Blockchain for Europe Summit 2024: The Future Isn’t Waiting for Us
The Blockchain for Europe Summit 2024 unfolded with all the regulatory panel debates you’d expect when European policymakers and blockchain enthusiasts collide. Martin Schmalzried, attended the event representing YoumanE.T, in order to garner insights into the future evolution of blockchain technology in Europe. Topics ranged from DeFi definitions to the complexities of MiCA, but there was a clear emerging theme: Europe is at risk of missing the boat on the most transformative technology since the internet.
DeFi: Defining the Undefined
DeFi (decentralized finance) was discussed in relation to MiCA, with heated debates about what truly qualifies as “decentralized.” Should a smart contract still be considered DeFi if its creators can tweak or manipulate it? Purists argue that real DeFi — akin to Bitcoin — should leave no room for centralized control, and rather rely on a loose and fluid amalgam of stakeholders, like miners and developers, who are responsible for maintaining these decentralized protocols based on emergent power dynamics which cannot be controlled or regulated. The Tornado Cash debacle, where developers faced sanctions, could potentially nudge blockchain coders and developers towards the Satoshi Nakamoto playbook: staying anonymous and deploying smart contracts without identifiable ties. Regulation-proof DeFi might just become the new norm, thanks in part to the looming dangers of regulatory overreach.
Stablecoins, MiCA, and the Digital Euro: A Missed Opportunity
Stablecoins were a hot topic at the summit, particularly in the context of MiCA regulation. While stablecoins are a cornerstone of crypto adoption, their (over)regulation is proving problematic. Centralized exchanges like Coinbase have already started disabling rewards for holding stablecoins, reducing their appeal which could further drive users toward DeFi — a silver lining for decentralization, perhaps, but hardly a sign of strategic policymaking. The Digital Euro, meanwhile, loomed in the background as Europe’s knee-jerk reaction to Libra (killed thanks to threats from regulatory bodies) and stablecoin emergence. With its limited functionality (holding limits and the obligation to open such accounts with third parties, aka mostly the incumbent players such as banks), the digital euro seems to hold little added value beyond lower liability risks compared to bank money. The Digital Euro feels less like a bold innovation and more like a defensive manoeuvre to preserve regulatory control.
Issuing restrictive rules for stablecoins while hastily rolling out a centralized “counter-proposal” smacks of insecurity rather than leadership. It’s a rather “dick move” (pardon my French), reminiscent of the behaviours of monopolistic corporations, that prioritizes fear of competition over fostering innovation. Europe’s regulators seem more intent on stifling emerging technologies than embracing their potential, inadvertently pushing users to explore the very decentralized systems they aim to control. If anything, this misstep might accelerate DeFi adoption — a small consolation for a broader failure to lead with vision.
MiCA: Ambitious but Shackled
The EU’s Markets in Crypto-Assets (MiCA) regulation was praised as one of the world’s most advanced frameworks. However, it’s also restrictive, particularly towards stablecoins. MiCA’s long-term effects remain uncertain, but its stringent requirements already raise questions about Europe’s ability to nurture innovation. MiCA is set to enter into force this December, and all parties agreed that a “wait and see” approach is warranted before starting to think of a MiCA 2.0.
AI and Blockchain: A Match Made in Web3
The intersection of agential AI and blockchain is an emerging frontier, explored during one of the panels. Imagine AI managing wallets, executing complex smart contract functions, or even trading autonomously to achieve user-defined goals. This potential, while still nascent, hints at a future where humans are less involved in day-to-day blockchain activities, leaving these tasks to autonomous agents, which could help solve the current lack of easy to use front-end interfaces in the blockchain space. Europe’s focus on privacy and sovereignty could make it the perfect sandbox for such experiments — if regulators can catch up.
Web3: Europe’s Missed Opportunity?
Ironically, the values of Web3 — privacy, sovereignty, and decentralization — align closely with those of the EU. Yet, there’s palpable fear among regulators about losing control. Case in point: instead of leveraging Vitalik Buterin’s proposal for an innovative ERC token standard, which allows communities to reclaim ICO funds if promises aren’t kept, and release funds progressively based on progress of developers on ICO funded projects, regulators doubled down on trying to retrofit ICOs into existing frameworks. The result? Billions lost in rug pulls like EOS, and little progress on fostering user protection through innovation.
The Bigger Picture
The conference felt too focused on the present-day concerns over regulation. It felt like holding a forum in the late 18th century on industrial policy from the King’s perspective — seemingly relevant at the time, but woefully short-sighted in retrospect. While Europe debates MiCA and the definition of DeFi, the world is moving forward: Microsoft is flirting with Bitcoin investments, and nations are considering cryptocurrency as a strategic reserve, while Europe’s bureau(aristo)cracy is pushing papers left and right.
What’s Next?
Europe’s cautious approach risks relegating it to a regulatory paper pushing machine in a world where blockchain technology is evolving at breakneck speed. To truly lead, Europe must embrace innovation, even if it means occasionally stepping outside the confines of traditional regulation. As Vitalik’s unimplemented standard demonstrates, solutions often already exist — it’s up to regulators to see and adopt them.
The Blockchain for Europe Summit 2024 delivered insights, but its fixation on the now might leave Europe unprepared for the blockchain-powered future. The train is leaving the station; let’s hope Europe isn’t still on the platform, debating whether it should buy a ticket or not.
