Serbian - Croatian regulatory recap (Pravne mudrolijeth) - Ilija Rilakovic + Vlaho Hrdalo

okay you guys ready to start so this is a fireside chat with our fantastic two lawyers coming together to teach us everything about law so I'm going to do a quick intro of who's who you could actually you can guess who's who um no I'm joking I'm joking obviously so we have Ilia and vlajo who thinks who's who who's Elia who thinks who's the Elia nah okay so both of them have very extensive experience I'll just give you a brief overview and then I'll let them take it on so Ilya shocking I know has been a lawyer since 2016. uh he's also a great dancer by the bye um and he has been the member of the bar association in Belgrade since 2016. um his expertise include law tax law and law of digital assets he's also fun fact our lawyer for the conference so if you've had to sign a contract with us he's written it up if you sit on full you know who your guy is um he holds an llm degree I hope I said that right in economic analysis of law from The Faculty of law University of Belgrade nice and um he also has another degree in international business law from Amsterdam that's it that's it it's too much it's too much it's too embarrassing joining him is an equally impressive counterpart and he has been a lawyer for over 12 years shocking as well 12 years um of pqe and the chairman of Croatian Association from blockchain and cryptocurrencies so we've got a bit of a law expert situation going on here especially for crypto um he's the author of several research papers of which terrorism and insurance from that risk was introduced into the library of the Croatian parliament in May 2018 wow it's very cool stuff I mean everyone assumes we're terrorists and I don't know if I'm allowed to say that so no yes you done said in 2019 he finished a course at the University of Pennsylvania on Privacy Law and data protection fun stuff in 2020 he initiated the establishment of the legal Tech working group with the creation Bar Association after which he was voted its first president so not only do we have a lawyer we have a president in the room as well aspiring politician cool so uh he also organizes conferences in all his spare time both of them have summer spare time they're doing lots of different conferences as well it's blocksplit.net and moneymotion.eu perfect so I will hand over to them because they're more fun um and we'll kick it off thanks for the introduction you're the host so um people have some expectations here from us uh has anyone seen a talk from Barry Schwartz called Paradox of choice just to you know the talk yeah so generally a great book and a talk it's about how having too much choices actually makes creates a paralysis in this decision and so he had this inter he wrote entire book to explain to himself why this is the case and then he ends the talk with this like this is what you came for the secret to happiness is low expectations so lower your expectations but anyhow we will solve all the legal issues during the 45 minutes one hour how how much do we have um depends on the interest yeah and as with those punk bands that play in front of audience of 15 people we will devote 17 people 17 people yeah okay you get two questions each yeah frontrow yeah so everybody gets song everybody get a question free legal advice for everyone oh we have to get serious so no this is a point of fireside chat okay cool then okay so how how do we start um no no this is really good one if you if you that's for the financial stuff yeah no that doesn't happen with lawyers if you really get uh two of us anything if you get serious uh legal advice from us today we will we will review our speakers policy for you who ask that tell us briefly what are the current state of issues with uh creation regulatory framework what's brewing inside of ubik for people who are not familiar with with uh new it's not pro product it's project that you are rolling out oh yeah well some of you were there recently I remember the faces but we had our own conference in Split called blog split the other two weeks ago um so we have this Association for blockchain cryptocurrencies in Croatia it's called lubric and we presented something called Ubi Court which is a an arbitration specialized arbitration for web3 projects uh the idea is that generally arbitration works in a manner that if you want a non-lawyer and no not a court to decide on your dispute you can so the state is fine with this as long as no one forces the other person into it so if you and I decide that we think Ilya should be the judge of what we have a dispute about the government says okay well I'm fine as long as you didn't pressure me into it or I didn't pressure you into it and we decided to I mean we had this Association for more than six years we were one of the first self-regulating bodies in the world or in Europe so we thought it would be a good venue for an arbitration