Insights from the Dutch Blockchain Days: Regulation, Adoption of Crypto, and the Fight against Crime

14 juni 2023, Amsterdam

Introduction

On June 14th, we from Masternode.one attended an exciting event within the Dutch blockchain scene: the Dutch Blockchain Days, an event that brings together industry experts, thought leaders, and blockchain enthusiasts. As a proud gold sponsor of this event, we had the opportunity to listen to expert panels on topics ranging from upcoming regulation to crypto crime, and future expectations for the industry, brought to us by prominent people within the global blockchain and cryptocurrency landscape. It was a day full of valuable insights and, of course, fun networking. 

In this blog article, we provide an overview of the event, focusing on its key themes, such as regulation and further adoption of blockchain technologies, and on the exciting developments shaping the future of blockchain and cryptocurrency.

Setting the stage: About the Dutch Blockchain Days

First organized three years ago, the Dutch Blockchain Days have quickly become the leading Dutch event for everything related to blockchain, crypto, and the web3 ecosystem. By providing a platform for industry professionals to share their experiences and thoughts about emerging trends, innovations and challenges with the world, the Dutch Blockchain Days are one of the highlights of the year for us, and we are proud to say we were a gold sponsor of this year’s event. We think working together is crucial in our mission to create a better world, so we were very happy to be able to make this event possible, together with the other amazing sponsors, and help in fostering knowledge, innovation, and connections.

This article covers the second and third panel sessions in the main room.

Key themes explored: regulation, crime, adoption, and future expectations

During the event, multiple panel sessions were held in the main room, where experts and thought leaders from the industry shared their thoughts and insights on a whole range of topics. There clearly were a few themes and topics that resurfaced throughout the day. The most notable theme that was touched upon by almost every expert was regulation. With regulatory difficulties and insecurity in the US, and the upcoming MiCAR regulation within the EU, regulation is a hot topic in the crypto industry these days, so we will elaborately touch upon these insights in the following section. 

Another theme that popped up during the panels was cybercrime related to blockchain technology and the challenges of combatting this. Furthermore, several speakers shared their thoughts on how to further spread the acceptance and adoption of blockchain and cryptocurrencies, and the obstacles associated with this. Finally, most panels ended with future expectations for the industry, which we will touch upon in this article as well.

Regulation

A current hot topic in the crypto landscape is regulation. For a long time, the relatively new sector of cryptocurrency has operated without clear rules. While lack of regulation provided the freedom for great innovation and developments, it also came with a severe risk of fraud, corruption, and crime, impacting both large industry players and normal users. Right now, multiple countries are working on regulation for the crypto-asset market, most notably the European Union with its upcoming MiCAR regulation. 

What did experts think about regulation?

While regulation comes with restrictions, extra work to adhere to regulatory norms, and bureaucracy, pretty much all of the speakers during the Dutch Blockchain Days were happy with upcoming regulation for the industry. An often mentioned benefit of regulation was the clarity it gives to users and providers of cryptocurrencies and related services. With regulation in place, it is clear for providers of crypto related services what practices are legal and how they should handle customer protection. This can make organizations and people more confident in their use of crypto assets and professionalize the industry, moving it from being an interesting new curiosity towards a serious player in the financial sector. 

On a similar note, the MiCAR regulation set to be implemented in the EU by the end of 2024 unifies the regulatory landscape for crypto assets throughout the EU, which makes it easier to expand activities within EU countries.

Implications of regulation for companies

As mentioned before, regulation will provide companies with clarity on the practices they can conduct, the services they can offer, and the measures they have to take to ensure transparency and customer protection. Following the FTX debacle, trust in cryptocurrency, especially in central exchanges, has been low. Regulation might be able to help restore part of this trust, which is crucial for widening the adoption and acceptance of crypto assets. 

For companies active in the crypto market, it will be important to create a clear policy that outlines how the company adheres to the regulation. This will not only provide transparency and a way of showing inspection how you as an organization follow regulatory norms, it will also provide you with a clear and comprehensive manual on what practices you might have to adjust or implement, and what course of action should be taken in case something happens.

