# ETHWarsaw 2023: MICA Panel - Fireside chat: regulatory framework

- Channel: [ETH Warsaw](https://streameth.org/eth-warsaw)
- Date: 2024-10-07
- Duration: 29:50
- Watch: https://streameth.org/watch/yt-4Fer98FQf-4
- YouTube: https://www.youtube.com/watch?v=4Fer98FQf-4

## Description

Panel Discussion - A fireside chat about MICA and how it affects the industry.

Follow us for more updates: https://twitter.com/ETHWarsaw

## Transcript

hi everyone how are you my name Isis and today I will be moderating the panel on ma uh I know MAA is the favorite topic of everyone here and in the industry so uh we're going to be diving deep into it and trying to understand it as much as possible and how it affects the industry uh with me I have arur and Yik uh and I would invite you guys to introduce yourselves quickly Yik you go first uh hi Eric novaski uh happy to see you here I'm with three layers lawyers on the stage I'm really happy that anyone is still in the room but I guess you know in the coming months and years uh it will turn up that we we are really needed and uh I'm I'm I'm a co-founder of toal which is Law Firm I'm also vice president pointer Capital which is private Equity venture capital u firm and um I've been in the industry since 2009 i' I used to work for the Polish Financial supervision Authority I work for the bank for the investment fund management company and investment firm and since 2016 I'm uh mostly providing services for payment uh institutions so fintech industry and in terms of crypto I'm an investor and I'm also used to be a contributor to to the xow as legal council I co-created um The Association of u c crypto lawyers called blockchain lawyers group uh which now consist of more than 100 lawyers from around the world and uh yeah so that's me hi my name is arur bilski uh today I represent binance as a senior legal council obviously a usual disclaimer that all the opinions that I give are on my own nothing that I say is legal advice blah blah blah U this is a regulatory panel so uh hopefully it would not be boring to you but because you're here I guess that you're interested in it and yeah when it comes to uh my experience I'm Attorney at Law in crypto since 2017 um started with ramp Network as one of the first employees before that much like er I worked for traditional Finance so Banks also law firms things like that uh right now happily advising uh binance when it comes to mostly C region but also Fiat services and yeah that's me lovely and a few words about me um my name is zovon conis I work for and NBA NBA is an association created by the commission to ensure that we represent the industry as much as possible and as well as possible to all conversations that have to do with Finance which is my expertise as well as other blockchain based applications um so I guess we should start by explaining what maika is um a quick question for the room who here's a lawyer one person two people the others are scared there's more of course um and who here has actually studied M this far a couple of people have you heard positive things about mik have you seen positive things or negative things about this regulation thus far positive right so it's a pretty good first step for the industry but what does Mika entail well first thing first you need to understand that Mika was written in 2019 um 2019 was was a long time ago for our industry that is very fastly paced now it was also written before the defi summer so that's very important for us to understand where we are with the regulation and what it does specifically MAA and please correct me if you think I'm wrong or you want to add anything else um defined crypto assets defined crypto asset service providers created a framework for any public placing of crypto assets or selling of crypto assets and public raising and and defined stable coins in two different methods as well as set requirements for stable coins in the industry um am I forgetting anything else maybe it's worth mentioning that the the first intention was to to tackle somehow the the the the Libra project by Facebook so that was the I think that the B that was the the main issue that you authorities wanted to um to address I I would state that it was make the biggest thing that they addressed as well as the Ico cat of 2017 2018 cuz of course you see that much of what is in MAA is about defining who these people are and how they raise money and what they need to en ensure um that they provide to their customers when it comes to disclosures etc etc so that they can raise money effectively and legally um they also talked a little bit about nfts do you want to add anything else um yeah just one thing that uh uh Reading MA gave me a very strong Deja Vu feeling because uh a lot of what's inside is pretty similar to some of our regulations that are already on the market and by those regulations I mean for example uh prospectus regulation for financial instruments uh mhid directive also for financial instruments uh uh M regulation so Market abuse regulation also for financial instruments by the way and payment services directive so it's not like it's something entirely new I mean it is in a sense but at the same time European Regulators legislators based very strongly on what's already existing on the financial market so I think that MAA in a sense tries to mimic what we already have and since you are mentioning about that and existing regulations it's very important to mention that any crypto asset that is attached to security is not in the scope of MAA tokenizing any or securitizing anything is not part of MAA it's part of miid 2 which is the financial regulation that has been applied to the European Union as a directive actually for quite some time and I think it's also very important to mention a bit more about what a Casp is a crypto asset service provider MAA defines a Casp as the provision of cost and administration of crypto assets on behalf of third parties the operations of a trading platform of crypto assets the exchange of crypto assets for viat currency that is legal tender the exchange of crypto assets for other crypto assets the execution of orders for crypto assets behalf third parties the placing or offering of crypto assets the reception and Transmissions of orders for crypto assets on behalf of third parties and providing advice on crypto assets so the marketing panel before us might want to take note uh in the near future um of course we can