Pablo G. Bartet: "The fusion of digital identity, DLT-based markets, and AI will shake up how accessible finance is for everyone"

Pablo G. Bartet is an attorney specializing in financial regulation and crypto assets, and he is part of the ATH21 team. There, he provides legal counsel to tech-based companies looking to innovate within a secure legal framework. Passionate about capital markets and technology, he began his journey investing in the stock market at a very young age, gradually immersing himself in the startup and software environment.

He says, “The real challenge is translating regulations into tech language and vice versa,” emphasizing how crucial it is to develop solutions that blend legal rigor and user-friendly design to boost the adoption of blockchain technology in the financial sector.

Question: What led you to specialize in financial regulation, and where does your interest in digital assets come from?

Answer: The financial side has always been a personal calling. From an early age, I was eager to invest and fascinated by the stock market. Over time, as my career progressed, that interest merged with a deeper curiosity about how markets work, motivating me to pursue a professional path in the sector.

Eventually, I shifted my focus toward startups, providing legal guidance in areas that straddle both tech contracts and IP protection, as well as investment rounds and shareholder agreements—basically the whole entrepreneurial ecosystem.

And technology? This field is closely linked to innovation because startups are usually tech-based and naturally scalable. My passion for software and emerging technologies drove me to explore this domain further.

Around 2017–2018, I came across a concept I was unfamiliar with: smart contracts. As an attorney specializing in tech companies, I was surprised I didn’t already know something so relevant, since these “intelligent contracts” seemed to blend tech and law in an innovative way. When I dug into how they worked, I realized that, for this technology to be fully functional, the blockchain would need to access real-world data, so I began researching. My first encounter was via Chainlink, an oracle that opened my eyes to a space where technology interacts with snippets of code capable of replacing traditional legal relationships.

The first thing I did was invest in that protocol (half-jokingly), and then I continued studying the topic. I had to set aside certain preconceptions about the crypto space to recognize that this technology could offer significant value in finance. That’s when I decided to make the leap, and I was fortunate to join ATH21 with Cristina Carrascosa and an amazing team.

Q: I understand your perception of technology has changed…

A: Absolutely. In the beginning, the sector felt filled with hype and flashy marketing, where just using the technology seemed enough to dive in—even when a project or operational model wasn’t clearly defined.

But the more you learned, the more you realized that traditional legal relationships—often bogged down by slow processes and red tape—could be revolutionized by this tech. Both in Europe and elsewhere, people recognized this potential, and you can see it in the slew of recent legislative initiatives dealing with blockchain, crypto assets, artificial intelligence, and digital identity. It’s all interconnected.

Q: How has the legislation evolved since you got started?

A: When I began working with models based on crypto assets, there was no specific legal framework to address them. People relied on analogies or interpretations of local and even foreign laws. Essentially, though, there wasn’t a consolidated regulation.

Over time, boundaries started to form to protect individuals interacting with these assets. The first legal implications showed up—things like anti-money laundering (AML) requirements. That was when service providers—for instance, those enabling the exchange between fiat currency and crypto—began facing regulations that required them to adopt policies for evaluating customers based on various risk factors and disclosure requirements.

Today, there’s a uniform regulation across the European Union that governs both crypto asset service providers and any entity looking to issue tokens. It protects investors and places these businesses on a level playing field with traditional investment firms and structures.

Q: On LinkedIn, you’ve posted about digital transformation in compliance. What do you see as the biggest challenges companies are up against nowadays?

A: I don’t want to take all the credit here, but in my view, regulation is the biggest hurdle. Many of our clients come from tech development backgrounds; while they excel at the technical side, they quickly realize they need to address regulatory and compliance issues.

This isn’t just about translating legal requirements into tech-speak, but also the other way around. In this arena, some level of interaction with the regulator is almost unavoidable, so it’s vital to understand both the technology and the regulatory environment. Essentially, the challenge is to balance compliance with the ability to interpret and adapt technology to a suitable legal framework.

Q: MiCA (Markets in Crypto-Assets Regulation) seems to have been a turning point in Europe. What are its main challenges and opportunities?

A: MiCA’s goal is to protect investors and stabilize a new, tech-driven market that can be prone to scams, operational glitches, or bad decisions. By regulating the space, MiCA aims to offer more security to users.

However, that protection can also create friction. While being regulated can boost investor confidence—and ultimately lead to higher demand—it can also lower conversion rates. Users who used to sign up in just a few clicks are now faced with lengthier forms and more complex legal terms. The task for platforms is to present clear, concise information and ensure specialized legal support to reduce these barriers without compromising security.

Q: Do you think regulations like MiCA will draw more retail investors to digital assets?

A: Yes, absolutely. If you want to centralize activity, you have to respect the investor and follow through on what you promise. Speaking from personal experience, being involved in the crypto world without a solid regulatory framework isn’t very reassuring, especially since few people can personally audit the underlying code. Having regulatory backing gives a sense of security to retail investors, most of whom have no idea what’s happening behind the scenes of a crypto platform.

