This is the presentation delivered by Simon Lelieveldt at the Emerce-Financials event on November 26, 2019. He takes a longer historic perspective to note that in Europe the e-money directive is an example of a well designed regulatory framework that balances the wishes of regulators and allows for innovation. Fast forward to today, his observations are that particularly in the Netherlands, the Ministry of Finance and Central Bank are consistently stifling innovation by topping up EU legislation with national rules and by being overly restrictive in their intepretations of relevant EU legislation. He points in particular at the ongoing AMLD5 implementation where an independent legal opinion confirms that the Ministry of Finance systematically misrepresents the content of the proposed law as being EU-rules only, whereas effectively it introduces two core elements of banking prudential supervision into the AML-law (against the explicit advice of the Council of State). Luckily, the overextended regulation does not stifle the introduction of his own ICO, an Iepen Coin Offering, consisting of wooden coins, made of the tree (Iep-Elm) that stood for over hundred years at the Amsterdam Exchange Square.

1. From book token to Libra
Challenges for innovation and regulation
November 26, 2019 - Simon Lelieveldt

7. Electronic Money Limited Network Prepaid services

8. Electronic Money Limited Network Prepaid services

10. EMERGENCE OF DIGITAL OR E-MONEY (1990S) - 1
Initial regulatory response:
Protecting the (value of) fiat currency
Buying pre-paid value is the equivalent of taking deposits

11. EMERGENCE OF E-MONEY (1990S) - 2
International coordination:
Reports on security /impact of electronic money (1996)
Local regulatory differences:
US: Money transmitter based frameworks vs national
legislation
EU: no payments reulation / framework / PSD
Discussion on restriction to banks or opening up the market
Electronic Money Directive: specialised credit-institution

12. EMERGENCE OF E-MONEY (2001) - 3
Early topics:
Pegging the value to fiat currency (1:1 conversion)
Is electronic money ‘in the cloud’ also e-money or should it
reside on a chip ?
Do pre-paid funds from mobile operators constitute e-money,
yes or no?
NOTE: THE US ‘STABLECOIN’ IS CALLED E-MONEY IN THE EU !

13. 2003 / 2004 MONEY ON PHONES IS NOT E-MONEY

14. FURTHER DEVELOPMENT OF E-MONEY
▪ Licenses for companies such as
Paypal, Google,
▪ Strong concentration of e-
money industry in the UK
▪ Stepwise development of pre-
paid market and regulation
▪ Second version of E-money
directive

16. STUMBLING FORWARD TOWARDS SOME BALANCE
Individual
banks and
customers
Collective
organisations
of
stakeholders
Government and
Ministries of
Finance / Economic
Affairs
CONSTITUTIONAL - COLLECTIVE - INDIVIDUAL

17. 2011-2019 BITCOIN TO BLOCKCHAIN TO DLT TO …..
Bitcoin Blockchain
DLT
ICO ITO STO
Payment
Ledger
Asset
Commodity
Securities
Technical
narrative
Regulatory
narrative

18. “Countries should consider virtual assets as “property,” “proceeds,” “funds”,
“funds or other assets,” or other “corresponding value”. Countries should apply
the relevant measures under the FATF Recommendations to virtual assets and
virtual asset service providers (VASPs).”
The FATF Recommendations Regulation of virtual assets

19. “Countries should consider virtual assets as “property,” “proceeds,” “funds”,
“funds or other assets,” or other “corresponding value”. Countries should apply
the relevant measures under the FATF Recommendations to virtual assets and
virtual asset service providers (VASPs).”
The FATF Recommendations Regulation of virtual assets
RESOLUTION 28/16. The right to privacy in the digital age
Reaffirming the human right to privacy, according to which no one shall be
subjected to arbitrary or unlawful interference with his or her privacy, family, home
or correspondence, and the right to the protection of the law against such
interference,
Recall and read the script of previous SWIFT discussions!
https://threadreaderapp.com/thread/1197791390807347200.html

20. 2015
E-money
accounts
FACEBOOK
IRELAND
Euro, Pound
Customers
E-MONEY
100 %
Reserve at
Comm. banks
No. guarantee
FACEBOOK INTERNATIONAL
Libra = curr. basket
Members – resellers –
validators - promotors
Securities guarantee
Primary Market in Libra
Customers
Exchanges – other
institutions
Secondary Market in Libra
Retail Market in Libra
CALIBRA =
MEMBER
LIBRA AS. =
ISSUER
Association:
1. Manage
reserve fund
2. Manage open
source code and
technical
roadmap
100 %
Reserve
PAYMENT IN KIND
(curr. Basket)
DISCONNECT
BETWEEN
CUSTOMER
DEMAND AND
LIBRA
http://moneyandpayments.simonl.org/2019/10/perspectives-on-ca-libra-2-on-libra.html

21. 2015
E-money
accounts
FACEBOOK
IRELAND
Euro, Pound
Customers
E-MONEY
100 %
Reserve at
Comm. banks
No. guarantee
FACEBOOK INTERNATIONAL
Libra = curr. basket
Members – resellers –
validators - promotors
Securities guarantee
Primary Market in Libra
Customers
Exchanges – other
institutions
Secondary Market in Libra
Retail Market in Libra
CALIBRA =
MEMBER
LIBRA AS. =
ISSUER
Association:
1. Manage
reserve fund
2. Manage open
source code and
technical
roadmap
100 %
Reserve
PAYMENT IN KIND
(curr. Basket)
DISCONNECT
BETWEEN
CUSTOMER
DEMAND AND
LIBRA
http://moneyandpayments.simonl.org/2019/10/perspectives-on-ca-libra-2-on-libra.html

22. DUTCH OVERREGULATE RATHER THAN INNOVATE
▪ Payment institutions holding funds are pushed to become e-money
institutions while PSD allows them to offer accounts that are not
deposits
▪ Long discussions on full reserve banking stalled by local and narrow
interpretations of boundaries of EU legislation ; letting other countries
take the lead
▪ PSD2 Service of only access to the account requires only a registration
but under Dutch interpretation a license regime, AML-rules and capital
requirements unduly kick in

23. TOKEN-SPECIFIC LEGISLATION: AMLD5
▪ Crypto-services in EU only require a registration and EU prohibits license
regime.
▪ Dutch players already implemented de facto AMLD rules due to indirect
supervision by banks and partners in value chain (other exchanges)
▪ Dutch regulator pushes forward a more extensive de facto license regime
(including bank supervision rules) against advice of Council of State
▪ Independent legal opinion clarifies / confirms that Ministry of Finance
systematically misrepresents the content of the law to Parliament
▪ Net result: a lot of extra cost and supervision for players beyond what the
AMLD5 requires
▪ Parliament discussions forthcoming in December; hopefully recognize the
Wizard of Oz at play here

25. 2018 ICO: IEPEN COIN OFFERING
“If you don't know history, then you
don't know anything. You are a leaf
that doesn't know it is part of a tree. ”
― Michael Crichton

26. “If you don't know history, then you
don't know anything. You are a leaf
that doesn't know it is part of a tree. ”
― Michael Crichton
2018 IEPENCENT

27. HTTP://IEP.AMSTERDAM