Proposed digital euro designs lack privacy options, ECB presentation shows

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Transactions via the EU’s prospective CBDC could be transparent to intermediaries, as any non-crypto digital transactions are.

Next to the fears of government overreach that the European Union’s ambitious digital euro project stirred, the main concern of the public is the prospective currency’s privacy framework. It appears that this worry might not be overblown after all: as the European Central Bank’s (ECB) latest presentation hints, user anonymity is not a desirable design option.

On May 3, crypto venture advisor and European digital asset regulation whistleblower Patrick Hansen drew public attention to the ECB’s presentation titled “Digital Euro Privacy options”. The document is relatively short and contains 9 slides that lay out the possible options for user privacy in the EU’s Central Bank Digital Currency (CBDC), also known as the digital euro.

Acknowledging the public concern for the CBDC’s privacy, the presentation stresses the need to assess the issue “in the context of other EU policy objectives, notably anti-money laundering and countering the financing of terrorism (AML/CFT).”

What this bureaucratic verbiage means in practice is that the baseline privacy scenario for the digital euro project is all transaction data being transparent to intermediaries such as banks. The option of providing a higher degree of privacy for low-value transactions is still on the table, though, and “could be investigated with co-legislators.”

However, the overall mood of the document can be expressed in a single quote from slide 4, which goes: “User anonymity is not a desirable feature.” As Hansen concludes, at this point it isn’t clear how exactly the digital euro would differ from the existing fiat-based infrastructure for digital payments.

The public feedback section for the digital euro contains more than 13,000 replies by the press time, mostly critical to the CBDC project. Meanwhile, the ECB and Eurosystem have began experimental prototyping of digital euro customer interface at the end of April.

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Ex-Fed vice-chair Quarles has lost none of his fervor in opposing US CBDC

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The former Federal Reserve official once again expressed his opposition to a United States central bank digital currency in a Tuesday podcast.

Former United States Federal Reserve vice-chair for supervision Randal Quarles discussed central bank digital currencies (CBDC) and the chances of the U.S. adopting such technology in an interview on the “Banking With Interest” podcast Tuesday. Quarles, who is known for his opposition to a CBDC, expressed his skepticism about the so-called digital dollar and predicted the U.S. will not introduce it.

Quarles, who served at the Fed from 2017 to 2021, said a close analysis of CBDCs would show that their advantages are “extremely marginal, if they exist at all.” He did not see the potential for CBDCs in promoting financial inclusion, commenting: 

“You’re going to need an account at the bank, the way you need to use money now, and in addition […] a cellphone and wireless access, and all that is making inclusion harder.”

Using a CBDC to exclude the role of the bank would be “pathological,” he added.

Quarles said opinions on CBDCs differ within the Fed, but he lamented the attitude of following in other nations’ footsteps just for the sake of it. He did not think a bill authorizing a CBDC could pass Congress, as the public would react unfavorably to the idea once it received broader attention. Nonetheless, he noted, “a coterie of politicians […] Many of them conservative Republicans, who you might expect would be concerned about this issue, but they’re more concerned we’re falling behind China.”

Quarles was bullish on stablecoins for international transactions, saying “we tend to win” when U.S. private sector innovation competes with state-run entities, such as the e-yuan. A CBDC would make stablecoins less attractive, he reasoned, asking:

“Why are you going to invest a whole lot of effort to developing a […] stablecoin payment system if the Fed is just going to bigfoot you out of existence?”

Related: Fitting the bill: US Congress eyes e-cash as an alternative to CBDC

When asked if he had any advice for his proposed successor as Fed vice-chair, former Ripple adviser Michael Barr, Quarles said, “Make your decisions as technocratic as possible,” in preparation for explaining to political supporters why they will not get everything they want.

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Sen. Lummis teases upcoming crypto bill, says NFTs won’t be included in it

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The senator spoke about the importance of definitions and weeding out nonviable altcoins for her comprehensive bill on cryptocurrency.