that would be specialized which means that a lot of people asked me this I thought it was common knowledge but as usually I was wrong uh arbitrary arbitrators don't have to be lawyers so if you have a dispute uh that is really really technical you can you can actually appoint a Marco to be the arbitrator because he knows stuff he knows the technical stuff okay it might be wise because arbitrations usually have like three judges it might be wise to put at least one lawyer so he knows the rules and stuff like that but you don't have to have all the lawyers deciding other matters which which seems logical sometimes because uh the web 3 disputes that come into our hands are usually very technical and maybe not mark maybe that's not great but the the thing is that I think from from my experience is that people would rather have a knowledgeable non-lawyer deciding on their like really specialized issue that may they may have then randomly aside uh assigned uh 50 plus lawyer that that was you know his previous or her previous case was uh dispute about you know the border between the two lands and the next one is of whether someone developed a Marketplace for all the change that it was agreed upon so yeah so basically you provide infrastructure and good combo for for people who need Tech expertise and uh like some someone who is like Marco who understands uh things how working in blockchain I think so yeah and the lawyer who will observe the process and maybe drop the decision to make it fair and square yeah I mean you know how arbitration works but generally if there's two if you have two sides so you you pick one arbitrator I pick the other and two of our arbitrators pick the third one so you don't actually decide on who the third one is the president of this little committee so you don't actually pick the all of them but you you give one Aggie one they they pick the third one and it will be prudent to have one lawyer but then it's not a requirement you can have three developers be the arbitrators why why people choose arbitration in non-web three matters because one of the reasons there's no appeal okay so uh one of the reasons why an average case in Croatia takes like seven years because you have these numerous appeals and reappeals and revisias and whatnot call the legal remedies you don't have it here so the decision uh that is rendered by arbitration is final and you can actually take it to to official uh government bodies for execution so this is Handy and is it similar to some project that exists like Claris or Aragon down that provide yes or no because they are actually on chain Arbitrage you know and this is just a normal arbitration where we'd like uh experts to be the arbitrators so it's that it still doesn't it might have still doesn't have a non-chain element but I don't know it's just the first it was like presented two weeks ago we have zero cases so far so anyone with a dispute or Brewing dispute so you you you roll it out and just wait for the first case or you yeah so it's up and running you just it is I mean great you have your set of rules yeah yeah I am maybe I downplayed it a bit but yeah it takes a lot of work you know you have to write the rules and pick the first arbitrators decide on what happens if a Dao applies so that's that's done yeah we don't have a case yet yeah should no no worldwide yeah yeah you pick the idea is that uh since it's you can't force someone into it you need to have something called like an arbitration clause which every contract has a clause that governs the jurisdiction and uh the governing law like if you're you're for a German company right so if you're a company and my company registration company have an agreement it says in case we enter into dispute we will uh the government the jurisdiction will be with the creation courts but they will use German law to decide you can you can you can pick it up yeah you can mix mix and match uh that's the usual thing but you can also say it won't be it won't be with the chords we will have arbitration and we will use Singapore law for instance because we think it's or Serbian law which has a specific digital asset law like the only in the world or among the five in the world so we just apply Serbian law but we want uh people from ubiquord because they know what what this stuff is I don't have to explain the blockchain for the first three hours of the hearing and the idea is that there's no hearing actually but it's document based so you just Lodge everything you have just a second you just launch everything you have from one side everything from the others we look at documents I don't think there's point of hearing out people and saying what they thought in blockchain just send everything you have and we'll decide yeah there's one there is one restriction if if you have both parties from the same country you can't pick foreign law okay so if you're where are you from okay if you have a U.

