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EU BYTES


GC: I want to briefly move to the self-sustaining eco-systems for gambling such as the Augur crypto-currency where for example, Augur gambling operators can open markets themselves and even charge a commission. This in essence means that the consumer and the operator become one. Correct? JM: That’s certainly a valid viewpoint. Think of it as a betting exchange that no specific entity controls. If one wants to offer or just take bets (or both) is entirely up to the customer. GC: Have you seen any movement here in markets and operations, including any other blockchain tech like Augur? JM: As far as I can tell nothing outside the Bitcoin sphere has truly worked out yet. Even Augur itself seemed promising, but so far has struggled to attract a critical mass of users. In the Bitcoin sphere there’s a number of casinos, sportsbooks and betting exchanges that deal exclusively in Bitcoin, and overall that ecosystem seems to be thriving. But overall it seems we will see a booming financial sector within the cryptocurrency world (often called DeFi for Decentralized Finance) before the gambling sector really takes off. But I have no doubt it will eventually happen. GC: Without stating the obvious, it is more than certain that the technology is here to stay. It is being taught at universities and there is a significant increase in policy attention. Not to forget, companies like PayPal are now allowing crypto-currencies such as Bitcoin to be bought and sold on their platform. And recently Singapore’s largest lender, DBS bank is launching a digital currency exchange to trade crypto- currencies. JM: I agree, it is here to stay, and this is why I invest in the technology. You mention policy attention. What increase have you seen? Any specific highlights? GC: There definitely are, especially quite a few in the last months. In September, the European Commission adopted a new Digital Finance Package, including Digital Finance and Retail Payments Strategies, and legislative proposals on


crypto-assets and digital resilience. JM: I guess it is about time. What are they proposing? GC: In a nutshell the Commission is saying that is a strategy “for a competitive EU financial sector that gives consumers access to innovative financial products, while ensuring consumer protection and financial stability”. This is very typical Commission speak, especially four keywords / phrases: competitive, innovative, consumer protection, financial stability. The last one is the key element though which I think is most interesting here. Facebook’s Libra is really in the political focus now. And, as you know Jo, it is the concerns Libra is raising as a “stablecoin”. A stablecoin is backed by sovereign currencies (EUR, US $, etc.) which according to the critics can endanger financial stability. It is of course, not the only one, but certainly would have a significant outreach, generally because of the sheer amount of Facebook users. JM: Yes, there is that concern especially in light of fact that stablecoins might be “printed” or created as much as the currency developer, etc. wants. There are strong potential risks for financial markets but also generally to inflation. GC: Exactly. FYI – The Finance Ministers of France, Germany, Italy and Spain put out a joint statement, wanting to push for strong rules in the Commission proposal. So, exciting times ahead for all of us involved in the discussions. Just to add, there is such diverse technology which should make regulation approach even more of a challenge. We are moving towards a stringent licensing and certification procedure. The


Commission proposal itself states that it seeks to set “strict requirements for issuers of crypto- assets in Europe and crypto-asset service providers wishing to apply for an authorisation to provide their services in the single market”. I suggest for those interested to also have a look at the Estonian model for crypto-currency licensing. But within this context, with the massive amount of crypto currencies (around 7,000 and growing) how do you think the market will pan out? Which ones will survive and how will that be determined? JM: You will see about 10 major successful ones, where Bitcoin will most likely something like the reserve currency of the crypto-world and the other ones fill specialized roles. Ethereum, for example, looks like it will be the infrastructure on which most of Decentralized Finance will be built on. There will also be plenty of room for niche currencies that often serve very specific purposes, like privacy coins such as Monero. GC: In light of the many crypto-currencies out there, do you think there will be cannibalisation? JM: Yes, absolutely. The majority will be absolutely worthless, only a very few will survive. It’s also very possible that some of the major cryptocurrencies of the future haven’t even been developed yet. GC: And how do you think gambling operators will chose, if they do, which crypto-currency to apply? Or, let me rather ask, how do you think gambling operators should approach crypto- currencies? JM: I think a conservative approach makes sense: Go with what’s proven to be reliable and has stood the test of time. That’s precisely why Bitcoin is so popular, it simply has the longest track records and survived many crises. GC: Jo, thank you. As always, would you be available for any questions if the readers want to get in touch with you? JM: Absolutely: marnitz@timeandplace consulting.com


Greetings from Brussels and #StaySafeStayTuned


NOVEMBER 2020 29


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