talk a bit more about that but I just want to let you guys intervene and provide any feedback so far about the scope and anything that might be missing from these Services well it's also worth me mentioning what is not included yeah and what the general approach taken in maai is simulation of what's left outside so we already mentioned that uh these are the the investment instruments and the security so everything that is already covered by Financial regulations um in the in Europe but uh what what Mika also mention is the this aim of decentralization it mentions that it does not aim to uh to cover uh the crypto Services uh when they are fully decentralized of course the the problem but maybe for for today I would say the opportunity uh is that is of course it's uh um it would have to be um decided what is really the centralized uh crypto asset service what it is not uh but anyway uh it it leaves the the full decentralized entities outside so potentially the Dow in this uh purely anarchistic uh way that we consider them uh should be left outside uh but at the same time the entities that call them themselves D that control uh protocols that control uh blockchain that control access points to this and even though they call themselves dowas would still be covered uh by MAA as Crypt asset Service uh providers and what's also not included are uh nfts yeah um notable um tokens uh but only if they not do not resemble the Securities so uh so so in fact when when only when they are not fible yeah that's a very interesting top topic and uh uh I smile right now because I've read 100 times that m is uh revolutionizing Market of tokenized assets and that's not exactly the case I mean of course when you uh take an initial glance at what MAA offers you will find the so called Arts so asset reference tokens and when you hear this term for the first time you may have an impression that we are talking about tokenized assets like uh those used for Investments and it's not exactly the case in fact Arts are the types of stable coins so if we want to uh tokenize assets for investment purposes and not just keeping a value a stable value of a token I don't really think that Mika would help us and uh if you later if you later remember anything from this panel I think it's uh it can be uh one of the key topics that uh uh something what y mentioned before that uh those assets that may be classified as financial instruments because of because they are for example tokenized debt or they are tokenized assets for the purpose of uh Investments uh that may be uh quite quite quite a key thing because uh um the fact that we have MAA doesn't mean that we cannot fall under different regulations like for example miit the infamous miit and um also we need to remember that maika is not the first regulation at Le at least not first European regulation that refers to Virtual assets we also have MLD so altim undering directive uh but the interesting thing here is that the definition of crypto assets is a little bit different if we take a look at MAA because for anti-money lering directive uh visual asset is basically uh any right or value that can be stored electronically and is used for exchange um and for maika it's a little bit different because uh MAA only refers to value or right that are uh stored on uh stored and can be transferred uh using uh either blockchain or uh other distributed Ledger technology so uh sometimes tokens Can can be classified as crypto assets under maika and at the same time not being classified under anti-money Ling directive they can be classified as virtual assets for both purposes or they can be neither so it's uh kind of tricky and uh uh you better ask your lawyer if you're unsure what you're talking can be absolutely and listen I think we should get to the gist of the conversation now right because I think we've defined a bit about who we are what we do we've defined um what maika does and what his scope and aim is um so how does that affect essential exchange or a centralized player and I'm going to start with our two first and I'm going to ask you the same question for decentralized players Yak afterwards uh okay so uh of course one thing that I want to also mention and uh I think it can be quite good takeaway that uh typically people think that MAA will affect exchanges and it will of course it it already uh affects us but uh at the same time it can affect everyone because uh just as mentioned before for example uh even uh regular crypto advice would be a licensed entity so uh I can imagine that you know YouTubers talking about crypto would have to apply for a license which can seem quite crazy but you know it is what it is um and uh not only them also regular people like uh all the investors that uh engage in crypto activity that uh buy and sell crypto will be affected too I think we'll talk about it later but uh uh one of the things that M also introduces is uh um rules of preventing Market manipulation and Market abuse so uh yeah no longer no more pumps and dumps but yeah when it comes to exchanges I think the well and also issuers of course it's because issuers like for example issuers of stable coins but of other cryptocurrencies as well we have to publish uh um information documents like white papers that would be quite similar to prospectuses but uh answering the question finally I think that for exchanges the main uh challenge is to will be to obtain a license simply but I wouldn't even call it problematic in fact in my opinion all of the major players were waiting for it because uh uh it's uh kind of difficult to operate in uh um in a legal environment this that's uncertain that you are like left in a gray area somewhat and uh because um MAA introduces this licensing regime and authorization it can of course be difficult to obtain a license you would have to submit a lot of documents you would be subject to uh certain regulations uh uh smaller entities may have problems doing that but at the end of the day it would provide uh a lot more safety also more safety for the clients especially but more certainty on the market so I think that the outcome would be positive at the end of the day y would you agree and how would that affect the startup trying to build a dow and other Dows that might be already active as MAA do you think it affects them or not really yes I'm I'm I'm I'm still trying to to to be like mostly positive uh so in case of of DS in case of decentralized