Digital Assets and the Public Good: The View from France* with Jean-Noël Barrot, French Minister for Digital Transition and Telecommunications

Jeremy: Nice to see everyone. I'm really excited for this conversation. I had a chance to meet the Minister. When was it?

Jean-Noel: It was at Truce, France, I think, last July. In Versailles.

Jeremy: In July. And I was struck with the Minister's deep appreciation for issues in digital transformation. I think it's remarkable the Minister has taken on this role as the head of digital transformation and telecommunications for the French government. There are very few significant national governments with such a cabinet level role, and I think it says something very important about France. And as well, of course, Minister Barrot as well. So I want to explore a little bit of your mission, your agenda and your background. And then I want to come into some key topics that I think are really important to the kind of conversations that we're having here about the future of digital assets and Web3 and the broader impact of digital and society. So thank you and please join me in welcoming Minister Barrot.

Jean-Noel: Thanks for having me.

 Jeremy: So maybe we can start again. Congratulations on the role, which is a noteworthy role you have, I think, a very interesting background for this, having come from the French National Assembly as a lecturer at very prominent universities in fundamental thinking on economic systems. And I'm very curious to hear how you arrived into the role that you're in now and maybe talk a little bit with all of us here about what you view as your core mission.

 Jean-Noel: So I was appointed after President Macron was reelected, which is something that is relatively unusual in France. He's actually the first sitting president with a majority in parliament to be re-elected. And so I was appointed as Minister delegate. I work under the authority of Bruno Le Maire, who is the Minister of Economics and Finance and In-charge of digital transition and telecommunications. A lot has happened in France over the past decade, both in terms of telecom infrastructure. We are now the country that's the most advanced in Europe for fiber deployment. It's a plan that we've set up ten years ago and that has gone as planned, which is not always the case in France, both in terms of timing and costs for public finances. And at the same time, over the past five years, we've been extending mobile coverage with a lot of success. And that's due to sort of the vision of President Macron. And based on this solid telecom infrastructure, there has been a very strong development of the innovation and startup ecosystem in France. When I was elected Member of Parliament in 2017, there were three Unicorns in France, and when I was reelected in 2022, there were 28 unicorns in France. So a lot has happened and France has shown its ability to grow sort of global SaaS companies over a very short period of time. Now what we're willing to do is to sort of go further and be able to have sort of expertise and sort of an autonomy in key aspects of the digital infrastructure. And this includes Blockchain because we have a nation of engineers with very talented people, very skilled people. And whether it's for AI, whether it's for the cloud, or whether it's for Blockchain, our intention is to be at the forefront of the upcoming waves of technology. So we are now going to focus a lot on this and I think we'll be discussing this in this chat. I'm very happy to be with you guys and I'm very happy about all what we're going to achieve together.

Jeremy: Thank you. I wanted to come back to your work in the French National Assembly and actually connect it to some of the topics here, which is France. I think, more than any other major national jurisdiction was out ahead in thinking about policy and regulatory treatment of digital assets and of companies and the industry. In a world where people are saying there's no regulation, Actually France put forward, of course, now known as the PSAN. But I believe you were in the National Assembly and played a role in this as well. It's a template for the broader regulatory environment in the EU. And I want to come back to that topic, but what led to the development of that and how has that positioned France in this emerging industry?

Jean-Noel: That's right. So after President Macron was elected, Bruno Le Maire, who was already Minister of Economics and Finance, decided that he wanted to build a legislation to stimulate growth of companies, in particular innovative companies. And so as a member of Congress, I was in-charge of sort of drafting and negotiating the financing dimension of this legislation. One thing we've done is basically create the equivalent of a French equivalent of the 401K for France in order to streamline retirement saving and in order to sort of be able to channel part of these savings with longer duration, so to speak, towards the funding of innovation in France and in Europe. But the other part of this legislation was to think about digital assets. And so there were two sort of easy paths. One was to do nothing and let those markets grow without any sort of regulatory guidance. The other path was to sort of forbid any such activities. And there were voices or there were forces that wanted to push us in this direction for fear of the risk associated with innovation. So we took a third path, the path which was basically saying we want to have some regulatory guidance, but that's voluntary, that's done on a voluntary basis so that sort of virtuous players can abide by these regulations and as a result, build trust regarding their customers, their investors and so on. So we worked on the ICO Regime in this respect. So we created sort of a label or a certification that is obtained on a voluntary basis for issuers that wanted to do an ICO and that would be regarded by investors as a label of trust, if you will. And at the same time, we designed the CASP regime or the SAR regime for intermediaries in digital assets that rested on the same intuition, namely a voluntary registration that would provide to the greater public confidence with the servants, since the regulator would have sort of provided a stamp on those services. And this regulation has been very successful because we now have over 50 organizations that have requested the registration with the French regulator. And this has also helped the regulator build its own expertise on these digital assets related topics. And this has also helped the European Union design its own regulation, which is going to come into force in the coming months, which is called MiCA, and which is greatly inspired by what we've done in France. So all this has been a very successful experience because I think we struck the right balance initially between the stimulation for innovation on the one hand, and the protection of consumers savers customers on the other hand.

