Blockchain technologies played an unusually prominent role in major elections such as in South Korea, but there’s been barely a whisper about it in France, which will soon elect, or possibly reelect, its president for the next five years.
After years of broken promises and hamfisted regulation, opinions are divided on whether that relative silence is really a bad thing.
French voters will have 12 presidential candidates to pick from when they vote on Sunday. Incumbent centrist Emmanuel Macron is likely to be a top finisher and will then face a run-off two weeks later against whoever comes in second – which, based on current polling, seems likely to be right-wing nationalist Marine Le Pen.
In a campaign that has seen a focus on more traditional issues including immigration, rising prices and broader internet access, crypto has barely gotten a look-in.
That may have changed, albeit slightly, after a recent study suggesting there could be hundreds of thousands of votes available. The survey, carried out by pro-crypto activist group ADAN with KPMG and pollsters IPSOS, found that 8% of French adults have invested in cryptocurrencies or non-fungible tokens (NFT), and 4% said the subject would determine their vote.
That’s enough to make politicians’ ears prick up, according to Faustine Fleuret, the CEO of ADAN.
Politicians “are open to [learning more] about crypto-assets,” Fleuret told CoinDesk, even if they are starting from a low knowledge base.
While she clearly welcomes that attention to crypto, she is conscious it could also come at a cost. Ideas dreamed up to fill out an election program by politicians approaching the issue from afar might not always be thought through well.
“We are quite afraid … that they want to address too early, too prematurely” the regulation of the sector, she said. Including emerging technologies like NFTs or decentralized finance (DeFi) under existing licensing regimes, for example, could strangle those initiatives at birth.
Risk vs. Opportunity
Some recent European initiatives have sought to encourage the crypto industry – allowing regulatory licenses to work across the European Union market, and allowing experiments with distributed ledger-based stocks, for instance.
But lawmakers have also highlighted concerns over the energy consumption of the proof-of-work technology that underpins bitcoin (BTC) and the use of anonymous crypto transactions in illicit activities, and have sought to legislate with restrictive provisions.
“I think in French and European speeches there is maybe a focus on risks, more than on opportunities – a focus on protection, rather than raising innovation,” Fleuret said.
She has reason to worry. Recent activity from the European Parliament – which has just agreed to laws on customer identification despite outrage within the sector – shows the dangers regulation can hold for crypto.
Real-life crypto entrepreneurs appear to agree crypto might be better off being left alone.
In Europe and elsewhere, the industry often sees regulation as “more of a risk than an opportunity,” and its task influencing new rules as “more damage control than a positive relationship,” Pascal Gauthier, CEO of French crypto company Ledger, told CoinDesk.
Ledger, which specializes in hardware wallets, is one of France’s rare unicorn companies in this space – but Gauthier complains that, whatever slogans politicians bandy about, officials do little to make his life easier.
A 2019 pledge by digital minister Cédric O to make France a leader in blockchain tech lacked an “execution plan,” Gauthier said. He said the move was mere “marketing” by the minister that didn’t translate in practice into warmer relations with the parts of the administration that caused most grief – such as BPI, the country’s state-backed lending arm.
“I don’t ask anything of politicians … I just ask for a light regulatory skeleton,” he said.
He said he’s often hit with burdensome measures that start from the assumption businesses like his are evil.
Others hope to see, if not more promises of heavy-handed regulation, at least more evidence that politicians understand the importance of crypto technology within the future economy – something that’s now lacking.
“There’s no real understanding of what the metaverse is, of what is the blockchain, the ins and outs of this technology,” lawmaker Pierre Person told CoinDesk. He fears that could lead to regulation that is “blind, stupid and dogmatic” rather than one the sector needs.
Person, a member of Macron’s party in the National Assembly in Paris, penned a landmark report on the potential of blockchain agreed by lawmakers in 2019 – but he despairs that his pro-crypto message still hasn’t really caught on.
“This is a technology which will radically change our society and our individual sovereignty,” he said. “My regret, when I see the level of the American debate and U.S. politicians on the issue – it’s much further ahead in terms of technological understanding and vision than French or European politicians.”
With such a significant portion of the electorate potentially at stake, he accuses candidates of simply “name-dropping” crypto issues to curry favor.
Proposals tweeted by anti-immigrant firebrand Eric Zemmour in February were just a “copy-and-paste” of his own parliamentary report, Person said. (Some of Zemmour’s proposals do indeed seem similar). Person also takes aim at the “very superficial” comments on the metaverse made by Valérie Pécresse, representing the once-dominant French Republican Party, which is now trailing in the polls.
“There’s no real package of propositions that are strong or linked to the problems faced today,” he said – with no candidate setting out how they’d influence EU rules that could prove troublesome for the sector, for instance.
Even Macron isn’t spared criticism. Despite the president being an ex-banker who, when a minister, talked about putting sovereign bonds on the blockchain, he hasn’t put the issue on the agenda, Person said.
Macron “has always looked at crypto with interest,” Person said, but “in the last five years, we haven’t had many staging posts from the executive on the issue.”
Key to changing this attitude, many believe, will be to center crypto debates on the internet issue that most bugs French politicians – their dependence on the Big Tech companies that underpin Web 2.
Les GAFAs, as they are universally known – short for Google, Apple, Facebook and Amazon – are seen as underregulated, undertaxed, and – above all – foreign. Calls for France, or at least Europe, to have greater “strategic autonomy” can translate into positive support for domestic alternatives – or rather more restrictive trade barriers that can end up stifling innovation.
Don’t miss out
Rage against les GAFAs has already spilled over into the next generation of digital innovations, to their detriment. French Finance Minister Bruno Le Maire was among those furious at the idea that Facebook might muscle into the payments market via its planned cryptocurrency, libra.
That in turn led to tough rules against stablecoins in the EU’s landmark draft crypto law known as MiCA, which some fear could damp the possibilities for decentralized finance.
But some in the crypto community are hopeful this somewhat negative debate can be turned to their advantage – by showing that distributed technology can end the centralized dominance of the current internet, and by underlining the urgency of France not missing out again, as it did with Web 2.
“Something that we insist on… is that we are not too late. We’re late in the global competitions regarding crypto assets, but it’s not too late,” Fleuret said, adding politicians were interested in how crypto can become a “pillar of European digital sovereignty.”
Gauthier is more blunt.
A future French president “could really make Web 3 the spearhead of Europe,” with regulation enabling the bloc to host one of the new GAFAs – a crypto exchange to rival Binance or Coinbase (COIN).
If not, he warns Europe will be imitating the unwise governments cited by former U.S. President Ronald Reagan in the 1980s – “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
“Don’t make the first two errors, to tax heavily and to regulate heavily,” said Gauthier. “Otherwise, we know it will cost taxes to subsidize Web 3.”
Editor’s note: Some interviews have been translated from French.