United States Senator Cynthia Lummis appeared on a livestream hosted by Axios on Tuesday to tease the highly awaited bill on cryptocurrency she is authoring. The Wyoming Republican said the bill will be introduced as “one big piece so people can see the big picture” and be broken down into five or six components for consideration by the appropriate congressional committees.

The bill, which Lummis is expected to introduce along with New York Democrat Kristin Gillibrand, is designed “so that it works within the traditional framework for managing and regulating traditional assets,” Lummis said. It will divide cryptocurrency oversight between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Oversight of crypto assets will be given to the SEC “when something fits within the Howey Test that makes it a security,” Lummis said, referring to the 1946 Supreme Court decision on the definition of a security.

Regulations must also address altcoins and consumer confidence, Lummis said, adding they need to “allow regulators to separate the wheat from the chaff in the space.” This will make it possible to use crypto for payments and integrate the asset class into 401(k) retirement savings packages, she said.

The Wyoming Senator indicated she was confident the bill would pass, as “digital assets are nonpartisan.” She expressed hope it would move more quickly through the legislative process than might be expected for such a complex bill because agencies currently have to “make regulatory decisions on the fly.”

U.S. President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets “dovetailed pretty nicely” with the bill’s proposals, Lummis said, although the bill differs from the president’s regulatory vision in that it would allow non-bank entities to issue stablecoins. Lawmakers would seek advice from the private sector on a stablecoin regulatory framework, she added.

Related: Senators Bragg and Lummis discuss crypto laws collaboration between US, Australia

Lummis mentioned that the bill touches on central bank digital currencies (CBDC) without going into detail. Environmental issues will not be addressed in the bill, nor will nonfungible tokens (NFTs). “It’s so hard to figure out how to categorize them,” Lummis said of NFTs. She indicated that regulators may be able to decide on how and if to regulate them after the passage of the bill.

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Crypto Bahamas: Regulations enter critical stage as gov’t shows interest

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SALT’s Crypto Bahamas brought together traditional financial players with crypto companies and industry experts to discuss the future of digital assets.

The crypto community and Wall Street converged last week in Nassau, Bahamas, to discuss the future of digital assets during SALT’s Crypto Bahamas conference. The ​​SkyBridge Alternatives Conference (SALT) was also co-hosted this year by FTX, Sam Bankman-Fried’s cryptocurrency exchange.

Anthony Scaramucci, founder of the hedge fund SkyBridge Capital, kicked off Crypto Bahamas with a press conference explaining that the goal behind the event was to merge the traditional financial world with the crypto community:

“Crypto Bahamas combines the crypto native FTX audience with the SkyBridge asset management firm audience. We are bringing these two worlds together to create a more equitable financial system.”

Traditional finance eyes crypto as regulations take shape

The combination of traditional financial institutions with crypto natives was indeed one of the most notable and noticeable (a number of men and women were wearing suits, while some sported shorts and flip flops) aspects of Crypto Bahamas. For instance, Kevin O’Leary — the Canadian entrepreneur better known as “Mr. Wonderful” for his role on Shark Tank — told Cointelegraph that the people present at the Crypto Bahamas proved to be the most important aspect:

“We have governments from around the world here, along with institutional investors that don’t actually own any cryptocurrency, but are watching the momentum in politics. They are starting to realize that a big change is coming.”

According to O’Leary, recent crypto regulatory frameworks from United States Senator Kirsten Gillibrand and Senator Cynthia Lummis, along with the Stablecoin Transparency Act proposed on March 31, 2022, by Representative Trey Hollingsworth and Senator Bill Hagerty, are now attracting institutional interest in crypto. 

“They’ve come to the conclusion that this is an asset class that is here to stay,” O’Leary remarked. While this may be, he pointed out that many traditional financial institutions still don’t own any cryptocurrency and will not own any digital assets until policy is implemented. “I think cryptocurrency will become the twelfth sector of the S&P. We will be paying 20-30% more when institutions start indexing this. That’s the big debate happening at this conference.”

