The soap opera “Roger Nordmann against cryptocurrencies” had a new and virulent episode on Tuesday. In a, Neuchâtel’s crypto community reacted strongly to a tweet by the National Socialist councilor expressing solidarity with an MEP who has been the target of “infamous attacks by the cryptocurrency cult”. The term “cult” has not gone down well with pro-bitcoins in French-speaking Switzerland, already at odds with the elected Vaudois since he launched a parliamentary motion last fall aimed at banning cryptocurrencies (the text was denied). The views are particularly clear-cut and hostile, such as the way the European Union and Switzerland regulate cryptocurrencies and other digital assets. The former tends towards strict control, even prohibition, of certain practices; the second has chosen to integrate these technological innovations into the existing regulatory framework, even if it means adapting it little by little.
Brilliant explanation from @AuroreLaluq on the need to properly settle cryptocurrencies. And all my solidarity, given the infamous attacks it undergoes from the cryptocurrency cult https://t.co/DtzwEWHva3
— Roger Nordmann (@NordmannRoger) Apr 1, 2022
The crux of the problem is the fact that cryptocurrencies make it possible to transfer large amounts of money quickly, without linking to a precise location and with a solid degree of anonymity. Crypto enthusiasts see it as the cornerstone of tomorrow’s financial system, decentralized and freed from banks. For them, bitcoin is a powerful tool for freedom, which they easily 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 the opposing side argues would justify a ban. Should we also ban the dollar as it is widely used for illegal activities?
All kinds of prohibitions
The real challenge of cryptocurrencies is that they have caused the emergence of new actors, new behavior and new infrastructures in a decentralized system. To tackle these new forms of financing, our European neighbors considered last March to ban the working principle 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 fight against climate change.
The ban was rejected in the European Parliament, but other reflections have been launched. A draft of strict regulations for certain types of electronic wallets would require all their owners to be identified. The latter can appear in databases if they have more than 1000 euros worth of cryptos. Another text plans to restrict or prohibit crypto exchange platforms from transferring digital assets to decentralized financial protocols (a funding based on these so-called “smart” contracts).
These building blocks of European regulation are still at a preparatory stage of the legislative process; nothing says they will see the light of day as they are. They nevertheless create a repressive climate that encourages French entrepreneurs to emigrate, especially to Neuchâtel, as the magazine balance repeated this recently.
Integrated into existing legislation
It is precisely in Switzerland that Roger Nordmann is quite close to the European approach: “cryptocurrencies should not be outlawed”, he summarized last October with our colleagues at Heidi.news. In reality, these instruments are already covered by many laws governing traditional financial activities, laws that were often enacted long before the invention of the blockchain. The basic principle is: “same risks, same rules”, as the chairman of Finma reminded us on Tuesday, Marlene Amstad, during the presentation of the annual report of the Financial Supervisor.
Crypto or not, a project that uses public savings must be licensed and, for example, comply with anti-money laundering regulations. Rather than create laws that only target digital assets, liberal Switzerland has chosen to adapt its existing framework where necessary, through what has been called the†
Officially, the Swiss approach is to stimulate innovation and competition. More prosaically, it is also a means of attracting qualified jobs in technology sectors. The limitation of this approach is that decentralized financial assets are usually launched from abroad, and thus outside national control. Another fundamental challenge concerns the identification of those responsible for crypto projects, which is essential for the security of participants, both in Switzerland and everywhere else.