Of course, increased regulation comes with more work for companies and organizations active in the crypto market, especially in the stages when policies and guidelines have to be developed. However, the experts on the panels expect the benefits of regulation to outweigh the burden of added workload and bureaucracy.

Implications for users

A large driver behind the development of regulation is the desire and need to protect users of crypto services against risks of losing their money, fraud, and to better be able to combat crypto-related crime. 

In the first panel during the third session of the event, several speakers were asked about the expected impact on users. An important topic within regulation are the “know your customer” guidelines, which obligate companies to validate the identity of their customers, to ensure if someone is who they say they are. The acquisition and storing of this information has to be according to privacy guidelines, of course. Operating completely anonymous will therefore become close to impossible. 

Another implication of regulation is increased client protection, which is beneficial to users of crypto services. Companies should minimize risks, and communicate clearly about the remaining risks of their services and products. The experts noted that this increase in client protection is important for wider adoption of crypto into industries and our daily lives.

Future hopes and expectations for regulation

Finally, speakers on the panels were asked what their future hopes and/or expectations were related to regulation of the crypto market. Most notably, they stressed the importance of simplicity when it comes to regulatory guidelines. Especially connecting new regulation tailored to the crypto industry to existing (monetary) laws and regulation is highly desired within the industry. They also mentioned the importance of harmonization of the MiCAR regulation with other areas of law, both within and outside of the financial sector. 

The speakers also noted some potential challenges that regulation might face. MiCAR, for example, does not touch on governance forms specific to the crypto assets industry, such as DAO’s, and the risks of those. 

Furthermore, as Wieger ten Have from Bitvavo, put it: “Regulation is always behind. It is always a response to the market.” With the crypto industry being a rapidly growing and evolving ecosystem, it is likely that regulation will have to be adjusted and improved, and it might be challenging for authorities to keep up with this and prevent confusion and contradicting guidelines.

Overall, however, regulation seemed to be very welcome to the industry, providing clarity and increasing confidence and usage.

Crime on the blockchain

Silk Road, Mt. Gox, bitcoin ransoms, and FTX; the crypto asset industry is notorious for some serious instances of fraud, theft, and other illegal activities. The relatively new and rapidly evolving technology is alluring to criminals and difficult for law enforcement and governments. During the second session of the Dutch Blockchain Days, Bas Lemmens from Chainalysis, shared his thoughts on cybercrime and cybersecurity related to the crypto market, and he had some very positive remarks. 

While cases such as bitcoin ransoms and the recent downfall of FTX might give the impression that the crypto industry is full of illegal practices and criminals lurking around the corner, the actual percentage of illicit activity is very small, below 1%.

How to deal with crypto related crime?

But how to deal with that very small percentage of illegal activities? Bas Lemmens explained that there are many software developments and models in place these days that help law enforcement track and combat illegal activity. Models can, for example, monitor activity on a blockchain, recognizing patterns and things that are out of place, potentially indicating illegal activity. 

Still, it is a challenge for governments to keep up with the techniques and ways of criminals, as is the case in every area of crime, not necessarily only in crypto. Just like drug smugglers will continuously come up with new tricks in an attempt to get drugs across borders, crypto criminals search for new ways to make illegal money on the blockchain too. There is a non-stop rat race between criminals and law enforcement.

What can law enforcement and governments do?

Aside from the use of cyber specialists and new software models, it is important that governments expand their knowledge on the crypto market, its developments, and its users and usages. Furthermore, there are companies, like Chainalysis, that provide governments and law enforcement with expertise and tools to combat crime on the blockchain. 

Experts expect the implementation of regulation with guidelines such as “know your customer” to help in preventing and noticing illegal activities as well.

The next billion users: Adoption of crypto and blockchain

Being within the ecosystem of the Dutch Blockchain Days, one can easily get the impression that blockchain technology and cryptocurrencies are everywhere, that they are amazing, and that everyone will use them. However, the reality is that it can be quite challenging to attract new users and participants. Several speakers shared their thoughts on how to attract “the next billion users” and implement blockchain and cryptocurrency more into the daily lives of people around the world.

