Latest / Blockchain Germany – Web3 Startups, Crypto Innovation & Venture Capital by Startuprad.io™ / MiCA Explained: Alireza Siadat on EU Crypto Rules
Transcript
- WEBVTT 00:00:00.000 --> 00:00:19.440 Music. 00:00:19.285 --> 00:00:23.845 Hello and welcome, everybody. This is Joe from StartupRate.io, 00:00:23.985 --> 00:00:30.465 your startup podcast and YouTube blog from Germany, welcoming today you to another 00:00:30.465 --> 00:00:36.245 episode of StartupRate.io, this time with a special guest, with a subject matter expert. 00:00:36.365 --> 00:00:42.725 I would like to welcome Ali Reza here from a head of digital assets from Aniton. Welcome. 00:00:42.945 --> 00:00:47.705 Hi, Joe. Thank you for having me today. I'm delighted to talk to you today about 00:00:47.705 --> 00:00:50.685 digital assets and regulation in Europe. Yes, exactly. 00:00:50.945 --> 00:00:55.545 So as always, this is touching a legal topic. This is no legal advice. 00:00:55.885 --> 00:01:01.265 You should see it as a starting point for doing your own research, your own digging. 00:01:01.525 --> 00:01:05.165 And this doesn't constitute any legal advice at all. 00:01:05.245 --> 00:01:08.465 This just gives you a framework how to think about it. 00:01:08.465 --> 00:01:11.265 Um alireza would you like to 00:01:11.265 --> 00:01:14.585 tell us a little bit about what you 00:01:14.585 --> 00:01:17.905 do what you've done in the past before we get into 00:01:17.905 --> 00:01:24.045 mika the topic of today's conversation yes sure joe so i'm a lawyer i'm a german-based 00:01:24.045 --> 00:01:29.365 lawyer so i'm doing regulatory advice for the past 12 years i'm advising banks 00:01:29.365 --> 00:01:35.605 fintechs but other other players who are entering the german market or expanding their footprint 00:01:35.805 --> 00:01:38.085 from the German market within the European economic area. 00:01:38.645 --> 00:01:43.185 And for the past, I would say, eight years, I have specialized with everything 00:01:43.185 --> 00:01:47.245 related to DLT, to the distributed ledger technology, blockchain. 00:01:48.105 --> 00:01:55.365 And with that, starting at 2017 with the wave of ICOs, the initial coin offerings 00:01:55.365 --> 00:01:59.865 coming over to not just Europe, but I would say to the global market, 00:02:00.025 --> 00:02:04.345 I really specialized in helping players to do crypto business. 00:02:04.345 --> 00:02:09.225 When I say crypto business, I mean issuing your own token, but also doing crypto 00:02:09.225 --> 00:02:14.625 services related to banks like trading, custody and also other things. 00:02:14.745 --> 00:02:21.125 And also helping fintechs and non-financial payers to do joint ventures and 00:02:21.125 --> 00:02:24.005 to cooperate with regulated players in Europe. 00:02:24.205 --> 00:02:31.585 Before we get into the topic, I know at one point ICOs have been very hot. 00:02:31.585 --> 00:02:37.545 We also had a few here from the area we interviewed about it. 00:02:38.902 --> 00:02:41.902 But then it was it was a crypto winter. 00:02:42.162 --> 00:02:48.142 And before or after, did some colleagues ask you, what the hell are you doing there? 00:02:48.262 --> 00:02:52.762 Why don't you do just simple M&A, it gets a lot of money, but also is a lot 00:02:52.762 --> 00:02:54.262 of work. Yes, definitely. 00:02:54.522 --> 00:02:58.002 I mean, you're describing it pretty good. I mean, as I said, 00:02:58.022 --> 00:02:59.942 I started looking into it in 2014. 00:03:00.142 --> 00:03:04.082 So quite some time. So I have witnessed all the, 00:03:04.802 --> 00:03:07.522 halving so far so and everything is related to the 00:03:07.522 --> 00:03:10.622 bitcoin halving so either prior or closely after 00:03:10.622 --> 00:03:13.742 the halving we witnessed the the crypto winter 00:03:13.742 --> 00:03:19.322 and i and i had it many times that colleagues uh were either laughing about 00:03:19.322 --> 00:03:23.902 the whole crypto industry or asking me to do some serious business but i'm not 00:03:23.902 --> 00:03:28.582 sure how what why it is like this maybe it is my nature my own nature Because 00:03:28.582 --> 00:03:30.842 when I started being a lawyer, 00:03:30.942 --> 00:03:33.662 I started with some not plain vanilla project. 00:03:33.842 --> 00:03:36.602 I started with Islamic banking and Islamic derivatives. 00:03:36.902 --> 00:03:42.062 So I was always looking for some, I would say, rather adventurous topics. 00:03:42.402 --> 00:03:49.082 And with crypto and blockchain, I have my own fund and I would not like to change it. 00:03:49.162 --> 00:03:55.542 And now I think would say I had a long length, a long pre-eff, 00:03:55.562 --> 00:03:57.262 we say in Germany, long pre-eff. 00:03:57.262 --> 00:04:04.302 I stayed with crypto and now it turns out to be also from an economic perspective, 00:04:04.522 --> 00:04:08.502 not such a bad decision to do crypto business and crypto advice. 00:04:08.882 --> 00:04:13.362 There's also saying in Germany, was lange dauert, wird am Ende gut. 00:04:13.462 --> 00:04:15.622 So what takes long will turn out good. 00:04:15.802 --> 00:04:19.682 Fingers crossed for you that this works. But I have to tell you at the beginning, 00:04:19.742 --> 00:04:23.302 I was also pretty skeptical of many, many things. 00:04:23.302 --> 00:04:32.562 But I do tend to see more and more good, sensible applications of DLT and crypto 00:04:32.562 --> 00:04:36.562 technology, maybe just crypto assets, 00:04:36.862 --> 00:04:39.522 crypto tokenization of assets, 00:04:39.902 --> 00:04:46.702 and really application of this business of those tools in business, 00:04:46.862 --> 00:04:51.062 not just to a grip of for the crypto. 00:04:51.182 --> 00:04:53.122 So that's something I'm seeing. 00:04:53.322 --> 00:04:56.782 And that's what it makes it pretty interesting to me. 00:04:56.882 --> 00:05:00.462 But let's dive a little bit into the regulation here. 00:05:00.542 --> 00:05:07.142 We're talking about the markets in crypto asset regulation, aka, me car. 00:05:07.362 --> 00:05:11.242 And since you've you've been a follower for. 00:05:12.302 --> 00:05:16.462 Of the digital asset space for quite some time, can you tell us a little bit 00:05:16.462 --> 00:05:21.702 about the story and what it's all about, how, I mean, the European Union does 00:05:21.702 --> 00:05:25.122 have a reputation to want to regulate everything. 00:05:25.442 --> 00:05:28.042 I'm just talking about the banana regulation here. 00:05:28.422 --> 00:05:31.842 But can you elaborate a little bit what's, 00:05:32.465 --> 00:05:39.345 the intention behind it, and the process before we get into the regulation itself. 