EC Report Explores Application and Challenges of Blockchain Technology
The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies. The report "Blockchain now and tomorrow" offers an in-depth and practical understanding of blockchain and how the technology can be used in various sectors in the future. The report helps policymakers and industry understand not only the latest trends in blockchain technology but how trust can be built between different stakeholders.
The report provides multidimensional insights into the state of blockchain technology by identifying ongoing and upcoming transformations in a range of sectors and setting out an anticipatory approach for further exploration. Moving beyond the hype and debunking some of its controversies, the report is intended to offer both an in-depth and practical understanding of blockchain and its possible applications. The report explains that blockchain technology is still at the embryonic stage and facing many challenges, such as performance and scalability, energy consumption, data privacy, integration with legacy infrastructures, or interoperability between different blockchains. Still, based on a limited set of proven use cases, blockchain often entails additional risks and barriers for firms, businesses, and organizations piloting it or interested in its deployment.
The report also highlights that policymakers and regulators need to progress in assessing whether existing policies and laws are fit for purpose or if new frameworks will be required. Pressing discussions include, for instance, the legal classification of tokens and coins, validity of smart contracts, applicable jurisdictions, consumer and investor protection, enforcement of anti-money laundering requirements, and data protection and privacy safeguards. Furthermore, the development of blockchain should be connected to existing digitization initiatives and programs to avoid overlaps and to maximize impact. Blockchains will be complementary or will work together with other key digital technologies, such as artificial intelligence, the "internet of things," data analytics, cloud computing, robotics, and additive manufacturing. As an emerging technology, blockchain requires the multiplication of use cases to test its added value in specific applications and sectors.
Further support and funding for pilots and experimentation spaces must bring together a range of stakeholders from universities, research centers, industry, small and medium enterprises, and start-ups. Blockchain is the technology behind bitcoin and other cryptocurrencies, but it has the potential to transform the ways to exchange a much wider range of assets. It could enable the secure transfer of money, contracts, land titles, data, services and other assets digitally, with few or no intermediaries. In February 2018, EC had launched the EU Blockchain Observatory and Forum with the support of the European Parliament to highlight key developments of the blockchain technology, promote European actors, and reinforce European engagement with multiple stakeholders involved in blockchain activities.
Related Links
- Press Release
- Report
- Overview of Joint Research Center (PDF)
- Blockchain Factsheet
- EU Blockchain Observatory and Forum
Keywords: International, Europe, EU, Banking, Securities, Insurance, Fintech, Regtech, Blockchain, Distributed Ledger Technology, EC
Previous Article
EBA Communication on Brexit Preparations of Financial InstitutionsRelated Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