To O’Leary’s point, while some members of the crypto community may find institutional players to be intrusive, Henri Arslanian, senior crypto adviser at PwC, told Cointelegraph during the conference that the crypto ecosystem should welcome the entry of institutions, noting that these centralized players provide the level of maturity and experience needed for working with institutional investors. “This can be beneficial for the entire crypto ecosystem,” said Arslanian.

Scaramucci further told Cointelegraph that crypto is still in its infancy, but he predicts that the market will undergo major innovations in the next five years. “In the long term, I’m excited about where everything is going, but in the short term we will witness headwinds as a result of post COVID-19, the war between Russia and Ukraine, the specter of inflation and supply chain issues,” he remarked. Scaramucci added that he believes FTX will be the most transformational player in the space overall because “their mission is to transform the entire financial ecosystem by tokenizing all markets.”

Recent: Has New York State gone astray in its pursuit of crypto fraud?

If you build it, they will come

In the meantime, it appears as if the Bahamas will likely become the world’s next crypto hotspot. While FTX moved its headquarters from Hong Kong to the Bahamas in September 2021, it’s anticipated that more crypto companies will do the same. Bahamian Prime Minister Philip Davis told Cointelegraph that the country has a regulatory regime in place and recently published a policy white paper framework to help crypto businesses understand how to operate in the country:

“This will help companies understand how they can grow and prosper, and what we can expect from them. The policy also takes into account concerns people have about cryptocurrency and the risks associated with digital assets. Policy is implemented to protect consumers and the integrity of the space, and at the same time ensure that we minimize all risks that may be associated with businesses here.”

Scaramucci said that he believes the Bahamas is becoming a crypto-centric region that will be known in the next five years as one of the most “forward thinking and economic visionary countries.” Arslanian added that crypto-friendly jurisdictions seen in regions like the Bahamas and Dubai have the opportunity to become global hubs by attracting top-performing crypto companies. “These jurisdictions are clearly focused on the future of crypto,” he said. On the other hand, Arslanian pointed out that the U.S. is still lacking in regulatory clarity when it comes to cryptocurrency innovation:

“I moderated a panel before this interview with Chris Giancarlo, the former chairman of the U.S. Commodity Futures Trading Commission. I asked him how he would rate crypto regulations on a scale of zero to 10 in the U.S., and he answered zero. Jurisdictions have the agility, but they also need the will to embrace crypto.”

In terms of understanding how the U.S. may improve upon crypto regulations moving forward, Arslanian explained that models in Dubai such as the newly formed Dubai Virtual Asset Regulatory Authority (VARA) may be helpful for other regions to implement. 

“VARA is a specialized crypto regulator, so they know this vertical very well. We need more regulators specializing in this policy in other regions.” While VARA is a recent innovation, FTX expanded its operations in the United Arab Emirates in March of this year by receiving a virtual asset exchange license in Dubai, which was granted under VARA.

Crypto undergoing “regulatory madness,” but future looks bright

Overall, regulatory developments within the cryptocurrency sector were widely discussed at Crypto Bahamas. For example, stablecoins and central bank digital currencies (CBDCs) were a hot topic of debate.

Sheila Warren, CEO of the Crypto Council for Innovation, moderated a panel discussion entitled “DeFi Future: Inside the making of a new financial system.” Warren told Cointelegraph that the next two to three years will determine the trajectory of Web3 and blockchain technology for generations to come, given innovation currently happening within the crypto sector.

“The biggest threat, but also the greatest opportunity for crypto right now is in the policy making space. We have evidence and hard data now to demonstrate how technology can achieve public policy goals that we can all agree is important for society,” she said.

