EC Launches Regulatory Sandbox for Blockchain Projects
The European Commission (EC) launched a regulatory sandbox for innovative use cases involving distributed ledger technology, also known as DLT. The sandbox will run from 2023 to 2026 and support 20 projects annually, including use cases on the European Blockchain Services Infrastructure (EBSI). EBSI is a multi-country project that is supported by EC, all member states, Norway, and Liechtenstein.
The aim of the project is to provide legal certainty by facilitating regulatory dialog and cooperation between innovators and regulators at the national and European Union levels. The sandbox will provide legal certainty for decentralized technology solutions, including blockchain, by identifying obstacles to their deployment from a legal and regulatory perspective and providing legal advice, regulatory experience, and guidance in a safe and confidential environment. Blockchain and other DLTs could be deployed across industry sectors such as finance and insurance, energy and utilities, education, healthcare, mobility, and logistics and supply chains. This cross-sector initiative is funded by the Digital Europe Program and delivers on the Small and Medium-size Enterprise (SME) Strategy for sustainable and digital Europe. Every year, the most innovative regulator participating in the sandbox will be awarded a prize. The sandbox will be facilitated by a consortium under the leadership of Bird & Bird and its consulting arm OXYGY, supported by the blockchain experts of WBNoDE and web-designers of Spindox, which has been procured through an open call for tenders in 2022. The selection process will be overseen by a panel of independent academic experts.
The European Blockchain Regulatory Sandbox complements other EC initiatives such as the European Union Digital Finance Platform and the regulatory sandboxes on Artificial Intelligence. A wide range of complex regulatory questions could be covered in the sandbox, including those related to digital identity, cyber security, consumer protection, competition law, smart contracts for automated data processing, liability issues, AML/KYC rules and sector-specific regulations. Focus will be on areas of application where novel legal and regulatory questions arise. The sandbox will not provide a derogation from existing regulatory requirements. Innovative public entities and private-sector companies (including start-ups and scale-ups) established and operating in the European Economic Area can apply in the first call for the expression of interest, which has just been launched. This first call will be open until April 14, 2023.
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Keywords: Europe, Banking, Blockchain, DLT, Distributed Ledger Technology, Regulatory Sandbox, Regtech, Suptech, Fintech, EC
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