That said, platforms will need to develop appealing, regulation-friendly products to truly tap into that potential.

Q: How do you think MiCA will impact KYC and AML processes?

A: MiCA will enhance security by making sure that those who invest are properly qualified. Combined with other directives, like those for AML, it strengthens measures against money laundering and terror financing.

While most crypto service providers in EU countries already had AML obligations, MiCA will add even more requirements, likely increasing friction in the user experience. We’ll see the push and pull between investor protection and the desire for a smooth user journey.

Q: AI, machine learning… how can they impact KYC and AML processes?

A: Right now, different regulations—MiCA, AI, digital identity, payment services, etc.—are often discussed in silos. But in practice, these technologies will combine to transform financial services. Digital identity, in particular, can be greatly improved using AI agents, and various projects have proven this. In the crypto space, the idea of “DeFAI” has emerged, which involves agents that can autonomously or reactively automate tasks. This represents a big leap for wallet management and user interaction in self-custody within the financial sector, including identity verification.

Looking ahead, I believe companies like Didit are fully immersed in this journey. The ultimate goal is enabling any kind of financial operation from a smartphone. The fusion of digital identity, DLT-based markets, and AI will shake up how accessible finance is for everyone.

Q: What are the must-have measures for a robust AML system?

A: It’s crucial to follow the guidance of the relevant supervisory bodies, such as SEPBLAC in Spain, working in tandem with the Bank of Spain and CNMV. Scalability is also essential: more and more companies are seeking interoperable solutions so that their clients don’t have to repeat the KYC process on every platform.

Digital identity wallets, particularly those built on decentralized frameworks, are a highly effective tool. Using zero-knowledge proof mechanisms can significantly boost privacy and let users access multiple services with a single verification process. In my opinion, this combo is the winning formula, and projects like Didit are showcasing how it can be done right.

Q: What strategies do you recommend so companies can integrate tech solutions without neglecting regulatory compliance?

A: At our firm, Cristina (Carrascosa) introduced the concept of “Legal by Design,” which we sometimes refer to as “legal hacking.” Essentially, simply knowing the law is the baseline for any attorney. What really sets you apart is being able to leverage your in-depth experience to find legal strategies that minimize friction and let a company grow, all while staying compliant.

Q: Compliance, especially in crypto, changes fast. What skills and knowledge should professionals have if they want to excel here?

A: Apart from formal education and practical experience, you need to realize you’re operating on shaky ground where you won’t always have absolute certainties. While the crypto sector didn’t have a dedicated legal framework at its start, that never meant basic legal principles could be ignored—things like creating and perfecting contracts, plus fundamental conditions in user-business relationships, still applied.

Professionals must combine traditional legal knowledge—sometimes based on rather old-school concepts—with new, reactive regulations. You need to pull from both worlds and trust your understanding of both the law and the technology to shape workable solutions.

Q: Do you think today’s risk-prevention regulations are robust enough? How would you improve them?

A: Yes, I’d say they’re sufficiently robust. Europe has been at the forefront of fintech regulation, providing a sense of stability and predictability. People often point out that while Asia or the U.S. drive innovation, Europe opts for regulation. However, that approach is still highly appealing to major corporations. Imagine launching a tech company in a region without a regulatory framework, only to face arbitrary decisions by the regulator—like can happen in the U.S. with the SEC, where you can be compliant today and slapped with a massive fine tomorrow.

So there’s this tension between having a stable set of rules—even if they’re not perfect for everyone—and facing the uncertainty of a “regulation by enforcement” environment. From my perspective, Europe’s model has worked quite well in fintech, with the exception of a few areas like stablecoins or tokenized payment methods, which could use more refinement.

At this point, there’s also growing attention on DeFi, where integrating digital identity, AI, and the crypto financial system can be hugely beneficial. It makes no sense to try to cordon off this field, especially if you lack the right tools. It’s important to prevent regulation from becoming a “Frankenstein” that stifles innovation.

Q: Looking to the future, what do you think will be the key compliance trends for crypto and fintech?

A: Here are the trends I see:

1. Self-custody: Empowering users to hold their own wallets and information, taking personal responsibility for their data.
2. Zero-Knowledge Technology: Leveraging protocols that maintain user privacy so you don’t have to disclose sensitive documents just to pass basic checks.
3. Decentralization: Embracing DLT-based solutions. With MiCA in effect, I believe we’ll see growing interest in DeFi. And in the realm of securities markets, there’s a lot of synergy between the institutional sector and DeFi projects—so we might see some interesting new products emerge.

About the Author

Víctor Navarro

Specialist in Digital Identity and Communication

I am Víctor Navarro, with over 15 years of experience in digital marketing and SEO. I am passionate about technology and how it can transform the digital identity sector. At Didit, an artificial intelligence company specialized in identity, I educate and explain how AI can enhance critical processes such as KYC and regulatory compliance. My goal is to humanize the internet in the age of artificial intelligence, offering accessible and efficient solutions for individuals.

"Humanizing the internet in the AI age"

Para consultas profesionales, contacta conmigo en victor.navarro@didit.me