In regard to stablecoins and CBDCs, Warren explained that both of these have a role to play within financial systems based on different use cases. “CBDCs may make sense in a contained financial system, but in most cases, I remain skeptical of CBDCs beyond interbank settlements and cross border payments.” In contrast, Warren believes that stablecoins have tremendous potential when it comes to being used as programmable money. She said:

“There is a role for stablecoins that is critically important. For instance, I think USD Coin is one of the most important innovations we are currently seeing in the ecosystem in terms of the bridge it can provide between different assets while enabling programablity in smart contracts. I’m bullish on stablecoins, but I want to see how regulatory environments treat them — this is important for our entire ecosystem.”

O’Leary thinks the first crypto-friendly policy to be adopted in the U.S. will focus on stablecoins. He believes this will be the case due to the Stablecoin Transparency Act introduced earlier this year, which aims to audit stablecoins on a 30-day cycle. 

“This is similar to money market accounts that Fidelity and Schwab have, so they are looking at this as a way to bring transparency to stablecoins. Let’s say USDC is the first stablecoin to receive this license — others will soon do the same,” O’Leary said.

Recent: DAOs: A blockchain-based replacement for traditional crowdfunding

He added that such regulations could be transformative for the traditional finance space. “For example, with FX trading, I’m currently getting overrun by fees, as I have to convert U.S. dollars into euros or British pounds when I buy European stocks. But, if there was a stablecoin, there would be more transparency, less friction and it would be auditable. I could transfer money in seconds,” he explained.

O’Leary further pointed out that stablecoin regulation legislation will likely occur after the U.S. midterm elections that are set to take place November 8 this year. “There will be a change in leadership,” said O’Leary. Warren added that the crypto sector is currently witnessing “regulatory madness,” noting that there is not a single jurisdiction not focused on crypto innovation at the moment, “This is the most important effort of our time. We are currently laying the foundation for crypto moving forward.”

To put this in perspective, Scaramucci told Cointelegraph that retirement plan provider Fidelity Investments announcing 401(k) retirement saving account holders the option to invest in Bitcoin (BTC) is a seismic event in terms of pushing crypto regulation forward. “I predict that Fidelity will do for Bitcoin and possibly other crypto what it did for the U.S. stock market in the 80s and early 90s. Fidelity has $2.4 trillion dollars in retirement accounts under custody, so just imagine a small sliver of that moving into Bitcoin.”

Scaramucci also revealed that SkyBridge will soon be offering a Bitcoin retirement option plan to its employees. Yet, he pointed out that a Bitcoin exchange-traded fund (ETF) within the U.S. is the biggest elephant in the room at the moment. “I’m hoping we will see a Bitcoin cash offering by the end of this year. If this happens, it will force all major financial services companies to have a Bitcoin cash offering moving forward.”

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ECB, Eurosystem begins experimental prototyping of digital euro customer interface

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Up to five banks or other payment services providers will be selected to participate without compensation in the development of the digital euro front end.

Progress will continue on the development of the digital euro as the European Central Bank (ECB) and Eurosystem have begun looking for companies to participate in an exercise to prototype customer-facing payments services. Payment service providers, banks and other relevant companies were invited to express interest in the project in an announcement released Thursday.

Eurosystem, which comprises the ECB and the national central banks of countries that use the euro, stated that it will select up to five front-end providers on the basis of their capabilities and the use cases they present. While participants are not required to have previous experience with the service they will prototype, experience will be considered in the selection process.

The prototype providers will be expected to develop front-end applications in accordance with the specifications of the system’s existing backend and interface. They will be free to provide feedback on the existing system, including how it can meet their technical requirements, and they will be welcome to propose additional value-added services. Participants will not be paid for their efforts but may be included in further steps in digital euro development.

The application deadline for the project is May 20, 2022. The project will begin in August and is expected to conclude in the first quarter of next year. The investigative phase of digital euro experimentation will end in October 2023. At that time, a decision from the Eurosystem Governing Council is expected to be made on the development of a real-world digital euro central bank digital currency (CBDC).

