Roger Nordmann, the crypto scene and regulation

The soap opera “Roger Nordmann against cryptocurrencies” experienced a new and virulent episode on Tuesday. In one text published by The weatherthe Neuchâtel crypto community reacted strongly to a tweet from the National Socialist Councilor who expressed his solidarity with an MEP targeted by “infamous attacks by the cryptocurrency sect”. The term “sect” has not gone down well with pro-bitcoins in French-speaking Switzerland, already at loggerheads with the elected Vaudois since he launched a parliamentary motion aimed at banning cryptocurrencies last fall (the text was refused ). The positions are particularly clear-cut and antagonistic, like the way the European Union and Switzerland regulate cryptocurrencies and other digital assets. The first leans towards strict control, even a ban, of certain practices; the second has chosen to integrate these technological innovations into the existing regulatory framework, even if it means modifying it bit by bit.

At the heart of the problem, the fact that cryptocurrencies make it possible to transfer large sums, quickly, without linking to a precise location and with a solid degree of anonymity. Crypto enthusiasts see it as the keystone of the financial system of tomorrow, decentralized and freed from banks. For them, bitcoin is a powerful tool for freedom, which they readily describe as “indestructible”, “unstoppable”, “revolutionary”. They find it hard to bear that this form of currency is sometimes reduced to a vulgar means of laundering money or collecting ransoms, which would justify its ban, according to the opposing camp. Should we also ban the dollar, since it is widely used for illicit activities?

Read also: Bitcoin is a religion, not a cryptocurrency

Panoply of prohibitions envisaged

The real challenge of cryptocurrencies is that they have caused the emergence of new actors, new behaviors and new infrastructures, in a decentralized system. To address these new forms of finance, our European neighbors considered last March banning the principle of operation of most cryptos, called “proof of work”. Because network participants consume a lot of energy to solve complex computer calculations. Not very popular in times of fighting climate change.

The ban was rejected in the European Parliament, but other reflections have been launched. A draft of severe regulations on certain types of electronic wallets would require that all their owners be identified. The latter could appear in databases when they hold more than 1000 euros in cryptos. Another text plans to limit or prohibit crypto exchange platforms from transferring digital assets to decentralized finance protocols (a finance based on these so-called “smart” contracts).

These bricks of European regulation are still at a preliminary stage of the legislative process; nothing says that they will see the light of day as they are. They nevertheless draw a repressive environment which pushes French entrepreneurs to emigrate, particularly to Neuchâtel, as the magazine With echoed this recently.

Integrated into existing law

In Switzerland, precisely, Roger Nordmann is rather close to the European approach: “cryptocurrencies should not be outside the law”, he summarized to our colleagues from last October. In reality, these instruments are already covered by many laws governing traditional financial activity, laws often put in place long before the invention of the blockchain. The basic principle being: “same risks, same rules”, as the president of Finma reminded us on Tuesday, Marlene Amstad, during the presentation of the financial overseer’s annual report.

Crypto or not, a project that uses public savings must obtain a license and comply with anti-money laundering provisions, for example. Rather than creating laws aimed only at digital assets, liberal Switzerland has chosen to modify its existing framework when necessary, through what has been called the Lex Blockchain.

Read also: Is Switzerland too complacent about blockchain?

Officially, the Swiss approach is to encourage innovation and competition. More prosaically, it is also a means of attracting qualified jobs in technological sectors. The limitation of this approach is that decentralized financial assets are most of the time launched from abroad, and therefore outside national control. Another fundamental challenge concerns the identification of those responsible for crypto projects, which is essential for the security of participants, in Switzerland as everywhere else.

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