The European Commission has launched a regulatory sandbox aimed at exploring the use of distributed ledger technology (DLT) in different sectors. The sandbox is designed to establish a framework for collaboration between regulators and technology innovators to hash out the legal implications for blockchain technologies. The Commission hopes that the sandbox will encourage enhanced dialogue between regulators and innovators in a trusted environment to promote the wider utility of blockchain beyond fintech applications.
DLT technology, also known as blockchain, is not limited to fintech applications such as cryptocurrencies or securities trading. The Commission asserts that it has a “wider utility,” including combating counterfeit goods and verifying credentials. Despite the significant potential of DLT, legal uncertainty persists, and governance remains shared between multiple actors. Hence, the Commission is committed to increasing legal certainty and reducing legal ambiguity.
The sandbox will support 20 projects a year and will be funded by the Digital Europe Programme. It will run from 2023 to 2026 and will facilitate enhanced knowledge and sharing of best practices among regulators and supervisors. A consortium led by Bird & Bird and its consulting arm Oxygy, supported by blockchain experts of WBNoDE and web designers of Spindox, will facilitate the sandbox.
The establishment of the European Blockchain Regulatory Sandbox is a significant step towards advancing the wider utility of blockchain technology beyond its current applications. It offers an opportunity for regulators and innovators to collaborate and establish a pan-European framework for DLT governance. By increasing legal certainty, the sandbox aims to encourage innovative applications of blockchain technology in different sectors while minimizing legal ambiguity. The involvement of a consortium comprising industry experts demonstrates the commitment of the Commission towards the success of the sandbox.
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