Related: More than three-quarters of central banks considering a CBDC: Research

This is the latest in a lengthy series of steps toward a digital euro, which at times has proven to be controversial. Earlier this month, the European Commission received feedback from more than 11,000 people about its digital euro initiative, with members of the public expressing concerns over surveillance and government overreach. Nonetheless, ECB executive board member Fabio Panetta recently expressed the opinion that issuing a digital euro is “likely to become a necessity.”

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Residents of 3 Chinese cities paying taxes and charges with digital yuan

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China has expanded its central bank digital currency pilot program to include the payment of tax, stamp duty and social security.

Residents in three major Chinese cities have begun paying tax, stamp duty and social security premiums using the country’s central bank digital currency — the digital yuan (e-CNY). 

According to a domestic news report, a number of government agencies in the Zhejiang province — located just south of Shanghai — are currently running real world trials programs that involve citizens using the digital yuan to pay taxes.

The Zhejiang Taxation Bureau is working with the country’s central bank — the People’s Bank of China (PBoC) — to explore a variety of taxation payment methods using the digital yuan.

The PBoC and affiliated local government agencies are reportedly looking to the next major test for the digital yuan, the Asian Games which will take place in Hangzhou in September. Local authorities claim that the digital yuan could be used to streamline calculating tax-related activities.

Following the successful steps in the implementation of the digital RMB pilot program, which began public testing in April 2021, the PBoC stated that it will look to extend the program to more Chinese cities including Guangzhou, Tianjin and Chongqing.

On the other side of the ledger to taxation, one local government has chosen to “airdrop” 15 million digital yuan ($2.25 million) to its residents hoping to boost consumer spending during the pandemic, and promote use of the new currency.

Related: Hong Kong watchdog warns stablecoins could undermine HKD in CBDC paper

Roughly 130,000 residents of the Futian district in Shenzhen will receive a share of the 15 million digital yuan (e-CNY) in the form of a red envelope via Chinese social media app, WeChat. The digital RMB airdrop marks the most recent government attempt to boost spending in areas of China most affected by the recent Covid-related lockdowns.

In Chinese and other East Asian cultures, monetary gifts are often handed out in red packets or envelopes, as the colored wrapping bestows good wishes and luck upon the recipient.

These developments extend China’s already significant lead in developing a central bank digital currency (CBDC) for public use, with the majority of countries still in the research stages of CBDC implementation.

According to state media, transactions in digital yuan across China came to nearly 87.6 billion yuan by the close of 2021.

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BlackRock launches blockchain industry ETF, names crypto as 1 of 3 big opportunities

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The world’s largest asset manager has launched a blockchain ETF, providing clients with greater exposure to crypto and blockchain-related companies.

BlackRock has officially launched a blockchain focused ETF, that provides investors with exposure to the crypto and blockchain industry without needing to directly own digital assets. 

On Wednesday, the world’s largest asset manager, which currently manages approximately $10 trillion in assets, added the Blockchain and Tech ETF (IBLC) to its iShares product line.

The $4.7 million ETF does not directly own cryptocurrencies or digital assets themselves, but instead tracks an array of international companies that are involved in the industry.

The ETF is comprised of 41 separate holdings, with the largest single holding being US-based crypto exchange Coinbase making up 11.45% of the fund. This is closely followed by large Bitcoin miners Marathon Digital Holdings (11.19%) and Riot Blockchain Inc. which accounts for 10.41% of the total holdings.

Showing readiness for future acquisitions, the ETF currently sports a healthy 9.15% US dollar cash position.

Alongside the release of the new ETF, BlackRock published a report that outlined three main areas of the market that are currently undergoing permanent changes.

The paper details just how bullish BlackRock is on the crypto industry, stating that while most of the attention directed towards digital assets focuses on the price and volatility, the actual value of blockchain is yet to be fully realised.

“We believe the broader opportunity — leveraging blockchain technology for payments, contracts and consumption broadly — has not yet been priced in.”

The paper also brings attention to the adoption of central bank digital currencies (CBDCs), noting that 87 countries are currently in the process of exploring the technology.

