Blockchain, and knowledge thereof, has come a long way since it first entered the spotlight in 2008 as the technology underpinning Bitcoin. It is now understood that blockchain and other distributed ledger technologies have disruptive potential that could transform various sectors, from banking to healthcare and beyond.
The last two years have been particularly significant for the development of blockchain policy in Europe. 2018 saw the European Commission launch the EU Blockchain Observatory and Forum to accelerate blockchain innovation and establish Europe as a leader in the field. Soon after, the EU Member States, accompanied by Norway and Liechtenstein, created the European Blockchain Partnership to align their policies and regulatory approaches, fostering an enabling environment for blockchain in Europe. Alongside this, there has been an increase in blockchain engagement at a national level with Malta introducing a comprehensive regulatory framework in the summer of 2018. Similarly, in 2019 Liechtenstein adopted its ‘Blockchain Act’ to regulate the token economy and Germany launched the first national strategy on blockchain in November.
Looking ahead, we can expect this trend of increasing policy engagement on blockchain to continue in 2020. Other countries are expected to follow the examples set by the likes of Germany to define their approaches to the technology more clearly. Switzerland, for example, will likely see movement in the blockchain space after consultations to adapt several of its federal laws to regulate the technology concluded in June. The Swiss Parliament is expected to begin its examination of the proposal in early 2020. Meanwhile, at the European level, the new President of the European Commission Ursula von der Leyen, has cited climate and tech policy as her top priorities. Her new Commission is expected to increase engagement with blockchain. Thierry Breton, Commissioner for the Internal Market, has identified blockchain as one of the key technologies which can enable the EU to become a key industrial player. Investing in the next frontier of technologies such as blockchain will be crucial to fulfilling Breton’s task of enhancing Europe’s technological sovereignty.
Nonetheless, it is unlikely that 2020 will see any major movements at the EU level beyond investment and exploration. Blockchain still remains very much in its infancy, making it difficult to devise comprehensive policies relating to the technology. Additionally, some concerns over blockchain remain, including its seeming incompatibility with various principles of the EU’s General Data Protection Regulation (GDPR). For example, the immutable nature of blockchain – one of the technology’s defining characteristics – clashes with the right to be forgotten enshrined in the GDPR. Until such issues are resolved, policies in the blockchain space will remain relaxed, encouraging innovation and development of the European blockchain ecosystem through investment, without adopting a defined stance or approach.
However, we can expect a shift regarding the fintech sphere. Given the critical nature of financial infrastructure, the financial applications of blockchain have generally attracted the most attention from authorities and regulators. The financial regulatory authorities of several countries, including the UK and Switzerland, have released guidance clarifying the regulatory treatment of crypto-related assets in their jurisdictions. Meanwhile, in April this year, France adopted a new law on Business Growth and Transformation (PACTE) with provisions for a new crypto-assets regime in France. In addition to the wariness demonstrated by European authorities towards foreign, privately issued stable coins, there is likely to be movement at the EU level across the fintech and crypto-assets sector throughout 2020.
Author: Catherine Williams, Access Partnership