Jeremy: It's super impressive. And I think it's one of the things that is not well understood in the world that France went out ahead of the rest of the world went out ahead of G7 nations and said, we can come up with rules to allow for investor protection to deal with some of the core risks. And we can do that across this new area of digital assets. And in my view, that was very significant. And again, when the media writes about these topics, they often will say, well, there's no regulation or and so on. And I think it's very important to emphasize that France has been leading it's out ahead of the entire European Union, it's out ahead of the United States, it's out ahead of a lot of jurisdictions. And so I think that work, which I'm grateful for your contributions, has been important. And I want to turn to the topic that you were just discussing, which was the PSAN became a kind of template for MiCA, the markets and crypto assets, EU-wide regulatory framework, and I believe was finalized under the French presidency in the EU as well. And so that's also in some ways a French accomplishment. But maybe we could talk a little bit about that transition to MiCA. What do you feel that that means for EU-wide competitiveness and innovation? And also, given that this is a kind of normalization of the work in some ways that France started, how do you think about what France will do to continue to try and be the hub for major digital assets innovation in Europe?

Jean-Noel: Right? Yeah, so initially there were indeed a lot of pushback, and that's probably one of the reasons why we haven't seen such regulations appear in other regions. But indeed, we feel it was a good investment to make as a nation because we are seeing some of the global leaders in the field of Web3 set foot in France, set their main European hub in France due to the success of the regulatory success that we've had. We've also seen the emergence of Web3 players that are sort of related to digital assets, not directly related, but I'm thinking about companies such as Ledger or such as Sorare, which are among those 28, 29 unicorns that we have now in France. And we are very happy with that because france had a tradition of a strong finance industry, a strong engineering base, and we are seeing that France is becoming a major, well, the major hub for Web3 in Europe. And that our Fintech ecosystem, which is already the number one ecosystem in continental Europe. We hope it's going to become all the first digital asset ecosystem in Europe as well. And I think we are on a good track for that. I think there is a payoff for Europe as well, because MiCA is a regulation that's there not to sort of curb innovation, but precisely to make sure that players like Circle that are going to invest in Europe can look at Europe as a single digital market with the same rules and that you guys don't have to jump from one country to the next and adapt to the legislation of each member state. And that's the way with President Macron with the French government we are looking at European regulation and that's basically one of the priorities that's been one of the priorities of the French presidency of the EU namely pushing through as many sort of regulation as possible in the digital space including MiCA, but also including the DMA and the DSA. That will come into force again, not in the spirit of curbing or slowing down innovation, but rather to accelerating innovation in Europe, but by offering the same set of rules across EU member states. And I think that's how MiCA should be seen as a way to strengthen the market for digital assets in Europe by harmonizing the legal standards throughout the continent.

Jeremy: Yeah, I hope to see what you've accomplished in France, what now is being accomplished in Europe, to see more countries emulate and to see that normalization on a G20 basis. Right. I think I was just in a discussion prior to this with an economist who is involved in international regulatory matters and there seems to be a G20 wide desire to use the next year to normalize digital assets, crypto markets regulation. And some of that is perhaps a reaction to failures. But also it's a desire to make sure that there's a clear foundation. Are you optimistic that what MiCA has done can become the global standard?