Trends in adoption of blockchain technology and crypto

A very striking trend in the adoption of blockchain and crypto is the divide between high income countries, and low and middle income countries. There is a relatively big adoption of cryptocurrencies in middle and lower income countries, such as Vietnam, Brazil, and Nigeria. These countries with emerging markets and economies also have a more positive perception of crypto assets. People that deal a lot with international transactions generally also hold crypto in higher esteem than people that do not deal with cross-border transactions often. 

A possible explanation for the divide in adoption rates of crypto between high income and lower income countries, could be the state of the traditional payment infrastructure that is in place. Many high income countries, such as the Western European countries, have excellent financial infrastructure, numerous payment options and great accessibility to money and financial services. This makes the need for another payment system or option, such as cryptocurrencies, less apparent. In contrast to this, in countries where payment infrastructure is limited, cryptocurrencies are an appealing alternative. People only need a mobile device and internet to get started.

Another trend that is quite prominent, is that many people are aware of the investment possibilities of cryptocurrencies, but there is limited knowledge on the more day to day uses of crypto and blockchain.

How to attract more users?

During the panel sessions, multiple opportunities for attracting more users were discussed. Firstly, regulation resurfaced again here too: increased regulatory clarity and customer protection might professionalize the industry, and attract more providers and users. 

Secondly, Patrick Elyas from Coinbase mentioned that creating more use cases for blockchain and crypto, such as financial uses and decentralized ID, might also lead to an increase in users. Making transactions faster and cheaper, able to compete with traditional payment providers such as Visa, might also boost adoption of cryptocurrencies in people’s daily lives.

Future expectations

As a final core theme of the Dutch Blockchain Days, the host asked speakers to share their future expectations for blockchain technology and crypto-related activities, or the potential developments they were most excited about. 

The expected increase in users was mentioned here, as well as a wider variety of applications that blockchain can and will be used for, such as the increased tokenization of traditional assets. 

Another possible future development that experts are looking forward to, is an increase in the implementation of blockchain technology into traditional finance, such as blockchain deposit accounts, where the bank account sits on the blockchain. 

Of course the implementation of regulation, such as the MiCAR at the end of 2024, and the consequences of that were another future development that many have their eyes on.

Our hopes for the next Dutch Blockchain Days event

While the day was full of valuable insights, interesting panels, and great networking experiences, there was one particular theme we hope to see more prominently next year: sustainability. The event itself was fully carbon neutral, the carbon emissions compensated by the planting of trees by Carbify, which is an amazing concept. However, during the panels and across the stands of sponsors, sustainability was barely mentioned. This was striking to us, because climate change and the decline of nature are such significant threats to both humanity and other beings on this planet. There are many examples of how we can use blockchain technology to help in mitigating climate change or in nature conservation, so it would be great to hear more about this in the next edition, because the world and the wellbeing of humans and other beings are not limited to the financial sector only. Furthermore, blockchain technology can be very energy intensive and have a great negative impact on the environment. It is important to realize this too, and it would have been interesting to hear about possible solutions for this challenge, especially in light of attracting the next billion users.

Conclusion

Overall, the Dutch Blockchain Days event was a valuable day of learning, listening and networking. In this article about the event we touched upon some of the main themes that occurred throughout the day, with regulation being the hot topic at the moment. Looking to the future, speakers expressed optimism about increased user adoption, wider application of blockchain, and the impact of upcoming regulatory frameworks.

While there might have been more attention on sustainability, we greatly appreciate the platform the Dutch Blockchain Days gives to the blockchain and crypto community, connecting industry players in creating a better world together.

Speakers of the sessions we attended

Bas Lemmens, Chainalysis

Patrick Elyas, Coinbase

Joshua Daniels, JP Morgan / Onyx

Emanuele Francioni, DUSK

Pepijn Pinkse, Loyens & Loeff

Mike Hutting, BLOX

Julien Vallet, Finst

Koenraad de Jonghe, Bitget

Martijn Schoonewille, Loyens & Loeff N.V.

Wieger ten Have, Bitvavo

Disclaimer: The views and opinions expressed in this article are those of the individual speakers at the Dutch Blockchain Days event and do not necessarily reflect the official stance or views of the companies they represent. The content presented here is based on their personal perspectives, insights, and discussions during the event. We encourage readers to consider multiple sources and perspectives when forming their own opinions on the topics discussed.