Europe Must Embrace Blockchain Innovation Says the European Commission
The executive body of EU has strongly come out in favor of blockchain technology following a meeting that aimed to set “the EU’s position for a possible discussion at G20 level.”
Latvian Valdis Dombrovskis, Vice President of the European Commission, said in remarks at the roundtable on cryptocurrencies that they concluded:
“The blockchain technology holds strong promise for financial markets. To remain competitive, Europe must embrace this innovation.”
The tone was less enthusiastic when it comes to cryptocurrencies or tokens, with Dombrovskis stating they are speculative and do not have a guaranteed value, unlike, presumably, the euro which is guaranteed to go down due to inflation.
They do however point out that like with any investment there are risks, just as parking euros has risks due to inflation, monetary mismanagement or banking collapses leading to unwanted haircuts.
Warnings about risk “must be clear, frequent, and across all jurisdictions,” the Commissioner said before taking a somewhat similar approach regarding ICOs.
“This is an opportunity, but there are also problems that expose investors to substantial risk, such as the lack of transparency regarding the identity of the issuers and underlying business plans,” he said.
We haven’t really seen any problems regarding lack of identity because unless there is an extremely good reason no one would invest in it.
But we do share their concerns regarding lack of full transparency in business plans prospectuses or whitepapers. There are some key figures that must be provided if the ICO-ing project is an established company, such as profits, revenue, and so on, for investors to be able to make an informed decision on the risk level they wish to take.
That’s really the main one we come across time and again and can easily be addressed by a non-governing trade body that sets some guidelines with companies that meet them benefiting from a higher level of respectability.
The European Commission, however, doesn’t really go into much detail regarding what plan of action derives from their conclusion.
If they can hear us, we would recommend a public and private partnership whereby a continental FCA works close with an ICO trade body to give it gravitas and to assist in setting guidelines that actually inform investors, rather than the SEC’s approach with its stupendously boring dense legalese prospectuses which no one reads.
Overall, there is nothing surprising, although we do raise a little bit of eyebrow in hearing them say only now that AML processes should apply to crypto exchanges and crypto custodians because as far as we are aware that has been the case for some four years.
Which means they are quite a bit behind. They gave no suggestions of sandboxes or any innovative regulatory approaches and limited blockchain innovation to only financial markets when its application is far wider as we reported just today with Porche testing blockchain tech to smartify cars.
But late is better than never, and they do say ICOs offer an opportunity, making it overall a balanced statement, although we’ll have to wait and see what that means in action.
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