The European Commission is launching a blockchain regulatory sandbox
The European Commission (EC) has launched a regulatory sandbox for blockchain which aims to offer legal certainty for innovative blockchain solutions.
The Commission, which is the executive branch of the European Union, recently announced the European Blockchain Regulatory Sandbox, touting blockchain and other distributed ledger technologies (DLT) as innovative developments that could transform energy and utilities, healthcare, education, finance, mobility, supply chains, logistics and other sectors.
“The European Blockchain Sandbox is set up and operated to facilitate 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,” the EC stated.
The sandbox will host 20 blockchain startups annually, lasting until 2026. Applicants will be screened and selected by a team of academic experts from European universities. The EC will then match these companies with relevant national and European regulators for a “constructive dialogue on the most relevant regulatory issues.”
The Commission will select the start-ups based on their business case’s maturity, contribution to the wider EU political priorities and regulatory relevance. It will award the most innovative blockchain project from each cohort.
The sandbox was first announced in September 2020, with one of its stated goals being to advance 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 of European countries to promote the development of DLT in the region.
While focusing on Europe, the sandbox will accept applications from EU companies collaborating on a project with non-EU companies, but only if the EU company takes the lead.
“This sandbox will provide legal certainty for decentralized technology solutions, including blockchain, by identifying obstacles to their deployment from a legal and regulatory perspective. It should also allow regulators and supervisors to improve their knowledge of cutting-edge blockchain technologies and share best practices through dialogues,” noted the commission.
The sandbox comes amid renewed 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 preparing to implement the Markets in Crypto Assets Act (MiCA). MiCA, which has divided opinion in the digital asset sector, will be more restrictive on aspects such as privacy coins and introduce a new licensing regime, among a number of other changes.
See: BSV On-chain Ecosystem Development in Europe
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