Following a meeting at the French Institute in Romania with actors from the French Tech of Bucharest on the theme “the future of finance”, our editorial team wanted to give the floor to two Tech managers, Dylan Delhommois and Jamil Benabdallah, both specialists in the field.
Dylan Delhommois, 24 years old, he co-founded the first cryptocurrency investment management company in France in late 2017. Passionate about all these topics, he calls himself a crypto-evangelist today and firmly believes in its massive adoption in the coming years. Graduated with a Masters in Commerce and Marketing, he now works as an Account Executive for the CometJobs company. He plans to launch an investment fund (around DeFi) in Romania in September.
Jamil Benabdallah, co-founder of H64, graduated in INALCO and Sciences Po Paris, he was director of Détente Consultant Eastern Europe, from 2007 to 2017. Expert for the European Commission and the World Bank on issues related to the sustainable development of the territories, he worked in particular on the digitization of private and public players in the sector. This is how in 2016 his interest in the Blockchain and the issues related to the acceleration and democratization of its adoption manifested itself.
What about the regulation of the cryptocurrency / DEFI sector and the use of challenging tools by institutional actors such as central banks?
Dylan: The regulation in France has evolved considerably in recent years, the first step in regulation is the appearance of the flat tax for the profits generated by cryptocurrencies. The Finance Bill adopted in 2019 modeled the securities regime to apply it to crypto-assets, i.e. a 30% tax in total on profits with a fixed allowance of 305 euros. A second law appeared in 2019 – the Pacte Law – creating a new status for companies evolving in this field: PSAN (Digital Asset Service Provider) accreditation, many companies are now required to have this accreditation in order to exercise. whether to offer the services that require it. Today there are 37 PSAN approved players.
On a European scale, the MICA (Markets in Crypto-Assets) regulation was adopted on 15 March 2022, which allows for the standardization of practices on a European scale. This will make it possible to regulate the issuance and provision of services related to cryptocurrencies, focusing on consumer and investor protection to limit the risk associated with fraudulent products. Furthermore, these regulations also address money laundering and terrorist financing.
Central banks are also interested in the creation of CBDC (Central Bank Digital Currencies) to be able to offer similar products today and above all to remain controlled and centralized. The first country to be interested and to deploy it currently is China.
Is Romania an attractive market for French Blockchain startups?
Dylan: The philosophy of Blockchain in general is decentralization, so blockchain start-ups are usually made up of employees from all over the world. Many start-ups today find themselves blocked by local regulations that are too restrictive to operate in this area. Romania, in this case, is now a sufficiently crypto-friendly country and many cryptocurrency companies are settling there. In France, accessing a bank account is still difficult despite the promises of the PACTE law.
What is DEFI?
Jamil: Blockchain technology and cryptocurrencies are the foundation of a new financial infrastructure, just as the Internet has been the foundation of a new IT infrastructure. Decentralized finance is natively digital; operates on decentralized infrastructures and is open to all, both in terms of use, consultation and participation in its implementation. To draw a parallel with the Internet, DEFI is revolutionizing finance as the Internet has done for information. Indeed, the first information revolution was the press, followed by the telegram, telephone, radio, television and, of course, the Internet. The internet packs all other revolutions into one – you can listen, read texts and watch videos in one place. Furthermore, the Internet has not only revolutionized access to content, it has also democratized the creation of this content. Finance has not experienced such a revolution. Of course, the vast majority of financial transactions today are done electronically, financial traders use the Internet to communicate, and the speed of execution has greatly improved. However, we cannot yet speak of democratization because the creation of new financial instruments, contracts and agreements remains the prerogative of a few large traditional players. The market is still closed, entirely controlled by intermediaries. If we compare the information revolution with the financial one, we are, for some analysts, just at the beginning of the printing phase. The DEFI therefore wants to be the traditional Internet of finance and democratize the access of the majority to the creation and use of financial instruments and this without intermediaries. Of course, complex regulatory and investor protection issues arise here.
How do traditional financial operators react to the appearance of DEFI? After an initial phase of criticism, can we talk about the institutionalization of the DEFI?
Jamil: After a very strong hesitation and a phase of reflection and experimentation that continues to this day, institutional actors see a leading role for Blockchain and DEFI technology in the digital transformation of the sector in the coming years. At the direct investment level, while there are few quantitative reports on the exact levels of institutional investor participation in digital asset markets, data based on qualitative surveys suggests growing interest in and investing in cryptocurrencies. Investors are gradually moving from the education phase to the actual investment phase, although this is currently slowed by volatility and the concomitant decline in equity and cryptocurrency markets. This last point is also interesting because it illustrates the institutionalization of the DEFI and the danger that this can represent for the small private holders / investors who until then have represented a significant part of the market. The financial players present in the DEFI, in fact, have adopted the use of cryptocurrencies for the purpose of diversifying and optimizing portfolios, given the apparently unrelated nature between the traditional financial market and that of decentralized finance. This assumption is now invalidated by the positive and growing correlation of cryptocurrencies with traditional asset classes. The greater participation of institutional investors, what we call the institutionalization of DEFI creates channels of contagion between decentralized finance and traditional finance and this, in essence, gives rise to risks for investors at the micro level, for which the world of cryptoassets is less. and less an alternative to reduce risk and diversify your portfolios.
Bio of the speakers of the event:
- Mirel Bran is Le Monde correspondent in Bucharest and presenter of a program on Radio France Internationale Romania entitled “We come from the future”. On June 22, she will launch the first Romanian book in the form of an NFT (Non Fungible Token) at the French Institute in Bucharest.
- Benjamin Rameau, former director of Binance, is the founder of Jenny DAO and co-founder of Exotic Markets. He is also a Business Angel in around 150 blockchain projects. He was a pioneer of the NFT ecosystem.
- Alexandru Stanescu is a partner of SLV Legal and a board member of ThinkBLOCKtank (the European association of blockchain lawyers based in Luxembourg). He regularly advises start-ups and scale-ups in the blockchain ecosystem, including exchanges, payment service providers, cryptocurrency managers and NFT creators.
- Constantin Rotariu is co-founder of Bitcoin Romania, a company that connects the world of traditional and digital retail through a network of bitcoin ATMs. For 8 years he has been promoting the vast opportunities offered by cryptocurrencies such as Bitcoin as a personal and / or corporate investment.
- Ioana Frincu is an innovation strategy expert, with a long experience in developing and managing Blockchain financial technology solutions. You founded the first blockchain development company in Romania. She is currently CTO of EQIFi and EQIBank.