Davos Is Reborn In The Crypto Metaverse

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The annual World Economic Forum in Davos once symbolized a kind of broken globalism, mixing politics and high finance. The recent image of Tony Blair and Bill Clinton on stage next to crypto billionaire Sam Bankman-Fried, wearing a t-shirt and socks, suggests the torch is gone.

Watching these former centrists, famous for their easy approach to financial regulation, along with the latest generation of fintech gurus is not a case of “crypto going mainstream”. On the contrary, it shows the kind of acceptance and respect that only money can buy – and the risks that come with it.

Spending dollars on technology to expand Europe is a good example. This week, Binance, the world’s largest cryptocurrency exchange by trading volume, said it had won French regulatory approval – less than a year after being hit by an explosive regulator ban.

With praise from Emmanuel Macron, a recent beauty offensive by billionaire Binance boss Changpeng “CZ” Zhao includes a € 100 million ($ 105 million) investment in the French blockchain ecosystem, a first campaign in recruiting 250 employees and hiring a French senior. regulatory officer.

This is a familiar playbook used elsewhere in the world of technology. See, for example, Facebook’s parent company Meta Platforms Inc., which seeks to recover from a post-pandemic crisis by promoting visions of a metaverse running remote work and digital money. Meta plans to hire 10,000 people across the EU (and expand its legal department) just to build it. As shown in the chart above, Big Tech is eclipses the EU.

Investment in Europe offers access to talent and tax breaks, but is also a launching pad for lobbying in Brussels, where new rules on tech platforms and crypto exchanges are coming. Crypto companies are scrambling to push back tighter controls while trying to distance themselves from the bad online abuse of trolls.

Lobbying doesn’t always work (remember Libra, anyone?), But the revolving door between regulators is a problem. In the UK, crypto companies hire cybercrime cops with double or triple salary offers. More than a dozen former U.S. regulators now work for Binance, Coinbase and others. Ukraine’s war and inflation may have damaged the market value of crypto and tech stocks, but it’s still a deep pocket industry.

The fear of losing the next technological revolution has also added to the pressure on EU lawmakers to keep the door open. “The rhetoric of backward technology in Europe is in full motion, with devastating consequences,” explains Julien Nocetti, associate professor at the Rennes School of Business. Macron called for a “European metaverse” as a way to improve local technology and reduce reliance on the United States and China.

But the failure to implement stricter surveillance threatens to hurt those least capable of it. Gamified trading apps encourage aggressive risk taking. About a quarter of fraud complaints filed by the French regulator last year were crypto-related. Low transparency: A review of the deposits of about 30 surveyed crypto companies found that most had not filed accounts in years or made such confidential (permitted).

The Meta metaverse is a far more distant concept, but an EU Council research paper recently warned that safety and security risks could increase, from cybercrime to online bullying and harassment, and that it is currently “unclear” whether the bloc’s political toolkit is in place. . challenge to regulate it.

If there’s one lesson for governments from past financial crises and technology scandals, it’s that many ecosystems need checks and balances. Beyond the new rules, now is probably the time to pay regulators better and hire more of them, as the SEC has done. A more competitive hiring environment for leading engineers could also curb brain drain: a 2018 French report on artificial intelligence suggests doubling starting salaries in public sector.

As Clinton said in the Bahamas, new technologies are open to abuse and require a deft hand in the “regulatory space.” While the globalists in Davos give way to the crypto-globalists, it is a difficult balancing act.

More from Bloomberg Opinion:

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• Sorry Elon, “open source” algorithms don’t improve Twitter: Cathy O’Neil

This column is not required to reflect the opinion of the Editorial Board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He previously worked for Reuters and Forbes.

More stories like these are available at bloomberg.com/opinion

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