The European Commission (EC) has launched a blockchain regulatory sandbox aiming to offer legal certainty for innovative blockchain solutions.
The Commission, which is the executive arm of the European Union, announced the European Blockchain Regulatory Sandbox recently, touting blockchain and other distributed ledger technologies (DLT) as innovative developments that can transform energy and utilities, healthcare, education, finance, mobility, supply chains, logistics, and other sectors.
“The European Blockchain Sandbox has been set up and is being operated to facilitate the dialogue between regulators and innovators for private and public sector use cases. Legal advice and regulatory guidance will be provided in a safe and confidential environment,” EC stated.
The sandbox will host 20 blockchain startups annually, running until 2026. Applicants will be vetted and selected by a team of academic experts from European universities. EC will then match these companies with the relevant national and European regulators for a “constructive dialogue on the most relevant regulatory issues.”
The Commission will select the startups based on their business case’s maturity, contribution to the broader EU policy priorities, and regulatory relevance. It will award the most innovative blockchain project from each annual cohort.
The sandbox was first announced in September 2020, with one of its stated goals being the advancement of the European Blockchain Services Infrastructure (EBSI). Dubbed the first public sector blockchain in Europe, EBSI is a partnership between the EC and the European Blockchain Partnership, a coalition between European countries to foster the advancement of DLT in the region.
While it focuses on Europe, the sandbox will accept applications from EU companies that collaborate on a project with non-EU companies, but only if the EU company takes the lead.
“This sandbox will provide legal certainty for decentralised technology solutions including blockchain by identifying obstacles to their deployment from a legal and regulatory perspective. It should also allow regulators and supervisors to enhance their knowledge of cutting-edge blockchain technologies and share best practices through dialogues,” the Commission noted.
The sandbox comes amid reignited interest in blockchain technology across Europe. In 2022, blockchain startups raised $263 million in 111 seed deals, the highest share (18.4%) of all seed deals in the European fintech industry.
It also comes at a time when the region is readying itself for implementing the Markets in Crypto Assets (MiCA) law. MiCA, which has divided opinion in the digital assets sector, will be more restrictive with aspects such as privacy coins and introduce a new licensing regime, among a raft of other changes.
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The European Commission (EC) recently announced the launch of its new Blockchain Regulatory Sandbox. This sandbox is designed to create a safe and open environment for companies and organizations to explore the potential of blockchain technology.
The EC’s blockchain sandbox is intended to facilitate regulatory research into the potential of the blockchain to enhance security and privacy in the digital landscape. The sandbox will enable the holistic assessment of the effectiveness of technologies and applications across European Union (EU) Member States.
The sandbox will enable researchers, industry partners, and other stakeholders to develop and test innovative uses of blockchain technology for applications in several sectors of the European economy, such as energy networks, healthcare systems, financial services, and digital identity. The aim of the sandbox is to foster the development and adoption of new blockchain applications through the safe exploration of their potential benefits and risks.
In addition, the blockchain regulatory sandbox will provide a forum for stakeholders to exchange ideas and learn from each other. This will help to reduce the risks posed by the technological complexity of blockchain and ensure that it is used in accordance with the goals of the EU.
The EC actively encourages technological innovators to use the sandbox to explore the full potential of blockchain technology in the European digital ecosystem. The EC is committed to providing a safe, transparent and supportive framework for the development and safe exploration of blockchain technologies.
The regulatory sandbox will accelerate the development and adoption of blockchain in the EU and set a standard for the responsible use of this revolutionary technology. It is an important step towards the wider adoption of blockchain applications across the EU, which will help to foster more secure, reliable, and transparent digital services for the citizens of Europe.