Defying France’s traditional financial systems and figures to convince them of the benefits of cryptocurrency was a sluggish battle for Pierre Person, a plucky 33-year-old who served as a member of France’s National Assembly for the past five years.
But as cryptocurrencies evolve to become more mainstream and with changes to the lower house of parliament following May’s legislative elections, which saw President Emmanuel Macron’s LREM party lose its majority, Person, a former parliamentarian for LREM, is hopeful there will be more open-mindedness toward digital currencies.
“When I first started getting interested in it in 2017-2018, it was a very unknown subject, not mainstream,” he told Euronews Next at the International Financial Forum in Paris.
“I think our decision-makers see crypto in a different way. Now we see that more and more people have started to get interested in cryptos and so politics can no longer miss out”.
In September 2021, during Person’s tenure in the French Parliament, he tabled a series of crypto amendments before the Assembly, including a flat tax rate of 30 per cent on digital assets. He also requested French companies be able to pay their employees and partners in digital assets.
Many other deputies did not share his vision and the amendments were put on hold until 2023.
However, Macron’s party has kept on its pro-innovation path since its creation in 2016 and alongside the country’s economic stability, Person argues that “the government is in favour of the arrival of this capital to promote innovation”.
But Person said that the real question is also what image the Assembly wants to give about its stance on digital assets and digital currencies – and he hopes it will be an open one.
“Existing players, in particular commercial banks, [must] also be more open and more welcoming to these new players,” he said.
France has started to be more accepting of these new businesses. In May, the country gave its regulatory approval to the world’s largest crypto exchange platform Binance.
Despite the relative openness to cryptos, Person believes there will always be a conflict with traditional banking models.
“It's true that there are always some headwinds. There is traditional finance that doesn't really understand the issues, that sometimes has trouble adapting and that, logically, doesn't want to be pushed around,” he said.
“But that doesn't mean that we should close the door and put up gates, because we see how it ends. We've seen what's happened with streaming, with a lot of Web 2.0 activities, and we know that innovation and competition is a good thing for growth in a country”.
How should cryptos be regulated?
The other issue, Person says, is there are regulators who are trying to guarantee the public interest when dealing with new players who do not abide by the same rules as traditional financial institutions.
“We have to find an in-between in this new world where we have to allow innovation, but at the same time we have to protect our citizens”.
Regulators have gotten firmer on cryptos since the stablecoin TerraUSD and its sister token Luna crashed in May. The saga was one of the biggest crypto collapses in history, wiping off more than $40 billion (almost €40 billion) from Luna’s market’s capitalisation overnight, and destroying people’s life savings.
The European Parliament has been trying to write crypto regulations into law since 2018 in its Markets in Crypto Assets law, known as MiCA, which is likely to come into force in 2024. It aims to better protect investors by setting the same tougher rules across EU member states for crypto players such as exchanges and issuers of stablecoins.
However, Person argues that even if the MiCA text had been voted into law as it stands today, it would not have prevented what happened in the Terra/Luna drama.
“The politicians are certainly saying that thanks to MiCA, we are going to prevent what has happened. This is not true,” he said.
“We are in a world where there is a lot of decentralisation and in it, there are people who are not scrupulous and who do not protect the interest of the depositors at all,” he added.
Person is in favour of “extremely strong regulation” but he argues Europe needs to write new rules instead of trying to adapt existing ones.
“Just because you make a payment with a credit card doesn't mean you make a payment with a stablecoin. It's not the same thing. I think it's quite different. So you have to invent new rules,” he said.
Creating Europe’s crypto champions
One thing Person is in favour of is “measured regulation” so that Europe can create its own crypto champions.
“I think that European sovereignty must be exercised. It can only really be exercised if we have big champions on our territory.
“My concern is that we are already seeing the leaders of tomorrow being formed in Asia, but also in the United States, and that they will most certainly come to France,” he said.
While he argues this is a good thing to allow Europe access to the global crypto companies, it’s not the same thing as creating the bloc’s own champions and exporting them internationally.
“We have to find the right balance and for that, we need regulators who are open, who understand that France is pro-business”.
The key to achieving this is education both for the regulators and decision-makers but also for the public.
“I think there is a misunderstanding sometimes of the technology. What it allows you to do is very often summarised in broad strokes, which doesn't allow you to see its full potential,” he said, adding that he hopes crypto does not turn into the Internet in the 1990s when only a minority of the population understood it.
He hopes Web3 – a decentralised version of the Internet in which crypto will play a role – will be the opportunity that France does not miss out on.
“We missed Web 2.0. If we reproduce the same mistakes, which consist in not embracing innovation, not opening our arms wide to capital or to innovation on our territory, we risk reproducing the same mistakes for Web3,” he said.
But he is optimistic that this will not be the case, not least because he feels there are plenty of French people involved in Web3.
“It's quite fantastic to see in the different projects that there is always a French person because they are very strong in mathematics, they are very good in finance and in engineering,” he said.
But he admits the financiers, those who run the companies, are typically American funds or Anglo-Saxon venture capitalists.
The solution, he says, is to “fully invest in our capitalist and economic model in this new innovation race”.