of code – had been sanctioned, a strange concept to get one’s head around. No actual person had been fingered.

The Dutch police have now arrested a developer of the protocol for facilitating money laundering.

There are still a lot of unknowns about this developing situation, but the latest figures I have seen suggest that Tornado Cash processed about $7bn of transactions, of which $1bn have been deemed to be unlawful.

That isn’t an insignificant sum, but it is dwarfed by the illicit flows in fiat cash, and through the banking system itself. Should all Central Bank governors and bank CEOs be arrested for facilitating money laundering?

It seems that the police are ignoring the thought processes of people like Eva and getting on with what they see as the job-in-hand.

Please don’t take this comment as criticism of the police, but it does reinforce my personal view that one should be very careful about getting involved in the privacy side of cryptos, be that as a user of certain DeFi apps, or as an investor in privacy coins such as Monero (XMR), even if your reasons for doing so are entirely lawful and justified.