EU Launches Blockchain Regulatory Sandbox for DLT Development

The <a href=”https://www.financemagnates.com/tag/european-commission/” target=”_blank” rel=”follow”>European Commission</a> (EC), a cabinet government and the executive body of the
European Union (EU), has announced the launch of its newest regulatory sandbox
for <a href=”https://www.financemagnates.com/terms/b/blockchain/” class=”terms__main-term” id=”be18ed01-45fc-4044-b447-06802a10dbcd” target=”_blank”>blockchain</a> and distributed ledger technology (DLT).The European Blockchain
Regulatory SandboxThe 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 including Bird &
Bird, OXYGY, WBNoDE and Spindox. Funding for
creating the sandbox was raised from the Digital Europe Programme. The
initiative is expected to work for the SME over the next three years and,
according to its 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 whole process.”Projects
will be selected through calls for expression of interest. Every year, the most
innovative regulator participating in the sandbox will also be awarded a
prize,” the EC stated in the press release.Europe Sees Blockchain
PotentialAccording
to the EC, <a href=”https://www.financemagnates.com/tag/dlt/” target=”_blank” rel=”follow”>DLT </a>and blockchain have broad 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 conducted in the EU have shown the considerable potential of
blockchain, the EC points to legal uncertainty. The regulatory sandbox has been
created to lower the 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-market or at an
early stage of being operational, involving amongst other technologies the use
of DLT,” the statement explained.Initial
applications are being accepted until 14 April 2023.Watch the recent FMLS22 Executive Interview with Tobias Bauer from Blockchain Founders Fund.Markets in Crypto-Assets RegulationThe
European Union has been working since the middle of last year <a href=”https://www.financemagnates.com/cryptocurrency/can-mica-take-europe-to-the-crypto-promised-land/” target=”_blank” rel=”follow”>to regulate the
cryptocurrency industry</a> under the Markets in Crypto-Assets <a href=”https://www.financemagnates.com/terms/r/regulation/” class=”terms__secondary-term” id=”341d154e-1396-4d12-a357-4837e79c4146″ target=”_blank”>regulation</a> (MiCA)
proposal. MiCA seeks to regulate issuers of stablecoins and other unbacked
crypto-assets such as Bitcoin. It also wants to bring operators of crypto-asset
trading venues and wallets within its ambit.Initial
discussions on the MiCA started in September 2020. However, an interim
legislative agreement between the EU and EC was reached just at the end of June
last year. The MiCA is intended to be part of a broader 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
started to take a stronger interest in blockchain technology at a time when it
has declined significantly in the private sector. <a href=”https://www.financemagnates.com/cryptocurrency/vcs-not-interested-in-blockchain-anymore-as-funding-almost-stopped/” target=”_blank” rel=”follow”>Venture capitalists are no
longer as interested in funding the industry</a> 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, it came in at $7 billion, showing a definite reversal
in the industry.