This month marks sixteen years since Satoshi Nakamoto’s white paper introduced the blockchain model. However, its origins date back to 1991 when Stuart Haber and W. Scott Stornetta first described a cryptographically secured chain of blocks.
While blockchain technology is primarily linked to cryptocurrencies and financial assets, some coins are designed for particular use cases. The rise of decentralized applications and smart contracts has enabled systems to manage various areas like digital identities, medical records, intellectual property, and more.
According to the World Bank, more than one billion people, 80% of whom are in Sub-Saharan Africa and South Asia, face difficulties in obtaining an official identity document, which results in the lack of access for basic services such as education and healthcare. Could blockchain be a key asset in solving such issues?
Utilizing the blockchain in other spheres where it could make a significant impact for human rights is something that we will focus on in the discussion with our next guest.
Ethereum’s role in decentralization: Vyara Savova speaks at ETHSofia
Vyara Savova is a web3 & human rights lawyer. She is a PhD candidate focusing on legal automation through the use of smart contracts. Savova is also a Senior Policy Expert with the European Crypto Initiative (EUCI), a Brussels-based non-profit that aims to shape EU regulation to favor open, permissionless, decentralized applications leveraging blockchain technology.
Vyara shares that her transition to web3 was relatively smooth: ”Particularly because I’ve always been a geek who’s been intrigued by new technologies and their impact on people.”
Savova’s professional path started in an NGO London, where she was completing a master’s degree in human rights law. After graduating with a master’s in human rights law, she joined a London-based NGO working on the human rights impact of the Arab Spring in Libya.
There, she saw firsthand the difficulty to preserve evidence of abuses in such a volatile situation. To address this, she helped develop a cloud-based digital archive. “Something that sounded quite innovative back in 2016 and required me to have multiple meetings with tech experts to figure out the specifics,” Savova explains.
Over time, this led her to blockchain and web3, expanding her approach to human rights without stepping away from the field.
Vyara Savova will be speaking at the first edition of the Ethereum-based event, taking place in the Bulgarian capital, ETHSofia. From 17th to 19th October, the conference will give a platform to some of the most recognizable names within the space and give blockchain developers and professionals the chance to share their ideas to a broader audience within the Eastern European region.
Are there any real-world examples where web3 applications have already had a tangible impact on human rights issues?
Speaking of identification, verification, and payments, some of the most promising use cases at the intersection of blockchain and fundamental rights protection relate to offering services to displaced and undocumented people.
Examples include the work done by the United Nations Refugee Agency to create a blockchain-based humanitarian intervention programme for people displaced or otherwise affected by the war in Ukraine, which uses the stablecoin USDC for secure cash-backed payments.
The impact of such initiatives can’t be stressed enough, particularly when they aim to solve other issues, such as the lack of documentation of refugees and the need for fair distribution of state and humanitarian aid.
What role do you see the EU playing in setting a global standard for crypto regulation? How does its approach differ from that of other major jurisdictions, like the US or China?
Something that the EU very much likes to believe is that it’s the international regulatory trendsetter through the so-called “Brussels effect”. Basically, this means that whatever regulations are being passed on an EU level inevitably influence the broader regulatory landscape, even leading to copy/pasting of the EU legislation by other jurisdictions.
The often-given example is the GDPR, which brought a fundamental shift in how people perceive their personal data and data protection rights and has an undisputed effect worldwide.
However, it’s not that likely that the EU crypto regulation framework, set by the Markets in Crypto Assets (MiCA) Regulation, will be as effective in transforming the global understanding of what crypto policy should look like.
The reason is that with MiCA, the crypto industry entered the realm of traditional financial services, which are always very jurisdiction-specific. A great example is the fact that there isn’t a unified understanding of what a “security” and a “financial instrument” is, leading to sometimes opposing interpretations by the US agencies (and most notably the Securities and Exchange Commission) and the EU regulators.
Can you tell us more about the European Crypto Initiative and how does it contribute to the development of EU policy through it?
The European Crypto Initiative is a Brussels-based advocacy organization that emerged in 2020 as a reaction to the first (leaked) MiCA draft. Even though MiCA is influenced by the financial services and financial instruments framework and focuses solely on services offered by centralized entities, there wasn’t an explicit exception for decentralized finance, or DeFi. We soon figured that part of the reason for that was the lack of representation of DeFi projects in front of EU policymakers.