S counterparty you couldn't at least in Europe you couldn't pick racial law but if you and I had had a contract we can say that Croatian uh courts will use California law to decide in our matters yeah yeah yeah yeah yeah it's handy if people agree on the preferred law you know yeah and that's super complicated I had a case in this agreeable they were pretty expensive and super expensive and super lengthy actually because I had a case in Zager where Liechtenstein law was uh uh to be I mean they have to there's something called the I knew this in Latin but it was a long time ago yeah which means uh the court cannot say I won't rule on what you brought before me so if the court has jurisdiction they can say I really don't understand liquor style now what happens is that the court is this boring to you I know it's procedural stuff foreign okay just one one word is that the creation Court then went to Creation Ministry of Foreign Affairs and said uh talk to the minister Foreign Affairs of Liechtenstein and get us a verified translation of this particular style law and like nine months later it arrives and that's about it but if you come to check me up later so yeah and um let's discuss maybe some weird uh policies of national authorities I'm particularly interested in what you mentioned about proving the price of crypto transactions so can you give us this opposite thing yeah it is paper trail on blockchain yeah well the thing is when we started this Association Croatia one of the first things we did was go to the authorities to to see what they think because we had businesses like blender said like serious people doing serious business and no regulation and then usually first thing you you know you worry about is you know in death in Texas uh the only two certain things in life so we went to the tax administration and I I was just talking to you yesterday about it we went to this this thing called like central office of Texas Administration and they were super interested in in finding out like what this is there was this lady that actually took out uh like a molar skin I said can you just like draw me how this works these blocks and these chains were really interested uh but she didn't have any answers I mean I didn't have any answers to questions like what if somebody had a wallet that they that they've abandoned but they still have funds from that wallet and they have no way of proving how they obtained it you know it could be money laundering they're always concerned about you know money laundering and tax evasion I mean it could be illegal stuff which isn't likely but you can't prove that you obtained it by going to bitcoin faucet and just taking 50 Bitcoins per visit and then they said like but can they just like prove what they can prove but not when we come to the audit like we don't want to come to audit Someone Who cashes out like millions and then they pick a random address from etherscan and they it's from it's from 2010 and say like this is my address you know like this is really me I bought Bitcoins back in 10 years 12 years ago or whenever yeah there was an ether then sorry blockchain Explorer and then they say like can they somehow like prove what they can prove and then we came up with something called Zombie sneak which is like records or a minute uh which is you you go to the Note 3 to to I mean theoretically any Note 3 but I was only able to persuade one note three to to be on board uh you go to the notes Republic and you bring what you have so you just try to prove your uh the life cycle of your crypto Investments or if or how you obtain crypto so it's a bit funny what Tilia says because we literally screenshot every every every stage and then it's like this big like first screenshot is I'm sorry I have it here but I can show you like the first screenshot is not Republic says I verify the threadrun just came to my office here opened the laptop and he went to an extension called metamask then second he is entering password before my eyes which I can't read but it grants him the wallet grants him access to the wallet so you have like 50 screenshots and this is there is no law that envisages this okay there isn't a law in Croatia that has a zombie snake in it uh zapist Nick works because it works in practice okay so we use it because it was like an understanding between us and the tax office uh by which they will accept what someone proactively did before they came to the audit okay the idea why you go to the north Republic because then you can prove the date that you were doing it okay and if you remember what I said earlier tax office says I don't want to come to an audit and you just pick a random address but if you usually people do it when they Cash Out serious amounts then they just go they do it before the notary public and then when the tax office comes they actually look at this office you know it has a it has a value in Practical world but it it I mean they've honestly told me if you say if you say we we told you to do this we will say like no no this isn't in the laws so it's in it works but it will never become a part of the law definitely so blockchain is cool but paper is the king pepper is the coolest yeah and it's yeah keeps your asset safe right well paper wallet you know paper's not that bad you're you are one step further uh from us because we still have uh this case law case tax law in developing um because we don't have our system for uh filing tax returns online updated so we still have to file paper tax returns yeah but you you at least the bullies the postcard thing is where you uh ID the person by sending them a postcard what we discussed about sorry the exchanges in Serbia are utilizing like four years ago at least one exchange for that exchange I know that they still uh send uh people around Serbia to verify the identities of people oh so that's still in place yeah it's it's faster than having postmen and knocking twice and uh crazy um okay and blender made made good introduction for for us uh how do you see a future of lawyers in crypto is it bright or smart contracts will kill us all and T1000 will replace us I think we will be replaced eventually to be honest um I mean we're not we're not providing that such a brilliant service that can't be you know done by machine I just think the machine is still not that good because I try to use AI to help myself out and it was horrible I'm probably because my prompt skills are horrible but I wasn't able to get it to do some stuff that