exchanges and in general in case of the centralized finance and IFI I would say this is an opportunity uh uh I would say that MAA does not uh directly address the issue by either prohibiting or forcing dexes or or Dows to to to become authorized uh additionally um mic also uh already ordered the further works of the European commission and supervisor authorities in relation to the centralized Finance so it's good that the that the Regulators are are were aware of that uh that defi is is is just the topic that should be treated in a different way and uh I believe that in in in case of of of Dow in case of Dees it will but especially in case of DS it will force uh those that that stand behind them to really to to decide you know whether this is a like the this is the the project that uh that in fact is not de centralized and in fact it's just controlled by the by the by one particular company which would mean that they would simply become um covered by by Mika they would be forced to to obtain the authorization which is not a bad thing and I agree with Arthur especially in case of certain like treatment of certain certain clients by certain Do decentralize or Die pretty much yeah yeah that's that's exactly what what we uh what what I what I would say so uh like from the from this like an anarchistic side of me I I really look forward to seeing you know how uh those certain entities will try to like to to to find their Niche but outside of still being to to be still out of the regulatory regime so which is might be strange thing for me to say as a lawyer because I ear my living like from from organizing obtaining licenses Etc but yeah but this is what I believe in and this is what I look forward and and and this is what I'm really excited about thank you very much now I do want to open up for Q&A very very soon but I have one to ask you what do you think the future holds and do you have any closing thoughts about Ma and the future regulations in Europe well maybe I can I can say that there there's an opportunity yeah because I I I come of course from the traditional Finance so but I remember uh working with fex and and meeting people from from the fch world even before the PSD which is the payment services directive and to to some to certain degree uh the the the word of payment services was a little bit kind of wild west yeah because it was outside of of the banking regulations uh it was not that govern but governed uh and uh I remember when the psd2 was was introduced uh there were certain certain actors from the from the market saying that it's going to totally uh destroy the market uh that the banking uh sector will will take over all the payment uh in payment services but uh after you know after this uh all these years we can see know that uh that this was indeed an opportunity and I I can say as Lear that it's not that hard really to to obtain the the license it's not that hard you know to to have those rules written and and and uh and it's not that hard to stick to them so for me it's an opportunity and it's also investment opportunity as as a as a VP at poter Capital I see it as a investment opportunity because you know the European Union would be the market which has like the the highest level of of um of of of the regulation which is also good when you want to spend your money and you don't want to have that money CED by the government which is for example happening right now in the US so my opinion yeah so as for me uh if you guys interested in Mika I can uh recommend and you speak Polish uh I can recommend a book uh metat I'm one of the alers um it's pretty cheap I think last time I checked it was like T Lotus or something uh in the internet and there is a chapter that I wrote about Mika that basically sums it up so if you're interested I can I think I can recommend um closing thoughts um I guess there is a lot to discover when it comes to maika because people often forget that uh that certain provisions of uh this regulation would affect and change the business in a way that wasn't seen before like I can give you just two examples one example is staking and uh earning profit or interest I should say on stable coins make up Pro more or less prohibits that so no more staking sorry uh the other thing uh about M at least not when it comes to ARs and Ms um other thing that uh is uh uh quite interesting um is um well Market manipulation I've mentioned already so so maybe no need to talk about it uh uh again but uh yeah for for example for issuers if we want to issue a token right now it's kind of deregulated um on unregulated I should say um and most people talk about how Mika will influence that in the case of publishing white papers that would be subject to S regulation that's true but people often forget about for example the right of withdrawal so if you issue a token uh you would have to allow your investors to get their money back within 30 30 days if I remember correctly so it would be a huge problem for a lot of issuers and uh may change the way uh the way the the market works right now it may also change how uh the marketing is done for such offers because uh uh right now we often see uh issuers uh playing on the Motions things like that and if you uh uh there's foro of course things like that but when you have 30 days to refin and uh withdraw the money that you paid for a token it's a completely different story thank you very much I also want to add just a couple of of things on here remember in the services that a Casp offers staking taken as a service and lending are not under casps this is an Omission that's going to be covered by maika 2 which is discussed but not even planned yet and we expect that mik 2 is also going to touch up on defi Dow NFD sales nfts are a little bit in MAA when they're used to fund raise money you need to have a white paper and some of these requirements um but I have I want to open up for Q&A in just a second but I want to ask you guys quickly would you put your money into an exchange that is licensed MAA or an exchange that's not licensed MAA um just quickly one word answer regulated or unregulated I would I would do both I guess I I would I think I would still I would still stick to to the centralized entities but you know in in terms of like gen General use I would I would favor the the M regulated entity I would like I would just like to have my like to know that my funds are not are separated from the companies funds I