Recently, the European Commission introduced a new regulatory sandbox for innovative applications with Distributed Ledger Technologies (DLT).
Supported approximately 20 projects per year
Funded by the Digital Europe program, the sandbox will run from 2023 to 2026 and is intended to support around 20 projects annually, including public sector use cases on the European Blockchain services infrastructure. Projects will be selected on the basis of calls for expressions of interest.
In addition, the most innovative regulator participating in the sandbox will receive an annual award. The sandbox will be facilitated by a syndicate led by ‘Bird & Bird’ and its consulting arm OXYGY with support from WBNoDE and web designers from Spindox. A panel of independent academic experts will oversee the selection process.
Improving knowledge in the field of DLT
The main objective of the European Blockchain Regulatory Sandbox is to support the cross-border dialogue between regulators and supervisors, and between companies or governments. In addition, the sandbox will allow regulators to improve their knowledge of DLT-related technologies, and lessons learned will be shared between participating regulators, enabling the Commission to identify best practices.
To achieve this objective, the European Blockchain Regulatory Sandbox will collaborate with other relevant sandboxing frameworks, such as the EU Digital Finance Platform. Companies from all industrial sectors and public authorities can participate with projects that are already market-ready or at an early operational stage.
Projects of this kind should include the use of DLT, among other things. Priority will be given to use cases chosen for implementation between public authorities in the European Blockchain Services Infrastructure, but a maximum of 20 use cases with a cross-border dimension will also be able to participate.
Regulatory technologies support
It is stated on digital-strategy.ec.europa.eu that Distributed Ledger Technologies can also be used as enabling regulatory technologies to help government agencies fight fraud in global supply chains and protect verifiable credentials from, among other things, counterfeiting. Companies can exchange non-personal data to train algorithms or create unique digital replicas of assets in the mobility and energy industries, which can then be bought, sold or insured. In addition, financial actors are expected to use DLT to minimize the costs of securities trading.
According to the same source, there is also a need for a better dialogue between regulators and innovators to better underpin Europe’s ambition for digital leadership. Finally, the European Blockchain Regulatory Sandbox addresses this requirement by providing a trusted environment in which regulators and providers of DLT technologies can communicate with each other.
