French Tech Bucharest meetings on the future of finance

After a meeting at the French Institute in Romania with actors from French Tech in Bucharest on the topic “the future of finance”, our editorial staff wanted to give the floor to two technical managers, Dylan Delhommois and Jamil Benabdallah, who are specialists in this matter. .

Dylan Delhommoy, 24 years old, at the end of 2017 he co-founded France’s first crypto asset investment management company. Passionate about all these topics, today he calls himself a crypto evangelist and strongly believes in its mass adoption in the coming years. After earning a master’s degree in commerce and marketing, he now works as an account manager for CometJobs. In September, he plans to launch an investment fund (around DeFi) in Romania.

Jamil Benabdallah, co-founder of H64, graduate of INALCO and Sciences Po Paris, he served as director of Détente Consultant Eastern Europe from 2007 to 2017. An expert of the European Commission and the World Bank on issues related to sustainable development of territories, he has worked, in particular, on the digitization of private and public players in this sector. This is how his interest in Blockchain and the issues of accelerating and democratizing its implementation in 2016 manifested itself.

What about the regulation of the crypto/DEFI industry and the use of contestation tools by institutional players such as central banks?

Dylan: Regulation in France has evolved a lot in recent years, the first step in regulation is the introduction of a flat tax on profits derived from crypto assets. The finance bill passed in 2019 modeled the securities regime to apply it to crypto assets, i.e. 30% income tax with a flat surcharge of €305. In 2019, a second law appeared – the Covenant Law, creating a new status for companies developing in this field: PSAN (digital asset service provider) accreditation, many companies are now required to have this accreditation in order to be able to exercise it if they offer services that require it. There are currently 37 PSAN approved players.

On a European scale, on March 15, 2022, the MICA (Crypto Asset Markets) regulation was adopted to standardize practices on a European scale. This will regulate the issuance and provision of services related to crypto assets, with particular attention to consumer and investor protection to limit the risk associated with fraudulent products. In addition, these rules also cover money laundering and terrorist financing.

Central banks are also interested in creating CBDCs (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 deploy it now is China.

Is Romania an interesting market for French blockchain startups?

Dylan: The philosophy of Blockchain in general is decentralization, which is why blockchain startups usually consist of employees from all over the world. Today, many startups are blocked by local laws that are too restrictive in this area. Romania, in this case, is a fairly crypto-friendly country today, with many crypto companies settling there. In France, access to a bank account remains difficult despite the promises of the PACTE law.

What is DEFI?

Jamil: Blockchain technology and crypto assets are the basis of the new financial infrastructure, just as the Internet was the basis of the new information infrastructure. Decentralized finance is inherently digital; it runs on a decentralized infrastructure and is open to everyone, both in terms of use, consultation, and participation in its construction. To draw a parallel with the Internet, DEFI is revolutionizing finance the way the Internet has changed information. Indeed, the first information revolution was the printing press, followed by the telegram, telephone, radio, television and, of course, the Internet. The Internet brings together all the other revolutions in one: you can listen, read text and watch videos in one place. Moreover, the Internet has not only revolutionized access to content, but has also democratized the creation of that content. Finance has not experienced such a revolution. Of course, the vast majority of financial transactions today are carried out electronically, financial players use the Internet to communicate, and the speed of execution has improved significantly. However, it is still impossible to talk about democratization, since the creation of new financial instruments, contracts and agreements remains the prerogative of a few large traditional players. The market is still closed, completely controlled by intermediaries. If we compare the information revolution with the financial revolution, then, according to some analysts, we are hardly at the beginning of the printing press phase. Therefore, DEFI wants to be the Internet of traditional finance and democratize the access of the majority to the creation and use of financial instruments without intermediaries. Of course, there are complex issues of regulation and, in particular, the protection of investors.

How do traditional financial players react to the emergence of DEFI? Can we talk about the institutionalization of DEFI after the initial phase of criticism?

Jamil: After very strong hesitation and a phase of reflection and testing that continues until today, institutional players see the leading role of Blockchain technology and DEFI in the digital transformation of the sector in the coming years. At the level of private equity, although there are few quantitative reports on the exact levels of participation of institutional investors in the digital asset markets, qualitative data based on surveys suggest growing interest and investment in crypto assets. Investors are gradually moving from the learning phase to the actual investing phase, although this is currently slowing down due to volatility and the accompanying downturn in the equity and crypto asset markets. This last point is also interesting because it illustrates the institutionalization of DEFI and the danger this can pose to small holders/individual investors, who previously represented a large part of the market. Indeed, financial entities present at DEFI have adopted the use of cryptoassets for the purpose of diversifying and optimizing portfolios, given the apparently uncorrelated nature between the traditional financial market and the decentralized finance market. This assumption is now refuted by the positive and growing correlation of crypto assets with traditional asset classes. The increased participation of institutional investors, what we call the institutionalization of DEFI, creates channels of infection between decentralized finance and traditional finance, and this, in fact, creates risks for investors at the micro level, for whom the world of crypto assets is smaller and smaller. fewer alternatives to reduce risk and diversify their portfolios.

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Biography of event speakers:

  • Mirel Bran is a correspondent for Le Monde in Bucharest and host of a program on Radio France Internationale Romania called “We come from the future”. On June 22, it will launch the first Romanian book in the form of an NFT (non-fungible token) at the French Institute in Bucharest.
  • Benjamin Ramo, former director of Binance, is the founder of Jenny DAO and co-founder of Exotic Markets. He is also an angel investor in approximately 150 blockchain projects. He was a pioneer of the NFT ecosystem.
  • Alexandru Stanescu is a partner at the law firm SLV Legal and a member of the board of directors of ThinkBLOCKtank (a European association of blockchain lawyers based in Luxembourg). He regularly advises startups and expanding blockchain ecosystems, including exchanges, payment service providers, crypto asset managers and NFT creators.
  • Constantin Rotariu is the co-founder of Bitcoin Romania, a company that connects the traditional and digital retail worlds through the Bitcoin ATM network. For 8 years, he has promoted the huge opportunities offered by crypto assets like bitcoin as a personal and/or business investment.
  • Ioana Frinku is an innovation strategy expert with extensive experience in the development and management of Blockchain financial technology solutions. She founded the first blockchain development company in Romania. She is currently the CTO of EQIFi and EQIBank.