would be I would be grateful that you know that uh that in in case of of the communication there's actually someone liable for what is being put in the in the white paper so uh yeah so I I guess you know a lot of of us may may were victims of of Shilling Etc so I guess you know in case of M regulated entities this it's less probable Still Still Pro possible but like I guess less probable yeah license Central exchanges whatever answer did you expect me to give and We Know M is going to be implemented by the end of 2025 would you issue a token now or after 2025 well I can say you know that the people the clients of myri they they they do not wait for for for for ma to be enacted because you know the the business must go on and uh so no one is really waiting but uh but it's smart to know what is coming yeah it's smart to to to know what to expect and not to be surprised you know in two years and and then not to have to like prepare all those documents do the authorization and and do everything so I I guess you know smart smart smart people from the market they they just start to know to to uh to prepare themselves for the for for maika I think it all depends on who's your target base if you want to sell your tokens in East Asia we don't really care about MAA right and it's something that people often forgets forget like for example they register the company in Switzerland and say oh okay I'm in Canton I can do anything I don't care it's not really like that because maika follows the clients each time you would offer your tokens to clients from the European Union you would have to meet the requirements that are provided by the regulation so yeah if you if you're uh if you're client based if well client based if you want to sell your tokens in the European Union and you as an issuer think that it would be difficult for you to meet the requirements you don't want to bur the additional cost you don't need uh additional credibility it's better to offer now but if you want your token to be more credible let's say you may very well wait but as we can see on the market it's uh not only about legal things but also how Market works if we right now we in a um bar Market everyone knows that maybe it's better to wait for a bull market to uh to issue your tokens not because of legal things but because of better valuations because of more Market participants because of more optimism on the market so I don't think that at the end of the day uh legal issues would will be they will be important but they will not be the key factor that would decide on the timing of the issuance thank you so questions uh we have two questions yeah I think that we have uh time for both I mean we don't have but uh let's quick thanks um I I just wanted to to let you know that I think I'm one of the only representative of crypto Valley in t here I think and we we we do have regulation in Switzerland as well so you canot you cannot do whatever you want out of Switzerland so it's a if you are a Swiss company and you're selling to European citizens you need to be complied with Ma so you need to have a license and also in Switzerland you you have to do um okay so it's it's even worse if you place your company in Switzerland you would have to meet the Swiss regulations and after that if you offer your tokens to the clients from the European Union you would have to meet regulations of European Union so Double Trouble basically but yeah sorry I know that in fact I think that TK and Switzerland as such has one of the best regulations in the world when when it comes to when it comes to blockchain and new technologies I uh I I wouldn't like my intention wasn't to mock anyone what I wanted to says that uh in regulations are crypto-friendly in European Union not so much and uh uh a lot of people think that if they register in one country like I don't know it can be sels it can be uh I don't know Bolivia ASC Empire antara you name it any jurisdiction and it doesn't mean that you can ignore all the other jurisdictions where you offer your tokens it's also worth noting that uh EU customers would still be able to access the crypto services from uh from third countries but uh the only problem would be to Market them into the EU so that's the case but you know the if someone is using already using it with and and wishes to to to use additional crypto service from outside of European Union it will be still be possible yes exactly and no offense apologies sir you know if I offended anyone it was my intention cool thank you so on my side one question relation to defi I know that def is not covered by Mika but you mentioned that staking stable coins would be illegal or impossible uh in the future in the European Union you want so I my general question is like um how do you see regulations affecting defi um in the future like kyc AML what what would be the expressions of regulation on on defi I can I I can answer in relation to to to mik so right now the Mika's approach is that uh when when um in case of you in case of of staking depends of of really what kind of program we are we are talking about because you know the the the market term stum sometimes covers different things so the one thing is for example the you cannot earn interest right yeah yeah for example the M prohibits um obtaining interest on stable coins yeah but on the other hand uh it allows uh to issue uh tokens um um as a kind of reward for uh for the tokens that you already provide so so for example this is this is okay and this is like this is in accordance with with convr verion of M in in legal words matter so the way that you Market your interest as a reward or air drob is going to help you become compliant um and also we didn't touch upon many other regulations right so the amlr a regulation on AML which increases the requirements from am am amld5 which is what we we had to deal with in 2017 2018 uh there's also dac8 which is going to tax or present a framework for tax and crypto assets um and ultimately we are maturing as an industry and this is going to allow us to achieve many other things and make a lot of money hopefully doing it so yeah just keep it positive in my mind think that's I think that's time I think yeah I think that we need to just just one sentence maybe I think that for defi the most important part of MAA is em EMT so e tokens because they would um be the new immany great uh thank you very much everyone thank you very much for our guests and uh