Jean-Noel: I am optimistic indeed and I think that we've seen that in other dimensions of digital regulations, such as GDPR for instance. And so because Europe decided on a set of standards for privacy, this has been embarked either as legislation in other regions or directly through corporate strategies. So there are many tech players here in Davos that now have GDPR by design or privacy by design, and through this have sort of spread GDPR as a standard across the world. And I think that the same will apply to MiCA, namely either through effective legislation or soft law or by the voluntary adoption of such standards by players. Because if a global leader like Circle adopts MiCA standards for their operations, I'm guessing that they're not going to have double standards or triple or quadruple standards for each of the countries in which they operate. So whether it's by direct legislation, soft club, or through the corporate strategies of the leaders in the field, I'm very confident that Mika, that is recognized globally as a balanced regulation, will make its way on top of that. It's interesting to add that while if we look at the latest failure and you can figure out the one I have in mind, mika would not necessarily have completely avoided such a failure because it's a failure that was triggered by fraud. And fraud happens in every market, unfortunately. But Mika would have built enough safeguards that the consequences of such a failure would have been much more limited than they've been. And so in sometimes this recent failure provides us with or provides the world with further arguments in favor of adopting Mika or Mika like standards across the board.

Jeremy: Yeah, I do believe that if a firm in the digital asset space was operating under Mika, I don't actually think something like that could have happened. Yes, fraud can happen, but having a regulator that is ensuring that you have the appropriate enterprise risk controls, that you have the appropriate financial controls, that you have the right level of financial audits, control audits, the things that financial institutions need to do, those are the safeguards that we depend on. And Micah does enforce that upon actors. I want to change the topic a little bit to, I think also an area of focus for you, which is sort of digital inclusion. And we think a lot about digital financial inclusion. The kind of proliferation in all of these new technologies is exciting, but it also is complex and difficult and bringing people into this is a challenge. One of our core kind of commitments in our social impact work is on that digital financial literacy, digital financial inclusion. But I think for you kind of digitalization and digital inclusion is a huge topic under your remit, under your focus. I would be interested to hear your thoughts both on the broader topic and then also specifically on what Web3 and digital assets could accomplish in terms of digital inclusion.

Jean-Noel: Sure, yeah, it's a great challenge because in our democracies, western democracies in particular, the support that we provide to innovation and disruptive technology is conditioned on the acceptance of the people, that what we are doing has value to the people and to the people entirely. Not to a certain elite only. And so there is a big challenge of sharing the benefits of digital transition with everyone so that everyone feels that they are part of this digital transition, not that they are excluded from the benefits associated with such a transition. And we're working hard on this by in particular sort of deploying, as we've done over the past 18 months, actual human digital counselors throughout the country that are going to reach out to people that are the most remote from the digital world to help them gain sort of expertise and autonomy with digital tools. We are going to sort of structure this policy a little bit further, a little bit more. And at some point, I think that indeed the contribution of global and leading digital players such as Circle as a company, whether it's a Web3 company or a company involved in other dimensions of the digital transition, is going to be useful. And I think we have mutual interests, we have mutual interest to build sort of expertise and know how in the digital space and to reach out to populations that see the digital transition as with a relatively negative view because they feel that they are excluded from the benefits of that. And then I think there is a big challenge of education at early ages. Not that every citizen needs to become a blockchain developer, but I think it's very important that our populations in our democracies sort of have a basic understanding of what is the economics or the mechanics of blockchain. What is the mechanics of deep learning and AI so that they understand that this is not about magics, but that is just engineering developing new solutions that can solve problems that didn't have solutions so far. I think that it's very important that we have that. There is one initiative that I think was very interesting, which is a Finnish initiative in the field of AI with short videos called Elements of AI that have been broadcast to a large chunk of the Finnish population that they have been able to understand what the basics of it are and perhaps be reassured that it's not magics, but just logics and sometimes mechanics. Right? So I think this is also very important. And then that's sort of the third point. I think that the way our people are going to benefit from this digital transition is by actually being actors of this transition and namely being able to find jobs in this space. And to do that, we need to boost our efforts in higher education in those fields such as blockchain, such as AI, such as Quantum, that are going to be in high demand in the years to come. We need to make sure that those training and then those jobs are accessible to the largest possible chunk of the population, and in particular to women who are, for the moment, not seizing these opportunities for a number of reasons. That we need to fight together. And so I think that there is a lot of job on our plate but I think we can collaborate both in sort of designing and supporting and strengthening the education and higher education at low levels but also in higher education and finding ways to also attract the other part, the other 50%, which is women, where, as you know, there is as much IQ as in the other 50% part of the population that we need to be able to draw to these jobs, both for economic efficiency but also for acceptance of this tradition.

Jeremy: It's a tremendous perspective, and I wish more governments had leaders like you who were trying to think about these issues at a national level. We're again very grateful for the work that you've done in moving some of these agendas and the work that you're doing with the president today. And we're looking forward to seeing how the French ecosystem grows and thrives. And I'm very pleased to have you here this morning. So thank you so much.

Jean-Noel: Thank you.