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- Blockchain Regulatory Sandbox launched for regulatory discussions on the use of cutting-edge blockchain technology.
- The Sandbox will provide legal certainty for decentralized technological solutions.
- The Commission has highlighted the potential of DLT, but there is legal uncertainty.
The European Blockchain Regulatory Sandbox has been launched by the European Commission. Sandboxes are safe spaces where businesses can test their goods and services while interacting with proper authorities.
By creating a pan-European platform for regulatory discussions, the sandbox increases the legal certainty of cutting-edge blockchain technology. The sandbox is slated to run from 2023 to 2026 and will annually support 20 projects, including public sector use cases on the European Blockchain Services Infrastructure.
It is funded by the Digital Europe Programme and delivering on the SME strategy. Through calls for expressions of interest, projects will be chosen. Each year, a prize will also be given to the sandbox participant regulator who has shown the most creativity. A group led by Bird & Bird and its consulting arm will oversee the sandbox’s administration.
What is the purpose of the Sandbox
By identifying barriers to its deployment from a legal and regulatory standpoint and providing legal counsel, regulatory experience, and guidance in a safe and confidential setting, this Sandbox will give legal certainty for decentralised technological solutions, including blockchain. Moreover, it ought to make it possible for supervisors and regulators to communicate best practises and broaden their understanding of cutting-edge blockchain technologies.
The Sandbox will fund 20 initiatives yearly, including public sector use cases on the European Blockchain Services Infrastructure (EBSI), a multi-nation project backed by the Commission, all Member States, Norway, and Liechtenstein under the Digital Decade. The initial call will be available until April 14, 2023.
The Digital Europe Programme, an EU funded initiative aimed at delivering digital technology to enterprises, citizens, and public administrations, provides assistance for The Sandbox. Also, by removing the legal ambiguity surrounding blockchain, it will be possible for more industries to use the technology, assisting Europe in realising its goal of being a digital leader in the Digital Decade.
Several industry areas are using distributed ledger technology.
Blockchain and other distributed ledger technologies have uses outside of finance. DLT can assist regulatory technologies that aid in the fight against counterfeit goods in international supply chains and the defence of verifiable credentials (such as diplomas) against fraud.
Businesses in the manufacturing, energy, and mobility sectors can promote the interchange of non-personal data to train algorithms and/or develop distinctive digital twins for assets they buy, sell, or insure. Financial players anticipate that DLT will lower the cost of trading securities. Pilots have demonstrated the great potential of DLT across industrial sectors, however there is still legal ambiguity because governance is still shared by numerous entities.
An improved collaboration between regulators and innovators is required to ensure legal certainty and assist Europe’s aspiration for digital leadership in this Digital Decade. By providing a secure platform for regulators and vendors of DLT technology to interact, the European Blockchain Regulatory Sandbox fills this gap.
An increase in sandboxes
An improved relationship between regulators and innovators is required to increase legal certainty. This need is met by the European Blockchain Regulatory Sandbox, which provides a secure setting for dialogue between regulators and DLT technology suppliers.
Three years ago, a joint report by the European Supervisory Authorities (ESAs) on regulatory sandboxes and innovation hubs recognised the need for action to encourage improved coordination and cooperation amongst authorities to support the expansion of the fintech industry.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
