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The European Commission (EC), the cabinet government and executive arm of the European Union (EU), has announced the launch of a new regulatory sandbox for blockchains
Blockchains Blockchain consists of a network of digital blocks with a comprehensive ledger of transactions made in cryptocurrencies such as Bitcoin or other altcoins. One of the distinctive features of the blockchain is that it is maintained on more than one computer. Ledgers can be public or private (allowed.) In this sense, the blockchain is immune to data manipulation so it is not only open but also verifiable. Because the blockchain is stored on a computer network, it is very difficult to tamper with Blockchain consists of a network of digital blocks with a comprehensive ledger of transactions made in cryptocurrencies such as Bitcoin or other altcoins. One of the distinctive features of the blockchain is that it is maintained on more than one computer. Ledgers can be public or private (allowed.) In this sense, the blockchain is immune to data manipulation so it is not only open but also verifiable. Because the blockchain is stored on a computer network, it is very difficult to tamper with
European Blockchain Regulation 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. This is facilitated by a consortium including Bird & Bird, OXYGY, WBNoDE and Spindox.
Funding to create the sandbox was raised 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 the private and public sector within the European Blockchain Services Infrastructure. Independent academic experts will oversee the entire process.
“Projects will be selected via a call to express interest. Each year, the most innovative regulator participating in the sandbox will also be awarded a prize,” the EC said in a press release.
Europe Sees Blockchain Potential
According to EC, DLT and blockchain have broad potential, not only limited to the financial industry. These technologies 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 the assets they buy, sell or insure in the mobility, energy and manufacturing sectors,” added EC.
While pilot programs conducted in the EU have demonstrated the huge potential of blockchain, the EC points to legal uncertainties. A regulatory sandbox has been created to reduce uncertainty, where regulators and supervisors can have open dialogue and companies and public institutions can thrive.
“The sandbox is open to companies from all industry sectors and public entities for projects beyond the proof-of-concept stage and near-to-market or in the early operational stages, involving the use of DLT technology, among other things,” the statement explains.
Early applications are accepted until 14 April 2023.
Watch the recent FMLS22 Executive Interview with Tobias Bauer of the Blockchain Founders Fund.
Markets in Crypto Asset 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) proposals. MiCA seeks to regulate the issuers of stablecoins and other unbacked crypto assets such as Bitcoin. It also wants to bring crypto asset trading venue operators and wallets within its reach.
Initial discussions on MiCA started in September 2020. However, an interim legislative agreement between the EU and the European Commission was reached at the end of June last year. MiCA is intended to be part of a broader digital finance package and does not cover all issues related to cryptocurrency markets: MiCA bypasses DeFi and NFT markets, for example.
The EU has started 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 interested in funding the industry and only supported it with $2.3 billion in the last quarter. In the first half of 2022, funding was $30 billion, while in the second half, the amount raised reached $7 billion, indicating a definite turnaround in the industry.
The European Commission (EC), the cabinet government and executive arm of the European Union (EU), has announced the launch of a new regulatory sandbox for blockchains and distributed ledger technology (DLT).
European Blockchain Regulation 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. This is facilitated by a consortium including Bird & Bird, OXYGY, WBNoDE and Spindox.
Funding to create the sandbox was raised 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 the private and public sector within the European Blockchain Services Infrastructure. Independent academic experts will oversee the entire process.
“Projects will be selected via a call to express interest. Each year, the most innovative regulator participating in the sandbox will also be awarded a prize,” the EC said in a press release.
Europe Sees Blockchain Potential
According to EC, DLT and blockchain have broad potential, not only limited to the financial industry. These technologies 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 the assets they buy, sell or insure in the mobility, energy and manufacturing sectors,” added EC.
While pilot programs conducted in the EU have demonstrated the huge potential of blockchain, the EC points to legal uncertainties. A regulatory sandbox has been created to reduce uncertainty, where regulators and supervisors can have open dialogue and companies and public institutions can thrive.
“The sandbox is open to companies from all industry sectors and public entities for projects beyond the proof-of-concept stage and near-to-market or in the early operational stages, involving the use of DLT technology, among other things,” the statement explains.
Early applications are accepted until 14 April 2023.
Watch the recent FMLS22 Executive Interview with Tobias Bauer of the Blockchain Founders Fund.
Markets in Crypto Asset 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) proposals. MiCA seeks to regulate the issuers of stablecoins and other unbacked crypto assets such as Bitcoin. It also wants to bring crypto asset trading venue operators and wallets within its reach.
Initial discussions on MiCA started in September 2020. However, an interim legislative agreement between the EU and the European Commission was reached at the end of June last year. MiCA is intended to be part of a broader digital finance package and does not cover all issues related to cryptocurrency markets: MiCA bypasses DeFi and NFT markets, for example.
The EU has started 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 interested in funding the industry and only supported it with $2.3 billion in the last quarter. In the first half of 2022, funding was $30 billion, while in the second half, the amount raised reached $7 billion, indicating a definite turnaround in the industry.
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