00:05:40.065 --> 00:05:46.545 Yes, definitely. So as you just said correctly, I'm looking into the crypto business for some time. 00:05:46.705 --> 00:05:53.225 And I think it's also a good time to describe it from a historical perspective. 00:05:53.545 --> 00:05:58.865 Because when I started with crypto in 2014, everyone only knew Bitcoin, 00:05:59.045 --> 00:06:02.165 maybe still some people only know Bitcoin from crypto but there's 00:06:02.165 --> 00:06:05.525 much more about crypto assets you mentioned it in 2017 the 00:06:05.525 --> 00:06:11.145 ico hype and we had lots of pump and dumps so lots of scam activities and at 00:06:11.145 --> 00:06:15.205 the same time when you say crypto not that many people understand what is crypto 00:06:15.205 --> 00:06:21.065 actually because some people understand under crypto cryptocurrencies some understand 00:06:21.065 --> 00:06:24.845 cryptographic techniques to just for administration 00:06:25.165 --> 00:06:28.005 of information on the on the DLT and stuff like that. 00:06:28.165 --> 00:06:34.865 So what we had and I would say after the first major ICO hypes in 2017-2018 00:06:34.865 --> 00:06:38.965 when it went down, the global regulators, not just the European, 00:06:39.385 --> 00:06:43.785 they realized that we have a lack of regulation when it comes to crypto. 00:06:44.245 --> 00:06:45.685 Regulation doesn't mean that 00:06:45.685 --> 00:06:50.085 we necessarily need to forbid or not allow doing business with crypto. 00:06:50.365 --> 00:06:55.585 Regulation means first of all to understand what is crypto. So to have a harmonized 00:06:55.585 --> 00:06:57.865 understanding of the crypto assets definition. 00:06:58.105 --> 00:07:02.105 And before we start to do this podcast, I told you, Joe, maybe you shouldn't 00:07:02.105 --> 00:07:04.685 call it crypto when we talk to UK or US people. 00:07:04.865 --> 00:07:09.885 Maybe rather call it digital assets because crypto assets are defined in Europe 00:07:09.885 --> 00:07:12.885 with this MECA and a harmonized definition. 00:07:13.105 --> 00:07:16.585 So when we talk about crypto assets in Europe, we understand cryptocurrencies. 00:07:17.005 --> 00:07:22.105 Utility token, anything which is not already regulated under the existing regulation. 00:07:22.105 --> 00:07:26.365 When I say existing regulation, people know the securities regulation in Europe, 00:07:26.485 --> 00:07:28.685 which is regulated by MIFID. 00:07:28.955 --> 00:07:33.995 So everything which is non-MIFID, which is not regulated under the so-called 00:07:33.995 --> 00:07:38.655 securities regulation in Europe, is nowadays going to be regulated under the MICA. 00:07:38.755 --> 00:07:43.775 So regulation meant from the beginning having a harmonized understanding of 00:07:43.775 --> 00:07:47.395 the product, of the instrument, crypto assets. 00:07:47.715 --> 00:07:53.235 And this is something which I also see overseas in the US or let's say in UK, 00:07:53.395 --> 00:07:55.715 which is something the first step to do. 00:07:55.715 --> 00:07:58.535 Having a really common understanding what we define 00:07:58.535 --> 00:08:01.415 as crypto assets and then the second thing why we need 00:08:01.415 --> 00:08:05.175 the crypto assets regulation or why we started having the crypto assets regulation 00:08:05.175 --> 00:08:10.335 also again going back in history when you look at the ICOs many people know 00:08:10.335 --> 00:08:16.275 all of this funny white paper yeah I would say Mimi's you which you see in the 00:08:16.275 --> 00:08:20.615 internet like you see a zebra in the front and in In the end, 00:08:20.695 --> 00:08:27.035 a donkey comes out, which is a nice analogous or nice meme of describing how 00:08:27.035 --> 00:08:29.695 an ICO document looks, a white paper. 00:08:29.855 --> 00:08:35.095 The first pages, like very illustrative marketing pages, describing you like 00:08:35.095 --> 00:08:38.815 the nicest zebra you can get. And in the end, you are lucky if you get a donkey. 00:08:39.055 --> 00:08:43.855 So this is really how most of the ICOs went in 2017 and 2018. 00:08:43.855 --> 00:08:47.095 18 people got promised lots of nice things 00:08:47.095 --> 00:08:50.175 but in the end it turned out to be maybe a 00:08:50.175 --> 00:08:54.755 company which is insolvent or bankrupt and there's no blockchain no dlt no nothing 00:08:54.755 --> 00:09:01.015 and maybe you also think back joe when all this ico happened and then people 00:09:01.015 --> 00:09:05.315 started started putting some celebrities some movie celebrities as their advisors 00:09:05.315 --> 00:09:09.735 and their pictures and then someone saw it and made fun of 00:09:09.815 --> 00:09:13.075 it and say okay nowadays all the uh ico companies 00:09:13.075 --> 00:09:16.535 have all this movie and hollywood celebrates as advisors how 00:09:16.535 --> 00:09:21.595 can it be and this is something which needs needed to be changed so consumer 00:09:21.595 --> 00:09:29.275 protection protection from um yeah market abuse scammers um and also having 00:09:29.275 --> 00:09:33.775 some really reliable players in the market the opportunity to do their business 00:09:33.775 --> 00:09:35.915 because when When you think back of 2020. 00:09:36.315 --> 00:09:40.835 Like four years ago, Germany was the first regulator putting in regulation. 00:09:41.075 --> 00:09:46.335 Everyone said this is the end for crypto in Germany. But actually, it was the opposite. 00:09:46.595 --> 00:09:52.135 With Coinbase, the first global crypto exchange player, being the first regulated 00:09:52.135 --> 00:09:57.775 player in Germany, many others followed or tried to follow. eToro applied for license. 00:09:58.155 --> 00:10:03.075 Binance tried the same. Others like Creighton and major players are going to 00:10:03.075 --> 00:10:07.675 follow that approach to be regulated to be able to provide their activities 00:10:07.675 --> 00:10:12.895 under a transparent regulated manner rather than doing something where no one 00:10:12.895 --> 00:10:14.195 really knows is it legal, 00:10:14.315 --> 00:10:16.475 is it illegal, is it grey, is it white or black. 00:10:16.695 --> 00:10:22.655 When you've been talking about that, so the main reason is a protection of the 00:10:22.655 --> 00:10:25.915 digital asset investors. Right. 