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European Blockchain Strategy - Brochure

Blockchain is one of the key emerging technologies that is shaping Europe’s future. Blockchain can help make interaction between citizens, enterprises and public organisations more efficient, reinforce trust and enable each party to retain control of their own data. It will be instrumental in building a citizen-centric, sustainable, transparent and inclusive European digital society. To make it happen, investing in the next frontier of technologies such as blockchain will be crucial to enhancing Europe’s technological sovereignty.

visual repreesntation of blockchain

iStock by Getty images 911053906 laremenko

 

Europe’s ambition is to set the gold standard for blockchain technologies. We have implemented a strong regulatory and policy framework that supports sustainable blockchain innovation as well as the startup and scaleup ecosystems. Administrations across Europe play a trailblazing role in implementing this exciting and essential new technology.
Roberto Viola, Director General, DG CONNECT

 

Blockchain: a transformative technology for Europe

Blockchain is one of the key emerging technologies for Europe, on a par with AI, IoT, Quantum Computing and 5G. Known as the technology of trust, it enables large groups of people and organisations that may not know or trust each other to agree on and permanently record information without the need for a third-party authority. 

How do Blockchains work?

Contrary to traditional databases, blockchains do not record data using a central controller whom users must trust, such as a bank. As illustrated below, data in a blockchain are recorded in a decentralised and distributed manner. This means that they are recorded at the same time on all servers across an entire network following an algorithmic process between the servers who jointly agree on updating the database. This consensus process leads to the validation of data if certain formal requirements are met. Valid transaction data are irreversibly recorded in a block that is chained to other blocks by encryption. 

diagram of the blockchain process

Source: JRC “Blockchain, Now and Tomorrow” 2019

This decentralisation and the use of encryption render blockchains particularly robust against data manipulation and underpinned their initial use case for payments with digital assets like Bitcoin. The time-stamped data entries serve as proof of authenticity and make blockchains “trust machines”. They also offer novel forms of governance that are consensual rather than centrally controlled and lend themselves to regulatory purposes in the public sector. Blockchain technologies are still nascent and keep evolving. Today, they serve many use cases beyond Bitcoin and are becoming a linchpin in the convergence of IoT with Artificial Intelligence in many sectors of the European economy. 

Why is blockchain important for Europe?

Revolutionising how we share data

By creating trust in data in ways that were not possible before, blockchain has the potential to revolutionise how we carry out transactions online. For example, individuals owning electric cars and energy companies can trust one another to fairly remunerate the charging of e-batteries with electricity from third parties when blockchains immutably record the provenance of the electricity and the status of an e-battery prior to and after charging.

Transforming Europe’s industries and cross-border public services

Along with Big Data, Artificial Intelligence and the Internet of Things, blockchain can help transform Europe’s industries and public services to address the twin challenges of digital and sustainable growth. By fostering decentralisation, it is particularly relevant in the context of a fair, green and sustainable post-COVID recovery. For instance, blockchain technologies can be used to facilitate the monitoring and efficiency of supply chains.

Building a citizen-centric digital society

Blockchain can help us build a fair, inclusive, secure and democratic digital economy in Europe – for example as the infrastructure behind a more citizen-centric, privacy-oriented, secure Internet and Digital Single Market, by supporting e-voting and proposing new decentralised identity models.

Contributing to the European economy

As the blockchain industry grows, it will contribute to the European economy, creating both jobs and value.

 

High potential for blockchain innovation in the EU

Europe is home to a vibrant blockchain startup ecosystem, with many startups in major cities including Paris, Amsterdam, Berlin and Madrid, among others. There are also many blockchain initiatives in the public sector.
map of the initiatives across Europe
Source: EU Blockchain Observatory and Forum, January 2021
 
While the EU is strong in talent and initiating innovation through startups, more needs to be done to scale up innovation and grow local ecosystems around large corporate players. There is also a risk that standards are being set by players outside the European Union and without consideration to values such as privacy and sustainability, which are core to the European way of life. The EU needs to nurture its own blockchain industry to emerge among the leading providers worldwide.

Where can blockchain be deployed?

Financial services

Drive innovation in capital markets, support fractional ownership of high-value assets, reduce friction in post-trade settlement systems, streamline payments services. For instance, by enabling atomic swaps of securities and money to remove counterparty risks, by replacing paper based bills of lading in supply chain financing or by underpinning fully automated insurance products such as per kilometre car insurance.

Public services and digital identity

Enable real-time update of public authorities with key data from organisations and individuals, collected in a decentralised and synchronised manner, and so enhance the effectiveness, accountability and inclusiveness of public service delivery as well as support citizen-centric digital identity.

Supply chain and trade finance

Streamline processes, add efficiencies, lower costs and increase safety in global supply chains and international trade finance by allowing players in vertical distribution chains to immutably record IoT data on the provenance and movements of shipments in real time, thus giving them a powerful tool to detect counterfeit and fraud.

