The Davos Collection is reborn in the Crypto Metaverse

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The annual World Economic Forum in Davos once symbolized a certain kind of discrete globalization, combining politics and high finance. The last photo of Tony Blair and Bill Clinton on stage alongside crypto billionaire Sam Bankman-Fried, wearing T-shirts and socks, indicates that the torch has passed.

The spectacle 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 proliferation.” On the contrary, it demonstrates the kind of acceptance and respect that can only be bought with money – and the risks that come with it.

Spending tech 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 British regulator.

Along with praise from Emmanuel Macron, the latest magic attack by Binance billionaire chief Changpeng “CZ” Zhao included a €100 million ($105 million) investment in the French blockchain ecosystem, the first recruitment drive for 250 employees and the poaching of senior The French are a regulator.

This is a familiar guide that has been used elsewhere in the tech world. See, for example, at Meta Platforms Inc. The parent of Facebook, which is seeking to offset the post-pandemic crisis by promoting Metaverse business insights into remote work and cryptocurrency. Meta plans to employ 10,000 people across the European Union (and expand its legal division) just to build it. As the above graph shows, Big Tech is ahead of the European Union.

Investing in Europe offers access to talent and tax breaks, but it is also a springboard for lobbying in Brussels, where new rules on technology platforms and crypto exchanges loom. Cryptocurrency companies are scrambling to roll back stricter controls as they try to distance themselves from the abusive abuse of online trolls.

Squeeze doesn’t always work (remember the scale, anyone?), but the revolving door between the regulators is a problem. In the UK, crypto companies have hired cybercrime police with double or triple salary offers. More than a dozen former US regulators are now working on Binance, Coinbase, and others. The war in Ukraine and inflation may have hurt the market capitalization of cryptocurrency and technology stocks, but it’s still a huge industry.

And the fear of missing out on the next technological revolution is increasing pressure on EU policy makers to keep the door open. “The discourse of a technologically backward Europe is in full swing, with disastrous consequences,” explains Julian Nossetti, associate professor at the Rennes School of Business. Macron has called for “European metaverses” as a way to boost domestic technology and reduce dependence on the United States and China.

But the failure to enforce stricter control risks hurting those least able to afford it. Expendable trading applications have encouraged extreme risk taking. Almost a quarter of fraud complaints filed with the French regulator last year were related to cryptocurrency. Transparency is low: A review of deposits by about 30 crypto companies examined found that most had not deposited accounts in years or had done so clandestinely (which is permissible).

The metaverse is a remote concept, but an EU Council research paper recently warned that it could increase safety and security risks, from cybercrime to online bullying and harassment, and that it is currently “unclear” whether the bloc’s policy toolkit is up to the task. The challenge is to organize it.

If there is one lesson for governments from past financial crises and technology scandals, it is that vast ecosystems need checks and balances. Away from the new rules, it may be a good time to pay regulators better and hire more of them, as the Securities and Exchange Commission is doing. A more competitive hiring environment for top engineers could also prevent brain drain: a 2018 French report on artificial intelligence suggested doubling starting salaries in the public sector.

Clinton also reportedly said in the Bahamas, that new technologies are open to abuse and require a skillful hand in the “regulatory space.” As Davos followers give way to crypto-globalization, it will be difficult to strike a balance.

More Bloomberg’s opinion:

• Online privacy becomes critical if Roe v. Wade Canceled: Parmy Olson

• Chinese tech companies get a reprieve, not an amnesty: Tim Colban

Sorry Elon, ‘Open Source’ Algorithms Won’t Improve Twitter: Kathy O’Neill

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

Lionel Laurent is a columnist for Bloomberg Opinion covering the European Union and France. Previously he worked for Reuters and Forbes.

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