Thread by David Marcus

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Follow-up of my last tweet. A small 🧵 about how the EU keeps falling behind when it has all the talent and resources to be a leading region in the world. In the early days of Libra, I had fascinating conversations with senior leaders at the ECB. 1/14
The short version of it was that Europe resented the fact that the vast majority of transactions were settled on US payment networks. 2/14
In their minds, the US leveraged its reserve currency and payments networks to overreach with unilateral sanctions, impacting EU member states. 3/14
This became particularly vivid when the Trump administration backed out of the Iran nuclear deal. Many European energy companies were in the middle of massively profitable deals with the Iranian regime. Sanctions crushed these. 4/14
That’s when the EU tried to setup a clearing house (INSTEX) to bypass US sanctions and continue to pursue its business dealing with Iran. That move failed. www.theguardian.com/world/2018/nov/06/european-clearing-house-to-bypass-us-sanctions-against-iran 5/14
The original version of Libra envisaged a stablecoin backed by a basket of currencies including the Euro. The EU could’ve co-opted this opportunity, but instead started on its current path with a Euro-wide suspensive consultation (MiCA). 6/14
That move was not about protecting consumers. It was a protectionist move to prevent another US led network to thrive in Europe. But let’s examine what happened since. 7/14
With China’s crackdown on crypto mining, the US is now in the lead of #Bitcoin mining. Meanwhile USD denominated stablecoins are growing at a rapid rate (nearly $200B now vs. $38B a year ago). Where’s Europe in this? Not in the mix. 8/14
Protectionism in the age of a massively connected world defeats the very markets one tries to protect. EU: if you want to be relevant, if you want European companies to be in the lead, you need to retain, nurture, and attract talent and innovation. 9/14
Historically the way most European countries tried to stimulate innovation is through advantageous government grants and subsidies. This is not the way. Favorable regulation and policies will enable global competitiveness. 10/14
More restrictions and short-sighted policies will almost inevitably produce the opposite outcome and make Europe fall even farther behind. Web3/crypto is going to redefine the internet as we know it. 🇪🇺 still has a chance to be a relevant player alongside 🇺🇸. 11/14
Trying to ban things without understanding them fully either as a protectionist move or to virtue signal for political reasons around ESG issues will have catastrophic consequences for Europe. 12/14
Meanwhile, this attitude will create an enormous opportunity for the 🇺🇸 to reinforce its lead in a massive industry in the making. Last week’s President Biden’s crypto EO outlined the importance of finding the right regulatory balance for the US to remain in the lead. 13/14
A decade from now, history won’t be kind with people and regions that not only didn’t jump on the opportunity to lead in this new era of innovation, but got in the way of it while not “fixing” anything in the process. 14/14
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