I thought it could which is basically I try to use it for I know if you have like an online database of properties in in Serbia yeah we do you can access it and see who's the owner and stuff okay so I downloaded from the creation or for one real estate random apartment I downloaded this PDF and then then I asked chat GPT like a million times to recognize who the owner is what is the property and then write the uh sales purchase agreement and so after you realize who is the owner this owner consider him a seller is the buyer the price is hundred thousand write me a contract and it failed miserably and again it might be me if anyone here is a good prompt whatever the name of this future profession is prompt Master hi um I I I think there's there's room to to to to to make improvements in doing this because when you write a sale purchase agreement it's you know it's it's a mundane job you always do the same thing think about you know tweak it and so there's room for improvement what I think you and me will be the most difficult to to replace um and not just you and me uh because uh when you're navigating uncharted waters like unregulated crypto that's where I think machines will have problems because I I can't sell the same things twice you know in crypto when web3 advice illegal advising is yeah and when you do some you know classic lowering is well I know my lawyers colleagues more like it but it's it's a one-trick pony most of the time you know they have the same document and they just like tweak it and I forgot this was being recorded but uh but I think the day will be easier to you know we we have to make ourselves difficult to to remove but maybe the Balkans will be safe heaven because the AI will never never understand how we think and operate no yeah that's what we said people from here are you know like Masters in evading rules I can tell you an anecdote that has nothing to do with law and shouldn't be recorded um I was in Vienna this is off record I used to can I switch off the recordings I I used to live in Vienna and uh friends of mine came to visit and we went to a club that's now defunct it was really cool club and the thing is that when you enter the club you get a card so it was there wasn't there wasn't credit cards weren't that widespread back then and so you get like their proprietary card so you don't pay every time you you get a drink but you you you give it to the bartender and they just put it on your tab like in a hotel and then when you go out you go to the there's only one cash register you give them a card and they charge you what you drink so it can be 50 Euros or a million years and the friend of mine who was not feeling well he wanted to go home and uh on on the in the exit they said like can we get your card and he said oh I lost it and they say oh we'll we have to charge you 50 euros and then all my friends looked at it and said and they threw it they threw seven cards in the trash and then a drink on on uh one no sorry they all drank on one card okay uh they threw it away and then when we were leaving at like 7 A.M uh we all gave our cards we had which had no spent and the the guy who was uh giving his card and everything was only he just threw it in the trash and he said I lost it and I said oh we're gonna have to charge you 50 euros for that he said shoot and just pay 50 euros now uh so that's that's why I think that there's so much room for improvement regulation wise and to get back to a serious note while we're talking about this is in Europe there is this huge I'm sure you've heard of it markets in crypto assets regulation uh that's been voted out and there's so many things that it doesn't govern it was just designed that way it's good they couldn't have uh and visited every possible solution so I think there will be as in everything you will have uh uh people you know bending the rules and then regulation will get updated so the the rules may not only stifle uh The Innovation but uh spark it as well I think I think they do it's really counterintuitive we had a round table in Croatian Parliament the other day which is also like you said like if someone told me in 2017 I'm gonna have a round table in creation Parliament and I entered the creation Parliament I had they had almost trip searched me and then there was a huge screen that says crypto assets like Roundtable crypto Assets in the Parliament and then the head of Croatian uh Finance Financial regulator honestly the answer the question from the audience saying yes I think marketing crypto Essence will stifle creativity I don't think so I what I told you now about the Vienna Vienna incident is that people will just find new ways and their regulation will have to follow and it will again be insufficient and people who find new ways to you know there was a I know if anyone here knows you probably use signal loans or you have heard of signal okay so the author of signal Moxie Marlin Spike uh had a really good blog post I reread it often uh contemplating about the perfect police order so people often say like I want order I don't want disorderly behavior and he said imagine a world where it's impossible to break the law okay so some supervising big brother that can even predict that you're going to break the law and he says it wouldn't be good because a lot of things that we consider normal today were once breaking the law okay so you would never have same-sex marriages or a marijuana legalization if it was physically impossible to break the law and it was both punishable by prison okay so I think we need people again being recorded I need we need people to break the law in a you know not like trafficking other people but to to bend the legal perimeter as my colleague from Barclays said in order to find the new ways how this law can be made to to push the limit yeah to push the limits to put limits without you know going overboard so we need the Judas Priest soundtrack breaking the law yeah there's so many songs that are applicable um all right shall we uh start with questions or we will yeah but I was the only one talking no more is yours you're the star here yeah you have to be court and not us yeah no if anyone has questions we can go today we can always come back to us just talking but if anyone has any questions um reference to Philip kadick's book and no it was just a funny uh actually it was supposed to be called kubik uh there was supposed to be a k before which should was supposed to send for kravna or the head and then