Programmable money

Create “programmable money” in the form of central bank digital currencies (CBDCs) and stable coins to unlock new business models, improve payments efficiencies, and provide consumers with more choice. The programmability of money in blockchains can support, for example, the automatic payment of congestion charges and tolls, the charging of electric vehicles.

Sustainable energy, mobility and circular economy

Support smart energy and mobility management, clean energy, P2P energy markets, re-cycling and re-use in circular economy by underpinning P2P trading platforms for electricity from rooftop solar panels in local energy communities, by helping transmissions system operators to integrate distributed generation and distributed demand for renewables and by tracking the provenance of commodities in the circular economy.

Healthcare and pharmaceuticals

Prove pharmaceutical provenance and authenticity, support privacy-preserving health data sharing, enable patient-controlled health data. Personal information management services can for instance rely on blockchain technologies to remunerate individuals who  voluntarily sharetheir health data in aggregated and anonymous form for clinical research (see the MyHealthMyData project).

 

Blockchain is a key technology for sustainability

The first generation of blockchains were energy-intensive in updating the decentralised database. More advanced blockchain technologies, however, consume no more electricity today than traditional databases. Through regulation, public procurement and policy initiatives, the European Union promotes sustainable blockchain technologies above non-sustainable ones. 

As much as the EU promotes making blockchain technologies increasingly sustainable themselves, it also supports the role that blockchains can play in a more sustainable economy to help deliver the European Green Deal. 

blockchain can Support Europe’s Green New Deal through transparency, accountability and traceability of greenhouse gas emissions; simplify carbon trading and climate change cooperation, Support local, peer-to-peer energy markets, prove provenance of green energy sources, promote use of renewable energy, manage sustainable energy grids, Create a trust and transaction platform for large-scale, sustainable circular economies, for example through “product passports.”

A coherent and strong blockchain strategy

The EU wants to be a leader in blockchain by ensuring that it can be safely and profitably used in ways compatible with European values. EU blockchain policy is designed to enable innovation, accelerate the adoption of blockchain technologies, and create a balanced and consistent legal framework for blockchain technology and digital assets.  

EU blockchain policy in a nutshell

Europe is funding blockchain startups and innovation

The EU provides funding for blockchain research and innovation through grants and by supporting investment. Grants are given through the Horizon programme (see below for more details). The EC supports investment in blockchain startups and projects through the new AI & Blockchain Investment fund, which invests in venture capital funds targeting AI and blockchain startups, early stage ventures and scaleups. Additional funding for the blockchain innovation ecosystem can be leveraged through the Recovery and Resilience Facility.

A strong political Partnership

The European public sector is playing a trailblazing role in blockchain by integrating blockchains in various public services and supporting a gold standard for blockchain technologies in the EU that contributes to sustainability and societal benefits. This strategy is being realised through the European Blockchain Partnership, a joint effort of all 27 EU Member States, Norway and Liechtenstein and the European Commission. The Partnership decides on common principles for the development of blockchain technologies in the EU and together builds the European Blockchain Services Infrastructure (see below).

Promoting legal certainty

The EC recognises the importance of legal certainty and a clear regulatory regime in areas pertaining to blockchain-based applications. It is currently focusing on developing a pro-innovation legal framework in the areas of digital assets (tokenisation) and smart contracts that protects consumers and provides legal certainty for businesses. The EC strongly supports a pan-European framework striving to avoid fragmentation. With the view to increase investment and ensure consumer and investor protection, the Commission recently released a proposal for regulating crypto assets, updating the anti-money laundering rules for crypto assets, and creating a pan-European regulatory sandbox for innovative blockchain solutions.

Supporting blockchain interoperability and standards

Standards are an important key to success for any nascent technology, and blockchain is no exception. The right standards, set at the right time in a technology’s development, can ensure interoperability, generate trust in and help ensure ease of use of the technology, and support its development and pathway to mass adoption. The EU takes an active role in the blockchain standards community, engaging and working closely with all relevant bodies around the world. It is involved in the work of ISO TC 307, ETSI ISG PDL, CEN-CENELEC JTC19 and IEEE and in ITU-T as far as blockchain is concerned, and looks to engage with all relevant bodies globally like INATBA.

Supporting skills programs

Digital skills are key to the future of Europe. The Commission invests in Europe’s citizens to ensure they have the digital skills they need to access, use and develop the latest digital technologies. This includes blockchain, where there are initiatives focused on development of the technical, business, legal and organisational skills needed to ensure blockchain flourishes in the region.

Interacting with the community

The EC interacts with the private sector, academia and the blockchain community primarily through two bodies: The EC has helped industry to set up the International Association for Trusted Blockchain Applications (INATBA), a multilateral public private partnership which brings together governmental representatives and international organisations with industry and academia (see below). The European Blockchain Observatory and Forum, created by European Commission and funded by the European Parliament, aims to pool expertise to identify and monitor blockchain initiatives in Europe and globally (see below).

Increasing funding for blockchain innovation

The EU provides funding for blockchain research and innovation through outright grants and prizes, and by supporting investment.

