The Davos set reborn in Crypto Metaverse

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The annual World Economic Forum in Davos once symbolized a kind of interrupted globalism, a mixture of politics and high finance. The latest picture of Tony Blair and Bill Clinton on stage next to crypto-billionaire Sam Bankman-Fried, wearing t-shirts and socks, suggests the torch is over.

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

The use of technology dollars on European expansion is a good example. This week, Binance, the world’s largest cryptocurrency exchange by trading volume, said it had won regulatory approval in France – less than a year after being hit by an explosive ban by the regulator.

Along with praise from Emmanuel Macron, a recent charm offensive by billionaire Binance boss Changpeng “CZ” Zhao included a 100 million euro ($ 105 million) investment in the French blockchain ecosystem, a first campaign recruitment of 250 employees and the poaching of a senior Frenchman regulatory official.

This is a well-known playbook that has been used elsewhere in the technology world. Take, for example, Facebook’s parent company Meta Platforms Inc., which seeks to address a post-pandemic crisis by promoting visions of a metaverse running on telecommuting and digital currencies. Meta plans to hire 10,000 people across the EU (and expand its legal department) just to build it. As the chart above shows, Big Tech is darkening the EU.

Investing in Europe provides access to talent and tax breaks, but also a start for lobbying in Brussels, where new rules on technological platforms and crypto exchanges threaten. Cryptocompanies are struggling to push back on tighter controls as they try to distance themselves from the ugly online abuse of trolls.

Lobbying does not always work (do you remember Libra, anyone?), But the revolving door between regulators is a problem. In the UK, crypto-companies have hired cybercriminals with double or triple paychecks. More than a dozen former U.S. regulators now work for Binance, Coinbase and others. The war in Ukraine and inflation may have damaged the market value of cryptocurrencies and technology stocks, but it is still an industry with deep pockets.

Fear of missing out on the next technological revolution also increases the pressure on EU policy makers to keep the door open. “The rhetoric about technologically backward Europe is in full swing with harmful consequences,” explains Julien Nocetti, associate professor at the Rennes School of Business. Macron called for a “European metavers” as a way to promote domestic technology and reduce dependence on the United States and China.

Failure to enforce stricter surveillance threatens to harm those who can least afford it. Gamified trading apps have encouraged aggressive risk-taking. About a quarter of the fraud complaints filed with the French regulator last year were crypto-related. Transparency is low: A review of deposits made by about 30 controlled crypto firms showed that most had not submitted accounts for years or had made it confidential (which is allowed).

Meta’s metavers are a more distant concept, but a research paper from the EU Council recently warned that it could increase security and safety risks, from cybercrime to online bullying and harassment, and that it was currently “unclear” whether the bloc’s political toolbox was up to the task. challenge to regulate it.

If there is one lesson for governments from past financial crises and technology scandals, it is that huge ecosystems need control and balance. In addition to the new rules, it may be time to pay regulators better and hire more of them, as the SEC does. A more competitive hiring environment for top engineers could also prevent brain drain: a 2018 French report on artificial intelligence proposed a doubling of starting salaries in the public sector.

As Clinton reportedly said in the Bahamas, new technologies are open to abuse and require a dexterous hand in “regulatory space.” As the Davos globalists give way to the cryptoglobalists, it becomes a difficult balancing act.

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This column does not necessarily reflect the opinion of the editorial staff or Bloomberg LP and its owners.

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

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