Fintech and blockchain: new directions in European integration

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During last decade, the blockchain industry (as well as that of crypto) has experiences a rapid growth; the speed of development has increased notably over the past few years. The industry and its growth are often analysed through market capitalization, trading volume and other financial metrics (there are already over a hundred different crypto-currencies); while the businesses in the sector are making good progress. 

Crypto companies around the world have been activating their lobbying efforts in the US and –recently – in the EU countries; and the European Commission takes “crypto-lobbying” quite cautious though seriously.
Not only that the European Union is still a kind of a virgin territory for crypto; most lobbyists working for the sector are actually resided in the US: it makes sense, considering many of the largest crypto-trading venues are based there.
The difference between the two sides of the Atlantic is striking: while the US decision-makers have been trying to regulate the sector in the best way, the EU’s counterparts, so far only managed to agree on a single rulebook for the bloc’s entire crypto market: the (proposed) EU Regulation on Markets in Crypto-Assets (MiCA).
For example, supporting platforms, such as OKX and LinkedIn conducted and co-authored a study focusing on the growth, shifting requirements, tenure, and demographics of talent in the blockchain and Web 3.0 space.

Crypto in the EU: perspectives
The market in crypto assets draft regulation (dubbed MiCA) has been barely noticed by the European single market. However, certain lobby groups such as Blockchain for Europe and FTI Consulting have been pretty active in shaping EU policy.
For many in the industry, EU decision-makers were making first beginner’s steps: like all first encounters, it didn’t start well, writes Bjarke Smith-Meyer living in Brussels and working for Politico.
However, there are perspectives in the industry: the fourth Blockchain Summit will take place in October 2022 in a hybrid modality in Brussels and invite representatives of different EU institutions, academia and industry in order to “shape the future of the sector”. The conference will cover the following topic: the proposed EU Regulation on Markets in Crypto-Assets (MiCA), the creation of central bank digital currencies (CBDCs) such as a digital euro, the proposed anti-money laundering review (AML VI), digital assets taxation, the EU Data Strategy, the forthcoming EU legislative proposal on artificial intelligence (AI), and emerging discussions on Decentralised Finance (DeFi) and self-sovereign identity (SSI). For example, MiCA is supposed to govern crypto-assets that are financial in nature; as well as crypto-assets with other functions and features which should default first to existing asset regulation, or the like.
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The US-based crypto exchanges are slowly turning toward European Union: first move was quite unsuccessful (the European Parliament phased out energy-intensive crypto-currencies, such as Bitcoin, in the EU); secondly, the MEPs considered introducing extra strict identity checks on people using “digital wallets” that hold crypto assets outside of exchanges; the latter triggered a “call to action” from the chief executive of the US exchange Coinbase, Brian Armstrong; the call that was generally ignored by the European Commission.
Crypto companies are looking around for new talented people to hire but “the expert-pool” in a quite niche sector is low and people do not stay in the market for too long. The crypto industry and the blockchain technology sector are attracting new job candidates by the rate of about 76 percent on a year-on-year basis; however, the human resources do not stay long: not more than a year or so… However, the fintech-industry and the entire block-chain sector is booming; that means a competition among highly-qualified personnel is inevitable.
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The problem, actually, is of a double character: on one side, the industry is struggling to employ fintech-talent people; on another side, the regulators and decision-makers are trying to find experts to scrutinize the quickly innovative sector. For example, the head of the European Banking Authority, which will regulate finally the issuance of digital assets called stablecoins, noted same weeks ago that there were “a major concern over the regulator’s ability to hire the specialized staff needed to carry out new duties”.
And so is just a friction of problems in the crypto-companies that are combating with the regulators to finalize the “rules of the game”. For example, France’s financial market agency -Autorité des Marchés Financiers – lost Julien Nivot this year to fintech company Ledger to head its regulatory affairs.
The European Commission, in its part, is trying to alleviate the problem by setting up a training center that can educate and up-skill EU officials with modern financial technology, which is apparently not enough.

Something on bitcoin
Bitcoin was created as a way for people to send money over the internet. The digital currency was intended to provide an alternative payment system that would operate free of central control but otherwise be used just like traditional currencies.
Bitcoin is a digital currency which operates free of any central control or the oversight of banks or governments. Instead it relies on peer-to-peer software and cryptography, argued the New Scientist.
In 2008 the domain name .org was bought and an academic white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was uploaded. It set out the theory and design of a system for a digital currency free of control from any organisation or government.
The author (covered by the name Satoshi Nakamoto; whose real identity still isn’t known for certain) noticed: “The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” The following year the software described in the paper was finished and released publicly, launching the bitcoin network on 9 January 2009.
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Hence, the blockchain was invented to build trust in the first crypto-currency, i.e. bitcoin, a digital and decentralised way for payment. Bitcoin’s roots are in anarchy-capitalism, a movement that aspires to reproduce the mechanisms of the free market without the need for banks or state bodies to enforce rules; in short, “it was designed to get governments and law enforcement out of the way.”
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Presently, bitcoin’s market capitalization reached $ 463 billion with a price of $ 24,235.000 and circulating supply of over 19 million units.

Note. The UK, the European main financial center, created in the beginning of August 2022 a “strategic working group”, SWG to provide a forum for industry, experts and consumers on the future of open banking: the concept to allow third-party developers to plug into traditional banks’ vast data area in developing new fintech solutions.
The organizers believe that there is potential in “the progress of open banking, to drive further benefits for consumers and businesses, and maintain the UK’s position as a leader in innovation’.
The SWG is a consultative forum for industry and other stakeholders to create a “principal mechanism” into the vision and strategic roadmap for further developing in “open banking”; it will operate until the end of 2022.
In addition, the FCA and the PSR, as co-chairs of the committee, have asked the Open Banking Implementation Entity (OBIE) to provide administrative support in on-boarding SWG’s secretariat. Bryan Zhang was nominated as the SWG’s independent chair; his responsibilities include selecting and appointing the SWG members, arranging and facilitating SWG meetings, collating stakeholders’ views in response to the committee’s questions, etc. Bryan is a co-founder and Executive Director of the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School.
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