00:10:28.154 --> 00:10:31.514 The companies regulated should welcome 00:10:31.514 --> 00:10:34.854 it because it will get more trust 00:10:34.854 --> 00:10:37.614 to those players and therefore in the mid 00:10:37.614 --> 00:10:40.694 to long term also get a lot of hopefully a lot 00:10:40.694 --> 00:10:45.254 of new investors i do believe that's why all of them are going through the very 00:10:45.254 --> 00:10:52.634 painful process of getting licensed and i i would be able to tell some stories 00:10:52.634 --> 00:10:58.834 about that but i can't um but nonetheless it's it's not it's It's not a joyful experience, 00:10:59.134 --> 00:11:03.954 but you have to see that the people on the other side, the regulators, 00:11:04.194 --> 00:11:09.794 most of them also don't enjoy it, but they do see the value in it. 00:11:10.174 --> 00:11:14.014 But you already referenced about 00:11:14.014 --> 00:11:19.134 MIFID, Markets in Financial Instruments Directive, and now we're in MECA. 00:11:19.134 --> 00:11:24.514 So MIFID regulates everything in financial markets and they just found the definition 00:11:24.514 --> 00:11:28.474 everything that's not regulated under MIFID is MICA. Is that correct? 00:11:28.714 --> 00:11:37.134 That is correct. So everything which is not already regulated under the MIFID regime and it is has some, 00:11:37.579 --> 00:11:42.179 I would say investment purpose or some purpose to be exchanged or traded on 00:11:42.179 --> 00:11:49.499 the marketplace or so called trading menu would be highly likely to be regulated under MICA. 00:11:50.279 --> 00:11:55.699 And this is actually a good first entry into understanding what MICA is. 00:11:55.919 --> 00:12:02.019 Before we get into that, we should say that MICA is a European Union regulation. 00:12:02.079 --> 00:12:05.699 So it applies to all member states of the European Union. 00:12:05.699 --> 00:12:14.099 Very likely Norway, Liechtenstein and Iceland will also follow some way and 00:12:14.099 --> 00:12:18.199 also get this regulation into their legal framework. 00:12:18.399 --> 00:12:24.199 And I'm not too sure about Switzerland, but I think they would miss an opportunity 00:12:24.199 --> 00:12:33.019 if they would not jump on this train and show that their space is also regulated. Yes, exactly. 00:12:33.199 --> 00:12:39.079 So the MICA, the Markets in Crypto Assets Regulation, very important. It's a regulation. 00:12:39.399 --> 00:12:43.879 Unlike a directive, it does not need to be implemented into domestic law. 00:12:43.979 --> 00:12:47.239 So it's directly applicable to all member states. 00:12:47.299 --> 00:12:53.039 Plus, this MICA regulation is also applicable to the European Economic Area 00:12:53.039 --> 00:12:59.639 jurisdictions like Liechtenstein and others. So there it is also going to be applicable directly. 00:13:00.099 --> 00:13:05.179 However, we're going to see also some laws which are called implementing laws 00:13:05.179 --> 00:13:11.119 or transitional laws because countries such as Germany or even Liechtenstein, 00:13:11.219 --> 00:13:13.959 they have already some crypto regulation in place, 00:13:14.099 --> 00:13:18.079 which is not in line or not harmonized with the MECA. 00:13:18.079 --> 00:13:22.659 Therefore, such jurisdictions like Germany or Liechtenstein and some others, 00:13:22.799 --> 00:13:29.739 they need to adopt or change or harmonize their domestic regulation with the MICA. 00:13:29.759 --> 00:13:34.379 So in the end of the day, what we call in the European Union a single market 00:13:34.379 --> 00:13:37.559 should be also available for crypto assets. 00:13:38.372 --> 00:13:44.832 I see. Plus, we should also add that each of those member states has to follow the regulations, 00:13:45.052 --> 00:13:51.932 but they can also make it tighter with national law and even limit it more so 00:13:51.932 --> 00:13:53.952 that would also be possible here. 00:13:55.052 --> 00:14:00.852 Exactly. Can you tell, let's go a little bit into the timeline before we talk 00:14:00.852 --> 00:14:06.612 about what it means for companies, for entrepreneurs who are active or thinking 00:14:06.612 --> 00:14:09.152 about being active in the digital asset space. 00:14:09.332 --> 00:14:15.612 My understanding is that MICA does not necessarily apply right now to everybody, 00:14:15.712 --> 00:14:24.072 but there's a phase where more and more of those regulations actually do apply. Exactly. 00:14:24.532 --> 00:14:31.632 So the MICA itself, so the legal text is already effective since last year, end of June. 00:14:31.752 --> 00:14:38.272 So since the 30th of June last year, the text has passed all the regulatory bodies. 00:14:38.312 --> 00:14:43.432 So it is effective. However, it is always like this with EU regulation that 00:14:43.432 --> 00:14:45.212 it's never directly applicable. 00:14:45.572 --> 00:14:50.492 There is a timeline, a so-called transitional period, where the market players, 00:14:50.632 --> 00:14:56.292 the regulators, and also those who provide the services have time to get used to the law. 00:14:56.472 --> 00:14:59.952 This is a transitional period which takes up to 18 months. 00:15:00.172 --> 00:15:03.232 And up to 18 months, because we have a two-phase approach. 00:15:03.772 --> 00:15:08.792 The first phase ends after 12 months. This would be the 30th of June this year. 00:15:09.212 --> 00:15:11.232 That's why we are talking today. Yes. 00:15:12.092 --> 00:15:19.172 So 30th of June this year, we are going to face the regulation for the so-called stable coins. 00:15:19.432 --> 00:15:23.572 This is everything which covers e-money token, asset reference token. 00:15:23.572 --> 00:15:26.932 So in other words, all those U.S. 00:15:26.992 --> 00:15:33.532 Tethers and USD circle and all the coins which have a purpose of being similar 00:15:33.532 --> 00:15:37.532 to money, e-money, will be regulated already now. 00:15:38.012 --> 00:15:43.372 Whilst the remaining crypto assets like cryptocurrencies and utility token shall 00:15:43.372 --> 00:15:47.652 be regulated by the end of this year, which will be the 30th of December. 00:15:47.652 --> 00:15:53.952 So you can say at the latest 30th of December this year in the entire European 00:15:53.952 --> 00:16:00.032 economic area, if you want to provide services or issue a token related to crypto, 00:16:00.132 --> 00:16:02.752 you need either a license or white paper. 00:16:02.872 --> 00:16:07.472 So these are the two things, white paper for issuers and the license for service 00:16:07.472 --> 00:16:12.232 providers, so-called crypto assets service providers, also called CASPs. 00:16:13.634 --> 00:16:17.294 We will get into that later on. 00:16:17.394 --> 00:16:23.034 But first, let us go a little bit through what Mika actually means for the entrepreneur. 00:16:23.274 --> 00:16:26.414 Our understanding is now June 30th, 2024. 