Blockchain technology allows people and organisations who may not know or trust each other to collectively agree on and permanently record information without a third-party authority. By creating trust in data in ways that were not possible before, blockchain has the potential to revolutionise how we share information and carry out transactions online.
The European Commission's strategy is designed to meet these goals. It wants to support a 'gold standard' for blockchain technology in Europe that embraces European values and ideals in its legal and regulatory framework.
This 'gold standard' for blockchain includes:
- Environmental sustainability: Blockchain technology should be sustainable and energy-efficient.
- Data protection: Blockchain technology should be compatible with, and where possible support, Europe’s strong data protection and privacy regulations.
- Digital Identity: Blockchain technology should respect and enhance Europe’s evolving digital Identity framework. This includes being compatible with e-signature regulations, such as eIDAS, and supporting a sensible, pragmatic decentralised and self-sovereign identity framework.
- Cybersecurity: Blockchain technology should be able to provide high levels of cybersecurity.
- Interoperability: Blockchains should be interoperable between themselves and with legacy systems in the outside world.
Elements of the European Commission’s blockchain strategy
The European Commission strongly supports blockchain on the policy, legal and regulatory, and funding fronts. The most significant parts its blockchain strategy include:
- Building a pan-European public services blockchain: The European public sector is playing a trailblazing role in blockchain by building its own blockchain infrastructure. Over time, this will include interoperability with private sector platforms. The European Blockchain Partnership is bringing this vision to life. It is a joint effort of all 27 EU countries, Norway, Liechtenstein and the European Commission. The output is the European Blockchain Services Infrastructure (EBSI), which will come into production in 2021.
- Promoting legal certainty: The Commission recognises the importance of legal certainty and a clear regulatory regime in areas relating to blockchain-based applications. It is currently 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 Commission strongly supports a pan-European framework and hopes to avoid legal and regulatory fragmentation. It 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. This was done with a view to increase investments and to ensure consumer and investor protection.
- Increasing funding for research and innovation: The EU provides funding for blockchain research and innovation through grants and supporting investments. Grants are given through the Horizon programme. From 2016-2019, the Commission provided some €180 million in grants through Horizon 2020. Significant budget for further grants is expected in the follow-up Horizon programme, Horizon Europe. The Commission supports investment in blockchain startups and projects through the new artificial intelligence (AI) and blockchain investment fund, which invests in venture capital funds targeting AI and blockchain startups and early stage ventures.
- Promoting blockchain for sustainability: The EU recognises the potential of blockchain and supports the use of blockchain technology in fostering sustainable economic development, addressing climate change, and supporting the European Green New Deal.
- Supporting interoperability and standards: The Commission believes strongly in the importance of standards in promoting blockchain technology. 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 (see below).
- Supporting blockchain skills development: There are planned initiatives focused on skills development to ensure the high-level skills that are needed are available.
- Interacting with the community: The Commission interacts with the private sector, academia and the blockchain community primarily through 2 bodies:
- The International Association of Trusted Blockchain Applications (INATBA), a public/private partnership designed to bring EU countries together with the private sector and other stakeholders like academia to further the blockchain ecosystem in Europe. INATBA promotes interoperability of blockchain technologies and good governance, and acts as interlocutor of governments and international bodies.
- The European Blockchain Observatory and Forum, which is a European Parliament funded pilot project. It aims to pool expertise to identify and monitor blockchain initiatives and trends globally to create a comprehensive, publicly available source of blockchain knowledge that supports the blockchain ecosystem within the EU.