The European Commission wants the EU to become a “global standard-setter” in the blockchain. This goal is leading it to adopt a new Digital Financial Package and launch a blockchain regulatory sandbox by 2022.
Greater focus on blockchain regulation
The European Commission is working with the European Blockchain Partnership (EBP) to introduce a new regulatory sandbox for blockchain and cryptocurrency. According to a new announcement released today, the sandbox is expected to launch by 2022. The initiative is a part of the European Commission’s Digital Finance Package which focuses on bringing regulatory clarity for crypto firms.
The commission states,
“By making rules safer and more digital-friendly for consumers, the Commission aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital start-ups, while mitigating any potential risks related to investor protection, money laundering, and cyber-crime.”
Creating a new framework for digital currencies
The Commission suggests that the EU legislation already covers some digital assets. However, these rules were created before crypto-assets and digital ledger technologies emerged. Such legislation created roadblocks for innovations. It also becomes difficult to use existing frameworks of the finance sector to the blockchain and crypto industry.
The regulatory sandbox will provide a hassle-free solution to testing innovative blockchain-based ideas without coming into direct opposition with the authorities. The initiative will include a pan-European blockchain sandbox that protects innovation from hurdles and gives tech experts, firms and regulators a chance to work together.
The commission noted that the pilot project will provide a controlled environment with temporary exemptions from regulatory rules. It will help regulators gain experience on the DLT use in existing market infrastructures. The project will focus on smart contracts, business-to-business data spaces, and data portability. Other focus areas include energy, environment, mobility, and digital identity.
The European Commission has been holding consultations in the blockchain and digital asset space since last year and plans to introduce comprehensive regulation for cryptocurrencies.