00:16:26.854 --> 00:16:30.034 Some regulations come into force. 00:16:30.154 --> 00:16:37.854 And at the latest on December 31st, 2024, all regulations apply within the European 00:16:37.854 --> 00:16:43.194 Economic Area, which is the EU, Liechtenstein, Norway, and I believe Iceland. 00:16:45.014 --> 00:16:49.734 Exactly. And this is the important part. So everyone who is still thinking of 00:16:49.734 --> 00:16:54.334 doing some activities and it ends before the 30th of June, which is a very short 00:16:54.334 --> 00:16:58.634 time, can do it now without breaking their heads over it. 00:16:58.634 --> 00:17:03.494 But if you're planning to do something, even if it starts now, but it takes longer. 00:17:03.634 --> 00:17:08.414 So, for example, you issue a token and this issuance will last, 00:17:08.534 --> 00:17:10.874 let's say, six months or 12 months. 00:17:11.354 --> 00:17:17.734 Then you will definitely need to look into the MICA regulation and you make sure if you need, 00:17:17.794 --> 00:17:23.674 let's say, a white paper or if you need to have a CASP registered or licensed 00:17:23.674 --> 00:17:26.454 CASP who is doing the services with you together. 00:17:26.454 --> 00:17:32.474 And this is something which will not just apply for those living or being domiciled 00:17:32.474 --> 00:17:34.454 or registered within a European Economic Area. 00:17:34.654 --> 00:17:39.774 It also applies to those third countries like let's say you're sitting in Switzerland 00:17:39.774 --> 00:17:45.354 or UK or the US and you're right now providing your services to the European market. 00:17:45.674 --> 00:17:51.954 This will also apply to you unless you make sure that you use the so-called 00:17:51.954 --> 00:17:53.954 reverse Reverse solicitation exemption. 00:17:54.574 --> 00:17:58.574 Reverse solicitation for those who don't know it. Reverse solicitation means 00:17:58.574 --> 00:18:03.734 that if you provide your services, but you're not actively targeting the European market. 00:18:04.014 --> 00:18:08.994 Let's say you're like a new U.S. company and you have a web page which is mostly 00:18:08.994 --> 00:18:10.574 targeting the U.S. audience. 00:18:10.774 --> 00:18:16.374 But for some reasons, someone from the EU is getting to your web page, 00:18:16.514 --> 00:18:20.694 asking for the services. In that case, you're allowed to provide the services 00:18:20.694 --> 00:18:23.334 to the one asking for the services. 00:18:23.514 --> 00:18:29.414 This is actually a fundamental right in Europe for any retail or for any customer, 00:18:29.514 --> 00:18:31.454 the freedom to request services. 00:18:31.834 --> 00:18:36.434 So you're allowed to provide your services to those who come to you by their 00:18:36.434 --> 00:18:40.474 sole exclusive intention. 00:18:40.594 --> 00:18:42.774 So you do not ask them to come to your webpage. 00:18:43.054 --> 00:18:46.174 And then you're allowed to provide the services without having the license. 00:18:46.174 --> 00:18:47.654 So this is reverse solicitation. 00:18:47.874 --> 00:18:53.374 If you put this in brackets or this put outside the scope, everyone else who 00:18:53.374 --> 00:18:58.194 is addressing the European market needs a license or a white paper. 00:18:59.528 --> 00:19:03.008 And for those, how did he call it? 00:19:04.908 --> 00:19:11.128 Reverse solicitation. Yes, exactly. We link down here in the show notes to it. 00:19:11.788 --> 00:19:17.448 Does it mean you have to be a regulated entity somewhere in Singapore, in the US or in Panama? 00:19:17.448 --> 00:19:24.508 Or does it just mean you're not directly marketing to citizens of the European 00:19:24.508 --> 00:19:28.468 Economic Area living there or people living there? 00:19:28.648 --> 00:19:33.508 And you just can't get out of this regulation with this little trick. 00:19:34.268 --> 00:19:39.228 So it actually applies to anyone. So any company, any player outside of the 00:19:39.228 --> 00:19:43.588 European Economic Area, so-called a third country, can provide its services 00:19:43.588 --> 00:19:47.988 on this reverse solicitation approach. They do not need to be regulated. 00:19:48.668 --> 00:19:53.668 Maybe they need to, but this is not of interest for the European regulator. 00:19:53.868 --> 00:20:00.288 The European regulator only is looking at the laws which apply to the European Union. 00:20:00.468 --> 00:20:03.948 So, for example, if you have a player, let's say, from China, 00:20:03.968 --> 00:20:09.368 and in China, crypto asset services are not allowed, this is not important to 00:20:09.368 --> 00:20:12.208 the German or to the European regulator. 00:20:12.208 --> 00:20:17.388 It is only important that this Chinese crypto asset service provider is providing 00:20:17.388 --> 00:20:24.028 its services solely on reverse solicitation and not targeting the European market. 00:20:24.888 --> 00:20:30.968 So, and now we get to the core of it all. What does it mean for entrepreneurs? 00:20:31.208 --> 00:20:39.848 First, what do they need to do? I do assume they do have to go to the national regulatory authority, 00:20:40.508 --> 00:20:45.388 for example, in Germany, BaFin, and say, hey, guys, I'm this person, 00:20:45.508 --> 00:20:48.088 I'm this company, I want to provide those services. 00:20:49.040 --> 00:20:52.940 Of course, best is if you have a lawyer who asks these questions. 00:20:54.020 --> 00:21:00.140 But basically, you have to approach the regulatory authorities best with a lawyer. 00:21:00.260 --> 00:21:05.060 And hopefully, you've spoken to him or her a few times before and they prepped 00:21:05.060 --> 00:21:05.920 you for this conversation. 00:21:06.300 --> 00:21:09.100 Yes, I mean, it is basically how you say it, Joe. 00:21:09.580 --> 00:21:14.440 You can also check it out. For example, some regulators like the Austrian regulator, 00:21:14.680 --> 00:21:20.680 they have a very nice webpage, even in English. So it's a financial market authority in Austria, FMA. 00:21:20.980 --> 00:21:26.300 So if you just put in Google FMA and then Mika, you will straight get to their 00:21:26.300 --> 00:21:29.200 webpage and you find some information. 00:21:29.580 --> 00:21:33.340 So you can go and approach your domestic regulator. 00:21:33.700 --> 00:21:37.340 You can even go to any regulator. So if you are located in Europe, 00:21:37.460 --> 00:21:39.540 you do not need to go to your own regulator. 00:21:39.620 --> 00:21:41.940 Let's say you're in Germany, you do not need to go to BaFin, 00:21:42.100 --> 00:21:45.280 to the German regulator. You can also approach the Austrian regulator. 