EU Launches Blockchain Regulatory Sandbox for DLT Development
The European Commission (EC), a cabinet and executive body of the European Union (EU), has announced the launch of its latest regulatory sandbox for blockchain and distributed ledger technology (DLT).
European Blockchain Regulatory Sandbox
The newly established European Blockchain Regulatory Sandbox was launched to create a pan-European regulatory framework to promote legal certainty for projects using blockchain technology. It is facilitated by a consortium that includes Bird & Bird, OXYGY, WBNoDE and Spindox.
Funds to create the sandbox were obtained from the Digital Europe programme. The initiative is expected to work for SMEs over the next three years, and according to the concept will support up to 20 projects from both the private and public sectors within the European Blockchain Services Infrastructure. Independent academic experts will oversee the entire process.
“Projects will be selected through calls for tenders. Each year, the most innovative regulator that participates in the sandbox will also be awarded a prize,” says the EC in the press release.
Europe sees the blockchain potential
According to the EC, DLT and blockchain have a wide potential, which is not only limited to the financial industry. The technology can support regulation and documentation in the fight against fraud.
“Companies can facilitate the exchange of non-personal data to train algorithms, and/or create unique digital twins for assets they buy, sell or insure in the mobility, energy and manufacturing sectors,” the EC added.
While pilot programs carried out in the EU have shown the significant potential of blockchain, the EC points to legal uncertainty. The regulatory sandbox is designed to reduce uncertainty, where regulators and supervisors can have an open dialogue and companies and public institutions can develop.
“The sandbox is open to companies from all industry sectors and public entities for projects beyond a proof-of-concept stage and already close to the market or at an early stage of operation, involving, among other things, the use of DLT,” the statement explained.
Initial applications are accepted until 14 April 2023.
Watch the recent FMLS22 Executive Interview with Tobias Bauer from Blockchain Founders Fund.
Markets in Crypto-Assets Regulation
The European Union has been working since the middle of last year to regulate the cryptocurrency industry under Markets in Crypto-Assets regulation (MiCA) proposal. MiCA seeks to regulate issuers of stablecoins and other unbacked crypto-assets such as Bitcoin. It also wants to bring operators of trading venues and wallets for cryptoassets within its purview.
The first discussions on MiCA started in September 2020. However, a temporary legislative agreement between the EU and the EC was reached just at the end of June last year. MiCA is intended to be part of a wider digital finance package and does not cover all issues related to the cryptocurrency market: it bypasses the DeFi and NFT markets, for example.
The EU has begun to take a stronger interest in blockchain technology at a time when it has declined significantly in the private sector. Venture capitalists are no longer as interested in funding the industry and only backed it with $2.3 billion last quarter. In the first half of 2022, funding was $30 billion, while in the second half it came in at $7 billion, which shows a clear reversal in the industry.
The European Commission (EC), a cabinet and executive body of the European Union (EU), has announced the launch of its latest regulatory sandbox for blockchain and distributed ledger technology (DLT).
European Blockchain Regulatory Sandbox
The newly established European Blockchain Regulatory Sandbox was launched to create a pan-European regulatory framework to promote legal certainty for projects using blockchain technology. It is facilitated by a consortium that includes Bird & Bird, OXYGY, WBNoDE and Spindox.
Funds to create the sandbox were obtained from the Digital Europe programme. The initiative is expected to work for SMEs over the next three years, and according to the concept will support up to 20 projects from both the private and public sectors within the European Blockchain Services Infrastructure. Independent academic experts will oversee the entire process.
“Projects will be selected through calls for tenders. Each year, the most innovative regulator that participates in the sandbox will also be awarded a prize,” the EC says in the press release.
Europe sees the blockchain potential
According to the EC, DLT and blockchain have a wide potential, which is not only limited to the financial industry. The technology can support regulation and documentation in the fight against fraud.
“Companies can facilitate the exchange of non-personal data to train algorithms, and/or create unique digital twins for assets they buy, sell or insure in the mobility, energy and manufacturing sectors,” the EC added.
While pilot programs carried out in the EU have shown the significant potential of blockchain, the EC points to legal uncertainty. The regulatory sandbox is designed to reduce uncertainty, where regulators and supervisors can have an open dialogue and companies and public institutions can develop.
“The sandbox is open to companies from all industry sectors and public entities for projects beyond a proof-of-concept stage and already close to the market or at an early stage of operation, involving, among other things, the use of DLT,” the statement explained.
Initial applications are accepted until 14 April 2023.
Watch the recent FMLS22 Executive Interview with Tobias Bauer from Blockchain Founders Fund.
Markets in Crypto-Assets Regulation
The European Union has been working since the middle of last year to regulate the cryptocurrency industry under Markets in Crypto-Assets regulation (MiCA) proposal. MiCA seeks to regulate issuers of stablecoins and other unbacked crypto-assets such as Bitcoin. It also wants to bring operators of trading venues and wallets for cryptoassets within its purview.
The first discussions on MiCA started in September 2020. However, a temporary legal agreement was reached between the EU and the EC just at the end of June last year. MiCA is intended to be part of a wider digital finance package and does not cover all issues related to the cryptocurrency market: it bypasses the DeFi and NFT markets, for example.
The EU has begun to take a stronger interest in blockchain technology at a time when it has significantly declined in the private sector. Venture capitalists are no longer as interested in funding the industry and only backed it with $2.3 billion last quarter. In the first half of 2022, funding was $30 billion, while in the second half it came in at $7 billion, which shows a clear reversal in the industry.
