The Brussels Cryptocurrency Industry Flexes Its Muscles

Peter Kerstens, a policy adviser at the EU’s executive arm, stated in a Monday speech, “Some, and many at the European Commission, will see the recent crypto market downturn as the evidence that this was just one big Ponzi scheme, that this was bound to end in tears, that we’re seeing the beginning of the end.  I cannot see that.”

Given the transformative potential of the underlying distributed technology, Kerstens stated that he remained “very, very bullish about blockchain, crypto, and Web3.”

Recent crypto market volatility has posed a threat to efforts that were formerly viewed as the future of crypto finance, such as lender Celsius and stablecoin terraUSD. However, some in the crypto sector in Brussels say that this is only a sifting process, allowing markets to uncover the enterprises that bring actual value.

“What is amazing about this market today is that all the sugar is gone,” Kevin de Patoul, chief executive officer of Keyrock, told the audience, comparing the buzz around Bored Ape and soaring currencies to the frosting on a doughnut.

With the crypto crisis, “you only see the real thing, which means that you actually did what makes sense … what actually has value in the long term and what doesn’t. And that is basically the promise of blockchain,” he remarked.

The crypto community is becoming optimistic about Europe. Germany topped a recent ranking of the world’s most crypto-friendly states; Binance speculates that current registrations in France and Italy might be the beginning of something larger.

Martin Bruncko, executive vice president for Europe at Binance, the world’s largest cryptocurrency exchange, told conference delegates, “I can imagine a situation where if things keep going the way they are going, we might eventually end up with headquarters in Europe,”

For businesses such as Keyrock, Belgium itself may not be an attraction. Although his firm and around half its 70 employees are headquartered in the nation, de Patoul acknowledges that it is not the most vibrant place for cryptocurrency.

“you’re one of the one of the few,” de Patoul stated in frot of CoinDesk. “Brussels is not one of the financial centers of the world.”

He asserts, however, that the firm — a market-maker that assists traders in securing liquidity in favored crypto-asset exchanges — can still service its worldwide market from its Belgian headquarters, with the assistance of the national central bank and regulator Financial Services and Market Authority.

Since we began in 2017, the attitude of regulators has “developed quite favourably,” as de Patoul. “Now it’s a lot more positive, and they really know their stuff.” Belgium looks to be following in the footsteps of its neighbor France, where the cryptocurrency sector has convened to make its political voice known and which yearly stages a similar event, Paris Blockchain Week.

But perhaps Brussels has something that Paris does not. As the headquarters of EU institutions, it also affords the firm closeness to policymakers, and he added — individuals like Kerstens and the legislators and negotiators crafting the regulatory framework that might persist for years, like as the EU’s Markets in Crypto Assets Regulation (MiCA).

In regards to political influence, “clearly being here does have a positive impact,” he stated, adding that laws such as MiCA are “going in the right direction, simply a bit too slow for our taste.”

MiCA, which allows crypto issuers to advertise throughout Europe if they publish a white paper with information for investors, is in its last phases of discussion, with significant problems remaining over how to address decentralized financing (DeFi) and Non-Fungible Tokens (NFTs).

“We have many bad ideas” regarding how to regulate DeFi, according to Kerstens, because it contradicts usual financial-regulatory standards that designate a central body to be held accountable. “If you have good ideas … don’t be shy, come and see us.”

However, Kerstens, advisor for technical innovation and cybersecurity at the European Commission’s financial services department, desires regulation of at least certain parts of NFTs.

Officials feel they must address financial-market abuses such as wash trades, in which brokers and dealers collaborate to influence prices, despite warnings from the crypto sector about treating Bored Ape differently from offline art marketplaces.

“We accept that it’s silly to do a white paper for every non-fungible token,” Kerstens remarked. “But when you look at the service provisions – the custody of non-fungible tokens, the exchange, the brokerage, the advice – what really is the difference between custody of an NFT and custody of bitcoin and custody of Ethereum? It’s the same thing; it’s the same service. ”

How these concerns are handled will likely determine the future of Web3 in Belgium and the other 26 EU member states. But in many instances, Belgian crypto businesses’ challenges arise from domestic issues such as taxation, not the supranational union.

Belgium imposes the highest labor taxes of all developed nations, as measured by the Organisation for Economic Co-operation and Development (OECD) – a problem for any startup looking to hire – and there is uncertainty over how to tax crypto gains, depending on whether trading is considered professional or merely household budget management.

Others, such as Florian Ernotte, an associate at the law firm Avroy Avocats and the founder of the website cryptomonnaie.be, point to the lack of legal recognition for decentralized autonomous organizations. These groups create DeFi apps as a factor that may hinder competition.

Christophe De Beukelaer, a crypto phile who is a member of the Brussels Parliament for the center-right Les Engagés party and co-founder of Brussels Blockchain Week, is one of the legislators who may attempt to modify this.

De Beukelaer tweeted in January that he would accept his pay in bitcoin (BTC) to increase awareness of creative assets as a store of wealth.

Since then, the value of the money has halved, but it remains unaffected by market fluctuations. This may also be because, in actuality, he receives a traditional euro salary, which he converts monthly into BTC, so partially protecting himself from market fluctuations.

While initially provoking resentment from colleagues, some of whom, according to De Beukelaer, labeled him an “anarchist,” he feels his advocacy has begun to increase interest in the potential of cryptocurrencies, which he still sure may make finance more equitable.

“My entry point is the realization that we are in a very unfair financial world: Many people don’t have access,” he stated In an interview, adding that cryptocurrencies gave transparency and the same laws to anyone. “In Belgium and also in Europe, you have very few people who have access to the financial markets.”

As a politician in what is essentially the municipal administration for capital of over 1,2 million people, De Beukelaer acknowledges that his ability to affect change is restricted. He believes that Belgium will make the most of its next EU presidency, during which it will preside over meetings of the bloc’s member states in the first half of 2024.

“I want to work with other members of Parliament on that to be sure we … have a real impact on important legislation at a European level, to make two or three breakthroughs on Web3,” he stated.

He is forthright on whether he has the support of the federal government or the country’s other, more extensive regions of Flanders and Wallonia to achieve this objective.

“Not yet,” he said. “But I’m working on it.”