Belgium's digital minister says EU will 'bring order to crypto' and create its own blockchain | The Crypto Mile
Watch: Belgium's digital minister: EU plans to 'bring order to crypto' and create its own blockchain | The Crypto Mile
The EU will "bring order to crypto" and create its own official blockchain for Europe, Belgium's digital minister has said.
On this week's episode of Yahoo Finance UK's The Crypto Mile, Belgian secretary of state for digitalisation Mathieu Michel emphasised the need for trust and regulation in the rapidly evolving crypto ecosystem and said the EU's new Markets in Crypto Assets (MiCA) bill solves this.
The MiCA legislation is the world's first regulatory framework for crypto-assets and is set to come into force between 2024 and 2025.
"The new MiCA bill will boost the crypto industry in Europe because Europeans are really strong on building regulation, and the purpose of this regulation is always to build trust," Michel told The Crypto Mile.
"There are lots of opportunities for blockchain, in the way value is exchanged, but it has to be done in a trusted ecosystem, which is why MiCA has the power to unleash the potential of this industry.
Read more: Europeum: A blockchain network for the EU
"If you think that crypto is just a currency, this is a bad way to identify crypto assets. Many people only see crypto assets as a financial tool. I see them as a way we can exchange value, and a way we can protect privacy. The EU will use MiCA to bring order to crypto, through regulation."
Michel said that the framework was not made to give the EU a competitive advantage over other financial hubs, "but to unleash power an innovation through trust".
"It will help us develop a strong crypto ecosystem, because we have a lot of talent in Europe that understand the next wave of innovation will be web3," he said.
Europeum, the EU's blockchain for Europe
The EU also plans to develop "concrete" blockchain applications in 2024, with the creation of 'Europeum', a blockchain for Europe.
This will concentrate on the exchange of data related to the bloc's citizens, such as driving licenses, identity cards, and property deeds.
"Belgium will have the EU presidency in 2024, and one of my goals then will be to transform the European blockchain concept from a technical project into a political project, to create concrete applications for the blockchain, pioneering digital wallets and digital identity," Michel said.
He added: "I have suggested the idea of a European blockchain, called Europeum, for digital payments and smart contracts. The need for a European blockchain arises from concerns over the dependence on foreign technology providers and the potential risks associated with that. It would have several advantages.
Read more: Philip Hammond warns of 'real risk' to London financial services from EU crypto bill
"In the first place, it would offer greater control and independence over digital payments and smart contracts, ensuring that the EU is not reliant on foreign providers for critical infrastructure.
"Additionally, a European blockchain could provide greater security and privacy for transactions, as well as offering benefits such as transparency and efficiency.
"Furthermore, the use of a European blockchain could facilitate cross-border transactions and data sharing within the EU, reducing the complexity and cost of cross-border payments and enabling greater interoperability between different systems.
"Identity cards, passports or title of property could all be deployed on a blockchain, which would provide great value, with the greatest value being in the data itself. The data of each citizen, such as title of property and driving licence and so on, could be safely exchanged on a regulated blockchain."
He said: "Work has already begun on this blockchain, with the European Blockchain Services Infrastructure (EPSI) project which exists right now in Europe.
"EBSI is a permissioned blockchain, meaning that only authorised parties can participate in the network, making it more secure and suitable for sensitive applications such as government authentic sources.
"Additionally, EBSI runs on Proof of Authority (PoA), a consensus algorithm that requires much less energy consumption than the proof of work algorithm used by many public blockchains and aims at being blockchain agnostic."
MiCA (Markets in Crypto Assets) regulatory framework
MiCA is a proposed regulatory framework for crypto-assets across the European Union. The regulation would introduce requirements for issuers, service providers, and trading platforms, among others, to protect consumers and prevent market abuse.
Michel said that by providing a clear and comprehensive regulatory framework for crypto-assets, the EU would become an attractive destination for web3 talent and businesses.
Read more: UK crypto hub could have 'significant competitive advantage' over EU, claims Revolut lead
"Additionally, the EU has a large and well-established market for financial services, making it an ideal location for crypto companies looking to expand their services beyond the crypto industry," he said.
"The introduction of the MiCA regulation would bring crypto-assets under the same regulatory umbrella as other financial instruments, making it easier for crypto companies to interact with the traditional financial sector.
"Moreover, the EU already has a strong and proven commitment to data and consumer protection as well as market abuse prevention which are additional competitive advantages in general but could equally and particularly attract web3 talent and businesses to Europe."
Michel said the combination of the digitisation of traditional assets on blockchains and artificial intelligence could pose risks for existing financial systems.
"For example, the use of AI for financial decision-making could potentially exacerbate systemic risks in financial markets, particularly if the AI models are not well-calibrated or are trained on biased or incomplete data.
"Therefore, it's essential that policymakers and industry leaders work together to develop a framework for responsible AI and blockchain use, taking into account potential risks and ensuring that these technologies are used in ways that benefit society as a whole."
Read more: Bank of England sets out new plans to regulate crypto
Co-founder of Winngie Technologies Ibrahim Ipek told Yahoo Finance UK: "While MiCA may not be a revolutionary regulation in terms of its capacity, its impact on several European countries provides leverage for the crypto industry.
"In addition, MiCA serves as a benchmark for all crypto regulations, similar to the GDPR privacy law. Other legislation will be based on MiCA and will implement further regulation on top of it.
"MiCA provides a comprehensive package for all 27 EU member states. It creates a market abuse standard that could be used in all member countries. Overall, MiCA provides a clear and comprehensive regulatory framework for crypto-assets in the European Union. This helps to reduce regulatory uncertainty and encourages innovation in the industry.
"However, there are still some parts of MiCA that need to be more established, such as those on decentralised finance (DeFi) and non-fungible tokens (NFT). Nevertheless, if we consider MiCA as a full package, it will be essential in attracting new businesses to Europe. As it is often said, Europe is good for regulation but late for innovation, while the US is the innovation place but late for regulation. MiCA may be proof of this."
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