This highly critical report on cryptocurrencies provided by a French MEP and the Rousseau Institute

INFORMATION BFM Crypto – Director of the Rousseau Institute with a group of economists presents a report very critical of the sector. It was commissioned by MEP Emmanuel Morel.

This is a report that is likely to make a splash in the crypto ecosystem. Led by Nicolas Dufresne, Senior Civil Servant, Economist and Director of the Rousseau Institute, the report is entitled “Cryptoassets: From Mirage to Reality, Reflections on the Financial, Economic, Environmental and Political Impact of Cryptoassets”. His plan will be unveiled this Monday afternoon in Paris by six economists who have contributed to its development, including Jean-Paul Delae, author of Beyond Bitcoin, or Jean-Michel Servais.

They all signed a forum in February 2022 asking for regulation of the crypto ecosystem months before the first crypto ecosystem crashes, with the collapse of Terra Luna and then the bankruptcy of giant FTX. A few months ago, left-wing MEP Emmanuel Morel, known for his critical stance on the ecosystem, contacted them to compile a review of cryptocurrencies. The publication of this report does not fit into any context. The European regulation, known as MiCa for “Crypto Asset Market”, aimed at regulating the crypto sector in Europe, has not yet been formally approved by the European Parliament. The vote of deputies was postponed until the end of April.

“An alternative discourse is possible”

In this context, this 122-page report reviewed by BFM Crypto is timely. Its purpose is to explain to MEPs the problems associated with crypto assets that have arisen in connection with their appearance. We speak critically to show that the cryptolobby discourse is not the only possible truth. An alternative discourse is possible and necessary,” explains Nicolas Dufresne at BFM Crypto.

The limitations of the European rules are underlined in all their forms. “The draft European regulation of cryptoasset markets will definitely not be enough,” we read. If the report recognizes some progress, in particular the new transparency obligations placed on players, regulation will not go far enough without regulating decentralized finance (DeFi) or even NFT, for example.

“We already know that we will have to switch to Mica 2, the first version will not solve all the problems associated with crypto assets, new rules will be required,” explains Nicolas Dufresne.

18 offers

The report mainly presents a list of 18 political personnel proposals. “If our proposals were considered by the deputies of the European Parliament, we would be very happy, it would be in the common interest. make the choice they deem necessary in the public interest,” said Nicolas Dufresne.

For example, the report proposes to ban the so-called “proof of work” system that allows Bitcoin to exist. The report highlights the “environmental disaster” associated with this operation. “Only the bitcoin lobby advocates this. I think we will come to this sooner or later,” says Nicolas Dufresne. Understand: Economists want to ban bitcoin. If electricity consumption on mining farms is a reality, mining experts emphasize the environmental impact measured over several years, in particular through “green” mining farms or the use of surplus energy that would otherwise be wasted.

Another suggestion of the report regarding the transition to the end of the “complete” anonymity of anonymous crypto-assets, such as crypto-monero or zcash. “It is not about making all transactions transparent, but about being able to lift anonymity when the circumstances so require, and that the judiciary can have access, regardless of the circumstances, to the identity – if necessary – of people who, by the origin of these transactions are about public safety. This is another principle of prohibition of cryptocurrencies, the purpose of which is complete anonymity,” emphasizes the director of the Rousseau Institute. In their opinion, the anonymity of cryptocurrencies will facilitate fraud, illegal criminal activity or financing of terrorism. Recall that the share of all cryptocurrencies associated with illegal activities is 0.24% in 2022 according to the specialized company Chainalysis.

Along with these proposals, others seem to be outdated, such as the proposal aimed at “strengthening and ensuring the effectiveness of obligations related to the fight against money laundering and the financing of terrorism” (LCB-FT). the obligation already rests with French players who wish to obtain the so-called PSAN (Digital Asset Service Provider) registration in France issued by the Autorité des Marchés financiers (AMF).

To a certain direction

Although Nicolas Dufresne is very critical of cryptocurrencies, he intends to clarify his remarks. “Well-regulated crypto assets with specific uses can be useful if there are uses that are not monetary or defy public order or the environment.” But in the end, the report wants to move in a certain direction.

“What we are promising through crypto-assets, the issue of transaction fees, transactions abroad, the removal of the intermediation of the system in relation to banks… This could be achieved with much greater efficiency, while maintaining this nature of the common good with the central bank. digital currencies that are truly accessible to citizens,” emphasizes the latter.

However, for the latter, the problems associated with the emergence of cryptocurrencies should be known to everyone. According to Nicolas Dufresne, even “the smartest players in the crypto asset ecosystem understand this very well.” The latter explains, in particular, by the fact that he regularly meets with the players of the crypto-ecosystem. For example, he recently spoke with crypto investor Julien Boutelou, with whom he shares certain beliefs, such as the fact that the so-called “proof of work” system (Bitcoin system) is outdated.

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