00:21:45.280 --> 00:21:47.740 This is also the nice thing about Europe. 00:21:47.800 --> 00:21:51.060 We do not really know borders. It is all borderless. 00:21:51.660 --> 00:21:55.420 It also applies if you have a license for your activity, you can provide the 00:21:55.420 --> 00:21:59.340 services to the entire European economic area, which is called passporting. 00:22:00.160 --> 00:22:05.900 So the first step you would do, you would first try to understand if your product 00:22:05.900 --> 00:22:10.040 or your service is regulated under MICA. You can ask, for example, 00:22:10.160 --> 00:22:11.940 for a quote, no action letter. 00:22:12.140 --> 00:22:15.700 No action letter means that the regulator confirms to you that, 00:22:15.760 --> 00:22:20.060 for example, you're not regulated because your product is for some reason not 00:22:20.060 --> 00:22:21.880 under Mika and not regulated at all. 00:22:22.160 --> 00:22:26.460 That means you don't need to take action, right? Exactly. Exactly. Yeah. 00:22:27.340 --> 00:22:31.740 Or you also have a different trade. We differentiate between the issuer. 00:22:31.940 --> 00:22:36.140 An issuer is someone who is issuing a token. So doing an ICO, for example. 00:22:36.140 --> 00:22:40.500 For example, from those who provide services, which is a crypto asset service provider, 00:22:40.720 --> 00:22:44.540 a crypto asset service provider is, for example, someone who's running a crypto 00:22:44.540 --> 00:22:49.720 exchange or doing the custody for crypto assets, whilst the issuer can solely 00:22:49.720 --> 00:22:52.540 do the ICO and not doing anything else. 00:22:52.720 --> 00:22:58.440 So if you only do an ICO and you do not do anything else, you usually do not need to have a license. 00:22:59.141 --> 00:23:02.281 What you need to do is you need to have a document in place, 00:23:02.421 --> 00:23:03.661 a so-called white paper. 00:23:03.901 --> 00:23:08.181 And this white paper, I said it in the beginning, is not this funny marketing 00:23:08.181 --> 00:23:10.081 white papers you had back in 2017. 00:23:10.861 --> 00:23:17.441 It is a very formalistic and standardized document which needs to look exactly 00:23:17.441 --> 00:23:20.141 as the regulator is telling you it has to look. 00:23:20.421 --> 00:23:26.721 But now it comes. This document does not need to be approved or accepted by the regulator. 00:23:26.721 --> 00:23:33.421 You only need to notify the regulator, which means 20 days before you want to go live with your ICO, 00:23:33.661 --> 00:23:39.561 you send the final document, your final white paper to the regulator and tell 00:23:39.561 --> 00:23:44.261 the regulator, look here, I'm planning to do an ICO in, let's say, 20 days. 00:23:44.521 --> 00:23:48.521 This is the document me and my lawyer, we have finalized. 00:23:48.881 --> 00:23:53.961 Have a look at it and then publish it on your web page. I'm going to do the 00:23:53.961 --> 00:23:56.581 same on my web page and then I'm going to go live in 20 days. 00:23:56.941 --> 00:24:01.521 Then maybe the regulator comes back to you and says, you're fine to go. 00:24:01.681 --> 00:24:05.981 Or the regulator says, are you really sure that your document you have produced 00:24:05.981 --> 00:24:10.721 is in line with the standards and you have not forgotten something? 00:24:11.241 --> 00:24:14.501 And I think that the regulator will do this in the beginning. 00:24:14.541 --> 00:24:18.081 And after some time, the regulator will not do it anymore because the regulator 00:24:18.081 --> 00:24:21.901 is really not in charge for accepting or reviewing the document. 00:24:21.901 --> 00:24:25.601 They would just collect it and have a look at it and see if it's really complete. 00:24:27.001 --> 00:24:30.461 And this one you have to differentiate from those who want to provide a service. 00:24:30.641 --> 00:24:34.001 And the one who want to provide a service, they really need to have a license. 00:24:34.221 --> 00:24:37.961 And they apply for the license, then they get the license, and then they can 00:24:37.961 --> 00:24:41.121 provide the services to the whole European economic area. 00:24:41.381 --> 00:24:45.181 And this is two different categories of players in the market. 00:24:45.281 --> 00:24:48.181 The issuer and the crypto asset service provider. 00:24:48.461 --> 00:24:53.581 So white paper and the license. From your personal experience as a lawyer, 00:24:53.721 --> 00:25:01.261 as a partner with Aniton, how long should an entrepreneur estimate to finish 00:25:01.261 --> 00:25:03.201 this white paper with a lawyer? 00:25:03.301 --> 00:25:10.561 Is it something like 12 months or 12 days? So we have nowadays some tools which 00:25:10.561 --> 00:25:12.661 are available free to use in the Internet. 00:25:12.881 --> 00:25:18.361 So with such tools, everyone can produce its white paper within a couple of days. 00:25:18.761 --> 00:25:25.641 However, the detail work, the fine parts, which are also critical things, 00:25:25.801 --> 00:25:27.281 which may raise liability. 00:25:27.601 --> 00:25:31.801 I talk about civil liability for the issuer. This may need a little bit longer 00:25:31.801 --> 00:25:37.581 and also the description of the technological background of the blockchain use 00:25:37.581 --> 00:25:39.141 or DLT use and stuff like that. 00:25:39.281 --> 00:25:42.941 This could take a little bit longer. So I would say anyone who wants to do an 00:25:42.941 --> 00:25:47.161 ICO nowadays and plans to do it for the next two or three months should plan 00:25:47.161 --> 00:25:48.901 with two to three months in advance. 00:25:49.481 --> 00:25:55.741 And two to three months, I think that's a good timeline and then do that. However, now it comes. 00:25:56.504 --> 00:26:00.244 There's one category of token, which is the stablecoins. 00:26:00.444 --> 00:26:04.024 For the stablecoins, either it's an e-money token or an asset reference token, 00:26:04.264 --> 00:26:07.584 not everyone is allowed to issue such a token. 00:26:07.784 --> 00:26:12.004 For example, an e-money token, you're only allowed to issue if you're an e-money 00:26:12.004 --> 00:26:14.344 institution. This is a licensed player. 00:26:14.824 --> 00:26:20.104 Asset reference token, you should be a bank or to have a license as an asset 00:26:20.104 --> 00:26:23.964 reference token issuer under MICA, which is very close to a bank. 00:26:24.384 --> 00:26:29.224 So for these two categories, like the stable coins under Anamika, 00:26:29.524 --> 00:26:32.684 you should be aware that only a white paper is not enough. 