Related: BlackRock joins stablecoin issuer Circle’s $400M funding round

Crypto ETFs are growing in popularity among institutional investors as a way of gaining exposure to the cryptocurrency industry.

Discussions concerning a spot Bitcoin ETF have been re-ignited after a recent Nasdaq survey revealed that 72% of the 500 financial advisors interviewed would be more likely to invest client funds in a spot fund over a futures-based one.

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Macron or Le Pen: What promise does each presidential candidate hold for crypto?

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Regardless of who wins the presidency, France is unlikely to deviate from the pan-European regulatory approach.

As France braces for the April 24 presidential election in a runoff, political pundits around the globe are making their bets. The choice is between the centrist incumbent Emmanuel Macron and right-wing populist Marine Le Pen. Much of the political debate this time revolves around economics, but there is one indispensable part of it that is largely absent from the candidates’ electoral agendas: digital assets. While both have a record of public statements on matters related to crypto, neither Macron nor Le Pen seems to be likely to trigger any significant policy change with regard to the French digital economy. 

State of the art

Despite the current administration’s notable efforts to embrace the IT industry, France is still, in many ways, not a particularly tech-friendly country. For years, its authorities have been fighting in the avant-garde of the European regulatory cause against United States tech behemoths’ tax “optimization” practices, such as opening European offices in more relaxed jurisdictions such as Ireland and Luxembourg.

In the way of regulation, the country does not have a specific regime for crypto, but the general regulatory climate is rather harsh. The main legislation regulating the industry is the 2019 Action Plan for Business Growth and Transformation of enterprises, or PACTE. It obliges any crypto firms in France (legally defined as digital asset service providers) to register with the Financial Markets Authority (AMF) and to comply with the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) requirements set out by the European Union’s Fifth Anti-Money Laundering Directive.

Perhaps the biggest headache for the crypto industry is the strict Know Your Customer (KYC) policy, which sets no transaction value threshold for invoking reporting rules. In other words, every crypto transaction worth 1 euro or more requires a full KYC procedure, including the disclosure of the parties’ full names, addresses and contact details.

On the bright side, disciplined industry players have a chance at obtaining a special license from the AMF, allowing them to apply for French bank accounts. As Thibault Verbiest, a Paris-based partner at the law firm Metalaw, explained to Cointelegraph, French banks are reluctant to open bank accounts for crypto companies.

Meanwhile, the central bank of France is actively exploring a potential central bank digital currency (CBDC).

French regulatory activism

French officials play an active role in the international regulatory process. In February 2021, Robert Ophèle, chairman of the AMF, proposed consolidating all the power and responsibility for crypto regulation in the hands of the European Securities and Markets Authority. He also emphasized the crucial role of blockchain technology in the future of the European economy. The proposition was later repeated by the French government.

Four months later, in June 2021, Bank of France governor François Villeroy de Galhau doubled down on the call to create a pan-European crypto regulatory framework as soon as possible. In contrast to Ophèle, de Galhau’s perspective on the matter sounded far less friendly.

Stressing the threat of crypto eroding “monetary sovereignty,” he estimated that Europe had only one or two years to solve the problem. The EU regulators responded with some major initiatives, such as stepping up work on the Market in Crypto-Assets regulatory framework and the current Transfer of Funds Regulation’s revision with tighter scrutiny of individuals’ transactions.

Nevertheless, the French government has made efforts to support the crypto industry domestically. “France has put itself at the forefront of crypto innovation, at least in terms of the adoption of the regulatory framework and some partnerships with major actors of the industry and the support via the financing of new projects,” Verbiest observed.

In November 2021, standing alongside Cédric O, the French secretary of state for the digital economy, Binance CEO Changpeng “CZ” Zhao announced a partnership with the local financial technology association France FinTech, pledging to spend $115 million on the development of the European crypto industry.

Cautious balancing vs. disinterested suspicion

According to a recent study, 4% of French adults consider cryptocurrencies a topic that will determine their vote in the presidential election. This modest number is reflected in the amount of attention both candidates have been giving to crypto.