Horizon 2020 and Horizon Europe

Grants for blockchain projects are provided primarily through the Horizon programme. From 2016-2020, the Commission provided over EUR 200 million in prizes and grants through Horizon 2020. Significant budget for further grants is expected in the follow-up Horizon programme, known as Horizon Europe.

26% of the projects are in cybersecurity, 22% in the IOT sector, 19% in healthcare

EU AI/Blockchain Investment Fund

The Commission in partnership with the European Investment Fund (EIF) has provided EUR 100 million to set up the first European AI/Blockchain Investment Fund. The fund is leveraging additional private investments through venture capital funds. It is estimated that the total investment volume in the first phase will be between EUR 500-700 million. The EU jointly with Member States plans to scale up the AI/Blockchain Investment Fund under the InvestEU programme and the Recovery and Resilience Facility.

European blockchain services infrastructure

The European Blockchain Partnership (EBP) is a joint initiative of the EU and EEA Member States as well as the European Commission to develop a common EU strategy on blockchain and build a pan-European blockchain infrastructure for cross-border public services. 

 pictures taken at the signing ceremonyAnnounced in a joint declaration on 10 April, 2018 by 21 Member States and Norway, the EBP has since grown to 30 signatories.

The EBP’s ambition is to build the European Blockchain Services Infrastructure (EBSI) – a project to jointly build and share a blockchain infrastructure for public services. Its goal is to improve the ability of Member States to provide public services across borders in Europe in a safe, citizen-centric and secure manner, and so make it easier for the region's citizens, residents and businesses to live, work and do business on a European scale.

By using blockchain themselves, European policy makers gain first-hand knowledge of how the technology works. The EBP and EBSI serve as a technological and regulatory sandbox, leading to better, more informed regulation on the technological and use case front. 

European blockchain services infrastructure

The European Blockchain Partnership (EBP) is a joint initiative of the EU and EEA Member States as well as the European Commission to develop a common EU strategy on blockchain and build a pan-European blockchain infrastructure for cross-border public services. 

The EBP’s ambition is to build the European Blockchain Services Infrastructure (EBSI) – a project to jointly build and share a blockchain infrastructure for public services. Its goal is to improve the ability of Member States to provide public services across borders in Europe in a safe, citizen-centric and secure manner, and so make it easier for the region's citizens, residents and businesses to live, work and do business on a European scale.

By using blockchain themselves, European policy makers gain first-hand knowledge of how the technology works. The EBP and EBSI serve as a technological and regulatory sandbox, leading to better, more informed regulation on the technological and use case front. 

Notarisation

The power of blockchain is being leveraged to notarise official documents for cross-border purposes and facilitate trusted processes in areas like digital audit and automated compliance checks.

Sharing digital credentials

Citizens gain digital control of their credentials, significantly reducing verification costs and time and improving trust in documents’ authenticity. As a first application, it will be used for tertiary education and lifelong learning credentials as well as to facilitate access to social security services across borders.

Self-Sovereign Identity

EBSI is helping to implement a Self-Sovereign Identity model in Europe, allowing users to create and control their own identity across borders. The model is designed to be compliant with the eIDAS regulation on digital signatures.

Trusted Data Sharing

Blockchain technology is being used to securely share data between public authorities. As a first application it is envisaged to be used in the context of customs and tax as well as asylum demand management.

Supporting skills programs

Digital skills are key to the future of Europe. The Commission invests in Europe’s citizens to ensure they have the digital skills they need to access, use and develop the latest digital technologies. This includes blockchain, where there are initiatives focused on development of the technical, business, legal and organisational skills needed to ensure blockchain flourishes in the region.

SME financing

The EBP is looking for ways to leverage blockchain technology for innovative financing models for SMEs.

 

Additional applications for EBSI are decided yearly by the EBP and will continue to enrich the capabilities offered to European citizens and enterprises when interacting with public bodies. 

The EU closely collaborates with the global blockchain community

INATBA offe rs developers and users of blockchain a global forum to interact with regulators and policy makers and bring blockchain technology to the next stage.

 

  

Constructive Dialogue

Maintain a permanent and constructive dialogue with public authorities and regulators that will contribute to the convergence of regulatory approaches to blockchain and other distributed ledger technology globally.

 

Governance Model

Promote an open, transparent and inclusive global model of governance for blockchain and other distributed ledger technology infrastructures that reflects the shared interests of stakeholders from industry, start-ups and SMEs, civil society organisations, governments and international organisations. 

 

Development Support

Support the development and adoption of interoperability guidelines, specifications and global standards, to enhance trusted, traceable, user-centric digital services.

 

DLT Applications

Develop sector-specific guidelines and specifications for the development and acceleration of trusted sectorial blockchain and DLT applications in specific sectors.

 

 logo of the  EU Blockchain Observatory & Forum

The EU Blockchain Observatory & Forum is a European Commission initiative to accelerate blockchain innovation and the development of the blockchain ecosystem within the EU and so help cement Europe’s position as a global leader in this transformative new technology. 

screenshot of the website of the EU Blockchain Observatory & Forum