00:26:32.864 --> 00:26:37.704 You need to make sure that you have to be an e-money licensed company or bank. 00:26:38.084 --> 00:26:40.184 And this is something special. 00:26:40.624 --> 00:26:45.084 Okay, let me try to work this out a little bit. 00:26:45.364 --> 00:26:52.364 So what I want to say, what you already said is, you get this white paper to the regulator, 00:26:52.664 --> 00:26:57.964 they don't have any objections, but it still does mean you are liable for everything 00:26:57.964 --> 00:27:00.984 that is in there is important legal document. 00:27:01.104 --> 00:27:04.264 And just don't Google the pieces, I put them together. 00:27:04.624 --> 00:27:10.764 Ask a capable lawyer, please, guys. On the other hand, as you already referred, 00:27:10.904 --> 00:27:15.624 there are these service providers, crypto asset service providers. 00:27:15.644 --> 00:27:19.084 So that means as an entrepreneur, you You can still do your ICO, 00:27:19.284 --> 00:27:24.084 you prep your white paper, but then you do have to work with people who are 00:27:24.084 --> 00:27:26.924 licensed, providing all those services. 00:27:27.364 --> 00:27:33.044 What I, for example, do have in mind is somebody safekeeping of the assets of 00:27:33.044 --> 00:27:38.664 the cryptos on behalf of the digital assets, on behalf of the investors. 00:27:39.104 --> 00:27:45.644 Something like a custodian bank has done in the past. Also, as you said, stable coin. 00:27:46.444 --> 00:27:50.324 That means one of your coins refers to one euro. 00:27:50.524 --> 00:27:55.564 Then you're in a much higher regulated field. 00:27:56.024 --> 00:28:02.664 Then maybe you should more think about three years than three months of preparing this. 00:28:03.024 --> 00:28:08.464 Plus, if you want to be, as you said, an asset reference token. 00:28:08.584 --> 00:28:15.184 So that means I do believe it refers to tokenization of securities. securities, right? 00:28:15.244 --> 00:28:18.264 So it simplifies the securities trading, 00:28:18.444 --> 00:28:22.764 especially in the European Union, but I do believe soon across the world, 00:28:22.924 --> 00:28:30.384 where you just have a crypto token that is traded that is bust around on behalf of a, 00:28:31.280 --> 00:28:36.120 physical security of a share of a bond of something else, right? 00:28:36.520 --> 00:28:41.160 Yeah, so you're almost 100% right. So you could be easily a lawyer, Joe. 00:28:42.440 --> 00:28:45.720 No, no, no. No lawyer, please. 00:28:46.380 --> 00:28:52.380 So the e-money token is a token which refers to one fiat currency. 00:28:52.460 --> 00:28:57.080 So you could be, for example, a U.S. dollar token or U.S. dollar currency. 00:28:57.520 --> 00:29:04.420 So USDC, for example. In contrast to that, the asset reference token is referring 00:29:04.420 --> 00:29:08.540 to at least two instruments which are in the portfolio, in a bucket. 00:29:08.780 --> 00:29:12.120 It could be a currency. It could be, as you said, a security. 00:29:12.540 --> 00:29:15.540 It could even be a cryptocurrency, which is lying in the bucket. 00:29:16.040 --> 00:29:18.840 The best example for that is the U.S. Tether. 00:29:19.040 --> 00:29:23.220 If you look at the U.S. Tether and you look at the basket of instruments which 00:29:23.220 --> 00:29:27.900 lie with the Tether Foundation, You can see there are, I think, 00:29:27.920 --> 00:29:29.860 six or seven or eight different assets, 00:29:30.000 --> 00:29:34.420 even gold and some other assets are lying there. 00:29:34.720 --> 00:29:38.480 And so if you go back with your U.S. Tether to the Tether Foundation, 00:29:38.820 --> 00:29:42.160 you can even get, instead of cashback, you can get, for example, 00:29:42.320 --> 00:29:46.120 gold or a U.S. dollar bond or something like this. 00:29:46.500 --> 00:29:52.240 You can redeem debt. And as you just said it correctly, if you have such an 00:29:52.240 --> 00:29:57.660 instrument and it's backed by some assets where this asset really needs to be 00:29:57.660 --> 00:30:00.780 there, so with that you guarantee the stability of the coin. 00:30:01.820 --> 00:30:05.940 If you look from that perspective, then you really understand why not everyone 00:30:05.940 --> 00:30:07.440 is allowed to issue such a coin. 00:30:07.580 --> 00:30:13.500 Otherwise, I would say the scamming industry would just rise with this possibility. 00:30:14.220 --> 00:30:15.900 Therefore, there is some reason 00:30:15.900 --> 00:30:20.760 why only e-money institutions or a bank is allowed to issue such a coin. 00:30:22.107 --> 00:30:26.887 So bottom line is for me right now, if you want to do an ICO, 00:30:27.087 --> 00:30:32.567 you need to look at what services you want to provide with the token and have 00:30:32.567 --> 00:30:37.867 somebody who is legally able to provide all the services around it, 00:30:37.947 --> 00:30:40.467 for example, issue interest, 00:30:40.887 --> 00:30:42.627 dividends and so on and so forth. 00:30:42.627 --> 00:30:45.567 Everything you want to do with that everything that need 00:30:45.567 --> 00:30:48.567 to be serviced you need somebody who's licensed to do 00:30:48.567 --> 00:30:52.167 that and of course stable stable coins 00:30:52.167 --> 00:31:00.567 or asset reference tokens it's a completely different ball game here um what 00:31:00.567 --> 00:31:09.887 other regulations do apply if you if you do want to ico a token for example, 00:31:09.987 --> 00:31:14.947 what they're like a salient things such a token can do. 00:31:15.467 --> 00:31:20.167 We now know it cannot reference to so called fear money, that fiat money that 00:31:20.167 --> 00:31:27.027 official currencies, think Japanese yen Korean one, Brazilian real US dollar, 00:31:27.087 --> 00:31:28.947 euros, pound, and so on and so forth. 00:31:29.467 --> 00:31:31.967 Plus also securities, I do believe. 00:31:34.206 --> 00:31:40.926 Yes, I mean there is a very complex list of rules and obligations and as you 00:31:40.926 --> 00:31:42.126 said we really have to differentiate. 00:31:43.206 --> 00:31:48.746 So if you're the issuer, for example, and you want to issue an e-money token 00:31:48.746 --> 00:31:53.986 issuer and you want to issue a Euro-backed stablecoin, for example, 00:31:53.986 --> 00:31:55.766 you're not allowed to issue interest. 00:31:56.086 --> 00:31:59.466 You're not allowed to pay interest to the users and you're not allowed to take 00:31:59.466 --> 00:32:00.726 the money and work with it. 00:32:00.786 --> 00:32:05.866 That's forbidden. If you have asset reference token, you are allowed to do that. 00:32:05.946 --> 00:32:08.266 You're allowed to work with the money and you to pay out interest. 