A former banker himself, Macron has taken a cautious stance by largely repeating calls for more regulation. At the Davos International Forum in 2018, he called Bitcoin (BTC) and digital currencies “the most aggressive players on the financial markets […] who can create financial crises and deregulate systems,” alongside shadow banking.

As Verbiest reminded, Macron was trained to be a high-ranking official of France’s treasury department. Thus, it’s only natural for him to prioritize the European banking sector’s anxieties over the interests of the digital economy:

“Crypto disrupts banking, and France has a very powerful banking sector. In addition, the European Union and the euro require that France find a consensus with the other European member states on monetary and financial questions.”

Nevertheless, Macron’s first term brought into the halls of power at least two notable individuals who openly support the crypto industry. Back in 2019, O promised “all crypto-asset and blockchain actors” support by setting up “comprehensive and credible conditions” for growth. Several years later, though, O justified the tightening of AML/CFT and dismissed crypto entrepreneurs’ reservations about the policy, saying that he didn’t believe that France was “missing the train of blockchain technology.”

Emmanuel Macron, the current President of France. Source: www.elysee.fr

Pierre Person, a 33-year-old member of the French Parliament, was one of the co-founders of the youth organization, Les Jeunes avec Macron, as well as the “left-wing liberal” think tank in support of Macron’s policies, La Gauche Libre. In 2019, he presented a business-friendly report on blockchain to the French legislators and has been advocating for the creation of the European stablecoin ever since.

More recently, however, Person stepped down from the leadership position in Macron’s La République En Marche movement and shared his disenchantment with the government’s actions on crypto.

Macron’s contender, the leader of the familial nationalist party National Rally, Le Pen, always preferred to talk about immigration threats rather than the digital economy. However, she has her own record of a U-turn toward crypto in public speeches.

Marine Le Pen, Member of the French National Assembly and presidential candidate. Source: mlafrance.fr

In 2016, ahead of the previous election, she called for Bitcoin’s ban, presenting it (and the digital currencies in general) as an idea originating from the “powerful Wall Street business lobby.” Since then, Le Pen has toned down the Wall Street narrative, limiting herself to support of strict regulation of crypto assets. In contrast to Macron’s entourage, she or her confederates are yet to say a good word about either cryptocurrency or blockchain technology more generally.

No to self-regulated sector, yes to pan-European approach

Irrespective of the outcome of Sunday’s vote, France will likely stay in line with the pan-European regulatory process that the country itself has been contributing to for years. Speaking to Cointelegraph, Stephen Stonberg, CEO of crypto exchange Bittrex Global, commented:

“It is unlikely that France would have any major issues with the EU’s upcoming Markets in Crypto-Assets [MiCA] regulation, as French regulators will be aware that a pan-European approach will be necessary to adequately oversee the industry. In fact, it’s more likely that French regulators are waiting for MiCA before making any major moves or commitments.”

Should Macron prevail, his administration will likely stay on its current course — a combination of cautiously crypto-friendly (with an emphasis on blockchains, not currencies) rhetoric and strict but not prohibitive policy toward digital assets, in full accordance with the FATF and EU frameworks.

A great summary of Macron’s ambiguous relationship with crypto is his interview, given several days before the second round of the election. Responding to questions on digital assets and Web3, the incumbent managed to elude pronouncing the word “crypto” once while uttering familiar phrases about his country’s mission to become the leader in the digital economy and support innovations. Perhaps, the most important words are:

“I don’t believe in a self-regulated financial sector. This would be neither sustainable nor democratic. It is up to the public authorities to define the right conditions to allow the sector to develop in confidence while encouraging innovation.”

With Le Pen, there is always a chance of a distinct anti-EU stance, but it’s hardly good news for the crypto industry. The candidate, who mixes bits of left and right sentiments in her populist cocktail, hasn’t given any signs that she could be particularly interested in the digital economy.

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