‘DeFi in Europe has no lobby,’ says co-founder of Unstoppable Finance

The trialogue for Markets in Crypto Assets and Transfer of Funds regulations (MiCA and TFR) is currently underway in the European Commission and the Council of Ministers. It will be completed in a few more weeks.

Experts believe that the TFR, if adopted, would impose a strict financial surveillance regime on European decentralized finance (DeFi), NFT (nonfungible token) and metaverse spaces. Companies in these sectors could move elsewhere to avoid regulation.

The German DeFi community is not silent. They have written an open letter to EU decision makers, which supporters can sign. Peter Grosskopf, from Unstoppable Finance is one of the initiators. He was also co-founder of Solarisbank 2017. Grosskopf was previously chief technology officer at Stuttgart Digital Exchange before he co-founded his DeFi project with Maximilian von Wallenberg, Omid Aladini and others.

Cointelegraph auf Deutsch interviewed Peter Grosskopf to find out how DeFi fascinates and what he thinks about the TFR regulations. Also, how the DeFi community is feeling in Germany right now.

Grosskopf stated that DeFi applications can do almost everything we do with banks today. He also said that there is a whole new infrastructure that is available that can be used in any part of the world, not just North America, Asia or Europe.

Grosskopf believes that DeFi tokens offer interoperability. They allow different systems to work together and, therefore, the new global financial market functions in a uniform, decentralized way.

Regulators don’t get DeFi

Grosskopf is not the only one who is excited about DeFi. Grosskopf stated that the European DeFi market is experiencing problems at both the political and understanding levels. Grosskopf stated that the European Union Parliament voted for the TFR. This is unfair as crypto has stricter rules than traditional financial industries.

“Politicians represent the people. They are elected by people to reflect our wishes, interests, and opinions. DeFi has almost no lobby, which is why very few people have spoken to politicians about DeFi’s progress and the potential benefits of decentralized financial systems. Let’s now put an end this. “The DeFi players, protocol developers and creators from Europe must be more active and present themselves.”

Grosskopf stated that regulators would be better able to see the benefits of DeFi by having transparent documentation of transactions that can be retrieved publicly and can be audited and inspected statically.

Grosskopf pointed out that one of the many benefits of blockchain is the creation of a digital ID, which can be used to identify a person or an organization within the digital space. Grosskopf explained that a digital identity can be stored in an unhosted account. When the user needs to verify his identity through a digital process he could use the derived data to authenticate him securely. Grosskopf stated that it was necessary to verify the authenticity of this identity and its legitimacy.

“And I believe there is a need to such solutions: To respond with technology to regulatory requirements and, if feasible, to establish our DeFi industry standards.”

He also noted that there are still issues to work on, such as usability and consumer protection. The DeFi community must start talking with regulators and politicians to convince them that DeFi transparency is more secure from corporate or political influence, corruption, and therefore less vulnerable to manipulation and corruption.

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Find a voice

The vote results were disappointing at first for DeFi, as two important EU Parliament committees voted in favor of TFR. Now, however, there is a positive mood and we want everyone to see the benefits of DeFi.

“But, let’s be real, the DeFi space in blockchain is still very new. It is hardly represented by any of the associations. We will do our best to be heard.

Grosskopf, who has been a crypto realist since years, says he is a crypto realist because he is well-versed in both the old world and the new world thanks to his experience at Solarisbank. Grosskopf believes regulation is becoming more stringent. Grosskopf believes that regulation is becoming more stringent in general. As a crypto realist, it is important that we as a community be proactive and create our own solutions before they are imposed on us by anyone outside.

“They want us to be safe, but they do exactly the opposite.”

Traditional financial transactions are not reported to the government for every transaction. However, suspicious transactions will be reported to the government. The current TFR version would require banks and payment companies, regardless of whether it was for something as commonplace and mundane as an Apple laptop, to keep information about any transaction exceeding the threshold of 1000 euros. Grosskopf considers this an invasion of privacy.

“Buying a laptop does not constitute a crime or make you suspicious. The mere fact that every purchase for an object or service exceeding 1,000 euros is listed somewhere, along with my name and all my contact information, is absurd to me. These data could be accessed by hackers or criminals who can then analyze your personal information and determine where you live.

Grosskopf believes that the TFR is absurd from a data protection standpoint. It also doesn’t prevent money laundering. They do not want to protect us, but are doing the exact opposite.”

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Companies that use Web3 could be relocated outside of the EU

Grosskopf claims that the TFR will prevent European projects from being developed and will result in less capital flowing into the Continental DeFi market. This will result in a decrease in DeFi sector growth and make Europe less attractive to investors.

“I see only negative consequences: Clients will increasingly turn to foreign providers which will have devastating effects on the competitiveness and quality of European service providers. It plays an important role in the establishment of new companies and their actual location.

Grosskopf said that although Switzerland is the obvious destination for DeFi startup companies, there are certain conditions where more companies may be established outside Europe. European policy will do the exact opposite. The DeFi market will be outside the scope of European policy’s influence, which will only have “negative consequences” for the goal to combat money laundering.

Here is a brief version of Peter Grosskopf’s interview. The full version can be found here (in German).

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