Therefore, EUCI filled that gap and started representing both DeFi projects and blockchain protocols in front of the Brussels decision-makers, which eventually led to DeFi and NFTs being explicitly excluded from MiCA’s scope. We achieved that through direct meetings and information-sharing with policymakers, explaining the differences between a decentralized infrastructure and one with a centralized entity responsible for its control and the need for a more tailored regulatory approach which would reflect that fundamental difference.
The latest news about Sam Altman’s Worldcoin project just emerged – he is bypassing the European market because of GDPR. Would you mind sharing your thoughts on what potential risks and opportunities blockchain projects like those entail?
Blockchain as a technological infrastructure is in fundamental conflict with data protection due to the specifics of its design and functioning. The issue becomes even more severe when those technical specifics are combined with the risks brought forward by centralized operations, effectively combining the worst of Web 2.0 with the main issues of web3. The Worldcoin project is a clear-cut example of that, which means that it will potentially always be in conflict with the GDPR.
To be more precise, Worldcoin focuses on issuing identity-tied tokens, for which it scans human irises with a futuristic-looking device called the Orb. While identification and identity management on-chain is indeed a serious issue for the broader blockchain community—mostly due to the pseudonymous nature of blockchain-based identity—the answer, at least in the EU, will most definitely not come from a private entity.
That said, I personally believe that Europe is on the right path in fixing some of the on-chain identity issues through the potential future use of frameworks such as the European Digital Identity Regulation (eIDAS II) and the EU Digital Identity Wallet.
What is your assessment of CEE’s efforts in regulating blockchain/crypto space; what do you think is needed to change on institutional as well as community level?
The CEE region is quite diverse regarding the individual countries’ approaches to regulating crypto assets and crypto-asset-related activities. While countries such as Estonia tried (and objectively speaking, failed) to establish themselves as a crypto hub by adopting crypto-specific frameworks, others, including Bulgaria, simply ignored the crypto market by focusing only on the anti-money laundering (AML) risks it brings.
I couldn’t say which approach is better in the long run, as what is happening now is the EU-wide unification of the general framework through the adoption of MiCA alongside a brand new AML framework, which focuses on crypto transfers.
However, it is also due to those EU-wide frameworks that we now see the gaps in the preparedness of different member states, which indeed affects both the work of the institutions, which are often understaffed and lack the specific expertise, required to regulate crypto, and the community, which needs to adopt a fundamentally different approach to what a crypto business looks like and how it operates.
What are the most pressing legal and regulatory challenges that Ethereum faces in Europe?
Ethereum is a living organism that constantly changes, leading to a quickly shifting set of regulatory issues. In its current form, some of the specific aspects that the regulators are looking into are staking (and generally the effects of the proof-of-stake consensus mechanism adopted by Ethereum to replace the more energy-inefficient proof-of-work) and Maximal Extractable Value (or MEV – referring to the intricate process of value creation and distribution when new blockchain blocks are created and transactions within them are ordered), alongside some issues around the security of the infrastructure.
What is the next big thing in the web3 regulation right now; what will you be involved with in the next months?
Tokenization is definitely among the most widely discussed topics—one that is also often referred to as Real World Assets, or RWAs. The European Commission is currently exploring this issue, meaning that it might potentially lead to a specific regulatory framework.
Regarding our regulatory involvement in the coming months, apart from any upcoming topics, we’re also hard at work with the MiCA implementation standards and guidelines. Basically, with the adoption of MiCA, we only got the blueprint, which now needs to be brought into the shape of an applicable regulation through the work of authorities like the European Banking Authority and the European Securities Market Authority, alongside the specific day-to-day application of MiCA’s requirements, done by the competent authorities on a member state level.
The above means that we are busier than ever, and it will likely only get worse as more legal frameworks affect the crypto industry—both related to its financial services aspects and the technical specifics, such as the liability of software developers.
Last but not least, tell us more about your time on ETH Sofia, what will you be sharing on the panel, and also let us know if there are any topics you are eager to connect over?
The ETH Sofia regulatory panel provides a great opportunity to discuss the practical effect of MiCA alongside some of the biggest questions around DeFi and its regulation. The conference organizers have done a fantastic job inviting a great selection of experts with a wide range of experience in both a more traditional and centralized context and in decentralized finance. I expect nothing less than an interesting and very practical discussion on the future of the crypto industry.
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