The EU strongly supports a EU-wide rules for blockchain to avoid legal and regulatory fragmentation. The Commission adopted a comprehensive package of legislative proposals for the regulation of crypto-assets in order to increase investments and ensure consumer and investor protection.
This package updates certain financial market rules for crypto-assets, and creates a legal framework for regulatory sandboxes of financial supervisors in the EU for using blockchains in the trading and post-trading of securities.
A digital Euro
The European Central Bank (ECB) and the European Commission services are jointly reviewing at a broad range of policy, legal and technical questions relating to the possible introduction of a digital Euro. They are considering this in the context of their respective mandates and independence provided for in the Treaties.
A joint statement by the European Commission and the ECB outlined their cooperation on a digital Euro.
Proposal for a new EU law on crypto-assets
Crypto-assets qualifying as 'financial instruments' under the Markets in Financial Instruments Directive have previously been subject to EU securities markets legislation.
However, these rules predated the emergence of crypto-assets and DLT. This could hamper innovation. So, the Commission proposed a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form. The pilot regime allows for exemptions from existing rules and allows regulators and companies to test innovative solutions utilising blockchain.
For crypto-assets that do not qualify as 'financial instruments' such as utility tokens or payment tokens, the Commission proposed a specific new framework This framework would replace all other EU and national rules currently governing the issuance, trading and storing of such crypto assets.
The Markets in Crypto-Assets Regulation (MiCA) will support innovation while protecting consumers and the integrity of crypto-currency exchanges. This includes rules such as no insider trading or front running. The proposed Regulation covers entities issuing crypto-assets, firms providing services around these crypto-assets, firms operating digital wallets, and cryptocurrency exchanges.
Further information can be found on the Commission’s press release and accompanying press memorandum.
Pan-European blockchain regulatory sandbox
A sandbox is a facility that brings together regulators, companies, and tech experts to test innovative solutions and identify obstacles that arise in deploying them.
The European Blockchain Partnership is planning a pan-European regulatory sandbox in cooperation with the European Commission for use cases in the EBSI and outside of EBSI, including for data portability, business-to-business data spaces, smart contracts, and digital identity. This will cover sectors including health, environment, mobility, energy and more. The sandbox is expected to become operational in 2021/22.
The EU wants to be a leader in blockchain technology, becoming an innovator in blockchain and a home to significant platforms, applications and companies.
The EU provides funding for blockchain research and innovation through grants and prizes and by supporting investment.
The European public sector is building its own blockchain services infrastructure, which should soon be interoperable with private sector platforms.
The European Commission aims to use innovations in blockchain technologies to help fight climate change.
The European Commission takes an active role in the blockchain standards community, engaging and working closely with all relevant bodies around the world.
The European Blockchain Partnership (EBP) is an initiative to develop an EU strategy on blockchain and build a blockchain infrastructure for public services.
The EU Blockchain Observatory and Forum facilitates dialogue between decision makers, thought leaders, and the blockchain community.