00:32:09.206 --> 00:32:15.606 But then again, there's a bucket of so-called significant e-money token. 00:32:15.846 --> 00:32:22.266 A significant e-money token has the exemptions which apply to asset reference token. 00:32:22.386 --> 00:32:26.226 So significant e-money token, you are allowed to take the money which you receive 00:32:26.226 --> 00:32:30.046 from the users or from the investors to work with that and to pay out interest. 00:32:30.046 --> 00:32:32.746 Interest however you have to uh you're not 00:32:32.746 --> 00:32:35.726 allowed to take all the money you have to keep let's say 30 percent 00:32:35.726 --> 00:32:38.706 as a risk buffer available similar to 00:32:38.706 --> 00:32:41.586 a bank which keeps when it gives out loans like 12 percent 00:32:41.586 --> 00:32:44.626 or 19 percent yeah and these are things which 00:32:44.626 --> 00:32:49.886 are very detailed very complex that's why i would say um we should not talk 00:32:49.886 --> 00:32:55.506 that much about the stablecoin issuers maybe we go on and talk about the cryptocurrencies 00:32:55.506 --> 00:33:01.206 and utility token because i would say we see much more of those coming and also 00:33:01.206 --> 00:33:03.826 maybe related services to them, like a crypto exchange, 00:33:04.226 --> 00:33:09.346 as you said, a custodian, like a safekeeper, crypto portfolio management, 00:33:09.726 --> 00:33:16.286 crypto advice, all of their things which are also coming, which are not necessarily 00:33:16.286 --> 00:33:18.546 dependent on the issuance of the token. 00:33:18.606 --> 00:33:22.746 You can also take an existing token like Bitcoin or Ethereum or others who are 00:33:22.746 --> 00:33:25.146 already existing and provide services to them. 00:33:26.293 --> 00:33:30.713 Sure, that that will be the next part, because I just want to get like the big 00:33:30.713 --> 00:33:35.533 guys out of the way to get to this area. 00:33:35.773 --> 00:33:40.753 So we already talked about like the custodians who keep the tokens safe, 00:33:41.013 --> 00:33:45.453 the exchanges where you can basically trade them. 00:33:47.353 --> 00:33:54.933 Can you talk a little bit about how the European Union envisions such an environment, 00:33:55.133 --> 00:33:59.153 such an ecosystem with the regulated entities? 00:33:59.413 --> 00:34:05.493 Because as we said, you have a crypto token, you have a utility token that we 00:34:05.493 --> 00:34:12.173 now go on a little bit to talk about where you basically explain the makeup world to us, right? 00:34:12.693 --> 00:34:17.613 Yes, yes, exactly. Exactly. So basically, you can say really as a rule of thumb, 00:34:17.613 --> 00:34:22.273 but in a nutshell, when you have a stable coin, like an E-Money token or an 00:34:22.273 --> 00:34:26.093 asset reference token, the highest regulation applies out of Mika. 00:34:26.673 --> 00:34:33.873 If you have a utility token or cryptocurrency, the regulation is less tough, less strong. Yeah. 00:34:34.333 --> 00:34:38.933 And therefore, which is actually, I would say, also strange, 00:34:39.153 --> 00:34:42.433 because if you look at the Mika timeline, as I said in the beginning, 00:34:42.613 --> 00:34:46.953 from the beginning, the rules on the stable coins apply from the 30th of June 00:34:46.953 --> 00:34:51.733 this year, whilst on the less critical token like currency token, utility token, 00:34:51.973 --> 00:34:53.893 the rules apply from the 30th of December. 00:34:53.893 --> 00:34:57.813 I believe, honestly, they did it like this because if you think back, 00:34:57.933 --> 00:35:03.033 when Facebook wanted to issue its own token and to do their own wallet, 00:35:03.133 --> 00:35:08.513 like with Diem and Libra and all of that, the European regulator was very nervous about that. 00:35:08.653 --> 00:35:14.673 And they wanted to have very quickly a regulation in place to cover the Facebook 00:35:14.673 --> 00:35:19.153 Libra slash Diem association project. However, as you all know, 00:35:19.373 --> 00:35:20.673 they've left Switzerland. 00:35:20.953 --> 00:35:24.893 This project was never launched in the European economic area. 00:35:25.133 --> 00:35:30.213 And therefore, I think we're a little bit too fast with the toughest regulation, 00:35:30.493 --> 00:35:31.513 which is a stablecoin regulation. 00:35:31.893 --> 00:35:35.213 I think we should have done it the other way around. You know, 00:35:35.233 --> 00:35:40.773 you have the regulation for utility token, currency token apply first so that people get used to that. 00:35:40.993 --> 00:35:44.613 You always start with the easier things and then you have the stronger and the 00:35:44.613 --> 00:35:46.093 tougher regulation later coming. 00:35:46.273 --> 00:35:50.073 So I think this was already a wrong move of the European regulator. 00:35:50.393 --> 00:35:54.833 However, it is what it is. Therefore, we also started talking about the stablecoin 00:35:54.833 --> 00:35:58.053 regulation before we go on with the utility token and currency token. 00:35:58.629 --> 00:36:02.529 However, as you were asking how the regulator. 00:36:02.889 --> 00:36:05.889 The European regulator, but also the National Common Authority, 00:36:06.149 --> 00:36:10.049 so the domestic regulators, envision the regulation of cryptoassets, 00:36:10.209 --> 00:36:16.329 I think they really envision it as having one industry of utility token cryptocurrencies 00:36:16.329 --> 00:36:20.729 like what we already have now, like with all the crypto exchanges like Binance, 00:36:20.749 --> 00:36:21.869 Coinbase and so on and so on. 00:36:21.949 --> 00:36:26.989 This is like, I would say, the old game with new rules. And then we have the 00:36:26.989 --> 00:36:31.249 new game, which is the stable coins, which is a tough regulation. 00:36:31.369 --> 00:36:36.669 So the new games with new players such as e-money institutions and banks will 00:36:36.669 --> 00:36:38.689 be regulated very, very tough. 00:36:38.909 --> 00:36:44.309 And I think basically the regulator imagines this new product in this new world 00:36:44.309 --> 00:36:50.509 to be in the hands of the existing players, like the existing banks and the 00:36:50.509 --> 00:36:51.849 existing e-money institutions, 00:36:52.169 --> 00:36:54.289 because they already have a license. 00:36:54.289 --> 00:36:58.669 So for them to issue this token like a stable coin is not that difficult. 