the Croatian registry of uh Association you can't be corrupt now because you're the only one you know and then we said can we just be ubik and they said yeah but I'm a fan of I'm a huge fan of Phil kedik and especially the book ubik but it's just like a coincidence so your registrator really cares about the names oh yeah very much they said you can't be Chrome now because you're the only one I said there will be more well there isn't any now so well that's Advanced comparing to us they don't really care as long as it's not occupied already yes very very very very very correct what she said but also I think that's the like the thing they they put the most concern in like the name I'm not sure they really check on the statute that you wrote on like 40 pages interesting others Marco how do you feel about being first first arbitrator [Laughter] yeah super proud I want to see the case like go on sadly no um I love disputes I love like getting into a debate none right now but like I would love to see one case from start to finish like better understand how the process would work because for me like it's first of all if you have companies from different countries okay you choose the jurisdiction you choose the the law that's applied but how is it enforced in another Court like if we're a German company can I take that paper into a German court and be like yes and that's accepted there completely and and would you like to preside the committee deciding about Dao case maybe potentially how that would look like well we actually spoke spoke about it about now we have this like a legal legal working group within ubik which brewed actually the the Obi Court this was my idea uh two other lawyers actually came up with the arbitration uh but the idea is what if a dog comes as a plaintiff for defendant doesn't matter um even easier if it's plaintiff but what if you have to enforce something against thou uh we still don't have any answer we had an idea of uh like maker Dao style like over collateralizing or just making them put down the the the the amount that's in dispute to a Smart contract or a multi-cigar whatever who knows it's safe that would be actually the only way because the same way you can't enforce a loan that you know maker Dao has an over collateralization system because you can't enforce alone the same way Banks do you know you can't just take you know take someone's car because it's not physical and so we were thinking about but we don't have you know we're really far away because it's only like a few months old idea so if anyone has any idea on how to include those in the so mikalo basically says for dolls that they have to be like registered in half yeah like what God knows about yeah right so would that like help the situation well first of all that that's not maybe the luckiest solution because Dao is uh in in Serbia is called the general partnership in English that's pretty much it the thing is that tortastic general partnership actually uh means that everyone taking part is liable and I think that people becoming members of the always so that nobody is liable and that's a pretty big difference so I'm not sure about the Old Government because in okay okay part of it but I personally don't like the legal wrapper system that's utilized in like Delaware because what's the purpose of that if you still have to have a company then just have a company you know basically then you kill the doubt it's not that yeah another topic there is a Dows are broken and should be like redesigned as they are so if you have like smart contract enforced actions and behaviors you don't really get to a problem in most cases the problem is that like we have a a doll but it's basically just a bunch of people doing whatever they want um so maybe if we enforce everything through smart contracts they never get to the barber but the the problem occurs when you have to interact with the real world I mean it makes sense when you operate only as a deathly protocol but when you have to somehow interact with real world and you have to at one point or another then then the problem might occur blender has interesting dial projects in the pipeline uh we'll we'll see yeah yeah we'll see about that Dao project so uh right uh of the bat you know with this discussion I was thinking uh as soon as you start interacting with the real world there are certain you know there can be certain legal ramifications like do you guys think about the future where certain actions in the digital world will have effect in the real world for example I was thinking about countries that are kind of disputed territories you know so for example like if a Dao in Taiwan does some business with somebody you know in China and they use ubik or something for arbitration and Chinese government doesn't recognize Taiwan as an independent country or you know like a closer a closer example here is like Kosovo or south of sethia or stuff like that you know like if you do stuff in the digital world that is not recognized by the real world you know like what kind of ramifications you know is going to have this like do you have maybe like a group that's thinking about these things or like am I doing too much you know two-part in the future you're not getting me talks about politics uh uh but I think that already you already have the problem if if the government I mean the elected government doesn't recognize something from a territory it doesn't matter if it's digital or physical they don't they don't recognize it so basically understand the question like digital the real world ramifications of digital Acts I think we'll see this like what they call fidget like the the blend of physical and digital but I still I think you already have a problem with your uh company from country a that country B doesn't recognize even if you're a pure physical not even web company you know like you have a passport problem if you're from a country that the other country doesn't recognize and yeah the things that happen in digital world really have ramifications in real world like hacks and um all the stuff that happen on chain have very much consequence in in the real real world so it's not completely detached any more questions yeah we can talk all day long but maybe we should I don't know sure people want to listen to that all day long [Music] but generally one-on-one will be here for the at least me today tomorrow so I have to be here yeah I know jokes on you but I don't uh thanks everyone thank you [Applause]