May 3, 2022
EUCI workshop in Amsterdam 19th/20th April 2022
EUCI in collaboration with COALA, organised a two day workshop to coincide with devconnect in a really nice venue, Creative Point, in the West of Amsterdam which is a short tram ride from the hustle of central Amsterdam.
The workshops were split into themes covering NFTs, DAOs, MiCA and TFR, and regenerative ICOs over two days.
Day One
Day One had a leisurely start as the group gathered around a nice selection of pastries, fruit and coffee. It was great to see everyone in person, meet new people, and share notes.
The EUCI founding team welcomed the participants and gave a short overview of what was planned.
NFTs were the first topic where the groups split into the legal and tech streams. The tech stream developed the idea of introducing meaningful identifiers to make it clear what flavour NFT is described and proposed a ERC1155L with the L signifying the all important label. The need for the label is not only for distinguishing between media types, but to signify whether an NFT was part of a collection or multi-token, and contains codes which refer to the licence type (such as Creative Commons or more restrictive non commercial licences).
Licencing is an important aspect of an NFT and of particular concern for the artists. Specifically there were discussions around what licences applied and how the derivative rights are defined.
We enjoyed a lunch in the spring time warmth in the terrace where we discussed the morning events and all things crypto.
DAOs were the subject of the afternoon sessions and again there were two groups. The DAO Model Law, developed by COALA, was the subject for discussions where one of the more contentious or difficult areas was taxation. In the absence of a registered address then where does a DAO pay taxes? One solution is a pass-through where the DAO members are liable for taxation in the countries of residency, however, this may not be a practical answer as tokens may not be available for the members in order to settle taxation either through vesting or reserves. It would be preferable to have a form of corporate taxation where the profits of a DAO could be managed like any other corporate with retained profits used for reserves rather than being declared as profits. A discussion developed around an idea of creating a TAXDAO which collected the notional tax from unregistered DAOs and distributed it to governments around the world, however, the discussion did not arrive at a good conclusion and was abandoned. The taxation issue remains a problem for unregistered DAOs and would benefit from tax experts looking at solutions.
There were some outstanding issues for the DAO Model Law aside from the tax discussion that were bought to the group such as the Failure Events and various scenarios were explored with different approaches.
We concluded the day with a trip on a canal boat themed on the metaverse where we discussed the day’s progress and talked more broadly about crypto, the meaning of life and which is the best country to live in as a digital nomad.
Day Two
The day began with a nice breakfast and gathering the group together who arrived around the start time of 09:30.
There were two main themes of day two namely regenerative ICOs and MiCA and the TFR.
The TFR is of concern principally due to the proposed rules around “unhosted wallets” which required all non custodian wallets to share the sender information and check the recipient. The clamp down on non-custodian wallets goes against the disintermediation through centralisation to a small group of institutions. The impact of this could lead to innovation in the DeFi, and DAOs moving out of Europe leaving speculation in assets such as Bitcoin or Ethereum, which goes against the EU strategy of fostering innovation and dampening speculation in crypto assets.
There was a wider discussion around education on what a wallet is in blockchain and how its function differs from a wallet in the traditional sense?
There is an argument around proportionality of having to disclose data, and while AML trumps any privacy concerns, there should not be technology bias.
The group reviewed the various texts for MiCA, comparing the original draft with the commentary from the commission and the MEPs. There was a good debate on what influence EUCI has, what can feasibly be changed and which of the texts were problematic. There was concern that while the original draft did not have any reference to DeFi, DAOs or NFTs that there will be some hasty amendments made to MiCA which could stifle innovation. The original draft did not contain DeFi, DAO, nor NFTs by design as they were emerging technologies. Last minute changes are in general not welcome as they would be rushed and from what has been observed not made with a solid understanding of the sector.
There was a discussion about how MiCA and MiFID II could be contradictory, especially in the context of DeFi and we touched on regulatory reporting, clearing and the different implementations by member states. MiCA is designed to be a pan EU regulation and MiFID II a directive which requires membership implementation, which by definition could create some inconsistency across the EU.
The regenerative ICOs ran in parallel to the TFR and MiCA working group and sadly I was not able to go to it and it would be an injustice to write about it. I look forward to hearing more about how regenerative ICOs work in practice as what I have learned so far is that it is a very interesting approach to fund raising with some caps on returns should the project create a huge amount of value.
Day Two wrapped up late afternoon with groups heading off to devconnet events, parties and the 24 hour coworking space.
To find out more about what European Union Crypto Initiative (EUCI) do please visit https://www.crypto-initiative.eu/ and follow the debate on twitter https://twitter.com/EuCInitiative