00:36:58.869 --> 00:37:01.349 They only need a white paper and then they can start doing it. 00:37:01.449 --> 00:37:06.929 While it's a startup like Circle or even Tether, if they want to offer their 00:37:06.929 --> 00:37:10.329 stable coins to the European Union or to the European market, 00:37:10.569 --> 00:37:14.009 they would need to first apply for a license, which takes very long, 00:37:14.149 --> 00:37:16.889 which is not that likely or not that easy to get. 00:37:17.109 --> 00:37:21.449 And then they would be happy to continue providing their services to the European 00:37:21.449 --> 00:37:24.929 Economic Area. I would, in my position, if I would be U.S. 00:37:24.969 --> 00:37:29.309 Tether, probably this is the reason why Tether is not really entering right 00:37:29.309 --> 00:37:30.049 now the European market. 00:37:30.429 --> 00:37:35.129 Think of, is it worth it? Is it worth it to enter the European market or continue in Europe? 00:37:35.229 --> 00:37:41.489 Maybe I should just continue with Africa and Asia and, I don't know, 00:37:41.549 --> 00:37:46.229 the Middle East, yeah, where you do not need to have a stable country regulation license. 00:37:49.149 --> 00:37:55.569 I see. so a lot of a lot of. 00:37:57.774 --> 00:38:03.674 Interesting thoughts in there. So basically, what the European Union is trying 00:38:03.674 --> 00:38:09.294 to do is all digital assets that are close or very similar to financial services, 00:38:09.574 --> 00:38:12.254 push them towards financial services. 00:38:13.074 --> 00:38:17.254 And there is some that are left. 00:38:17.334 --> 00:38:22.334 And basically, that's a space you can move in as an entrepreneur. 00:38:22.334 --> 00:38:24.814 Did I get you right some way here? 00:38:25.654 --> 00:38:31.214 Yes, yes, you got me right, Joe. So if you're like from the DeFi sector or you're 00:38:31.214 --> 00:38:34.494 like from the sector where you have always issued utility token, 00:38:34.794 --> 00:38:38.654 the European regulator is fine with it, that you can continue with that. 00:38:38.794 --> 00:38:41.574 Just make sure that you have your white paper in place. 00:38:41.834 --> 00:38:46.854 And if you want to provide custodian services, if you want to provide a platform, 00:38:47.014 --> 00:38:50.774 a marketplace where people can trade your cryptocurrencies and utility token, 00:38:50.774 --> 00:38:55.874 broken, make sure that you have a license as a CASP. Yeah, that's basically it in a nutshell. 00:38:56.074 --> 00:38:59.354 And we should not forget why we have all of that regulation. 00:38:59.654 --> 00:39:04.694 And this is, I think, very important. The origins of regulating crypto assets, 00:39:04.894 --> 00:39:08.134 like the origins also of regulating all of financial instruments, 00:39:08.274 --> 00:39:13.574 comes from the anti-money laundering rules and obligations, 00:39:13.814 --> 00:39:19.754 which are suggested on a yearly basis by the Financial Action Task Force, by the FATF. 00:39:19.754 --> 00:39:24.954 And the Financial Action Task Force, if you think back, it was in December 2013 00:39:24.954 --> 00:39:30.534 already, was the first international body which said we need to have regulations 00:39:30.534 --> 00:39:34.394 in place for virtual assets, for virtual asset service providers. 00:39:35.354 --> 00:39:40.294 So if you want to understand how the regulation evolves or develops for crypto 00:39:40.294 --> 00:39:42.974 assets, always have a look at the FATF. 00:39:43.074 --> 00:39:44.934 Always look what the FATF is recommending. 00:39:45.274 --> 00:39:49.814 Always look what the FATF is publishing. it all goes hand in hand. 00:39:49.954 --> 00:39:56.814 So anti-money laundering rules and regulation of service providers goes really hand in hand. 00:39:57.214 --> 00:40:03.754 So that means basically it's not necessarily all the questionable things that 00:40:03.754 --> 00:40:09.454 have been going on in the digital asset market that have been triggering this. 00:40:09.594 --> 00:40:16.554 But money laundering, tax avoidance, terrorism financing, those have been the harder pieces. 00:40:16.554 --> 00:40:22.614 And that's why everything was pushed towards regulated entities who already 00:40:22.614 --> 00:40:25.434 have to comply with the respective regulations there. 00:40:26.420 --> 00:40:32.520 Exactly, exactly. And this is the, we call it the so-called obligated parties, 00:40:32.600 --> 00:40:34.000 or some would say intermediaries. 00:40:34.100 --> 00:40:38.840 And this is actually exactly what the DLT, the distributed ledger technology 00:40:38.840 --> 00:40:41.020 does not want to have intermediaries. 00:40:41.040 --> 00:40:48.600 Yeah. So it doesn't really match or fit, but somehow the regulator is trying 00:40:48.600 --> 00:40:51.060 to match it and to fit it or to make it be fit. 00:40:51.520 --> 00:40:58.000 And this is also the reason, for example, why if you have a pure DeFi, 00:40:58.180 --> 00:41:03.920 so a decentralized finance player, which is not having any intermediaries, 00:41:03.920 --> 00:41:08.080 this player will not be regulated by Mika because the Mika is only applying 00:41:08.080 --> 00:41:12.120 to intermediaries, to people, to obligated parties. 00:41:12.460 --> 00:41:15.920 If there is no intermediary or no one who has the stakes in hand, 00:41:16.560 --> 00:41:21.660 such as a really truly decentralized finance environment, then the Mika is not applying. 00:41:22.460 --> 00:41:26.800 Adi Reza, I would say those are really interesting closing words. 00:41:26.820 --> 00:41:31.100 We're running already around 40 minutes for our recording, which is a little bit on the longer side. 00:41:31.100 --> 00:41:37.500 I nonetheless I hope to have you back pretty soon and then we can talk about some other. 00:41:39.140 --> 00:41:42.400 Legal framework here that our audience needs 00:41:42.400 --> 00:41:45.200 to be aware of great thank you Joe if anyone is 00:41:45.200 --> 00:41:48.060 interested to to tune in we have a also a 00:41:48.060 --> 00:41:51.160 web page paytechlaw.com check it out or 00:41:51.160 --> 00:41:54.620 if you want to connect with me on LinkedIn I'm very active there just connect 00:41:54.620 --> 00:41:58.040 there thank you Joe probably my pleasure everybody who'd like to learn more 00:41:58.040 --> 00:42:02.860 go down here in the show notes there's a link to pay tech law as well as to 00:42:02.860 --> 00:42:08.080 your linkedin profile and your company website have a good day bye-bye. 00:42:11.600 --> 00:42:18.480 Music. 00:42:13.260 --> 00:42:22.160 That's all folks find more news streams events and interviews at www.startuprad.io 00:42:22.160 --> 00:42:24.680 remember sharing is caring. 00:42:25.200 --> 00:42:38.400 Music.