The EU Blockchain Observatory and Forum (EUBOF), together with the European standardisation organisations, continues to appraise issues relating to scalability, legality and governance. This is done in the context of standardisation efforts.
EUBOF'S Reports and Findings
EUBOF has published several reports relating to Blockchain, including a report on governance in blockchain (dated 28 May 2020) which covers the challenges and issues regarding blockchain and its potential use.
The report has suggested that blockchain technology could be implemented in multiple sectors including, dispute resolution. This would benefit the system through increased efficiencies, as to streamline and reduce the costs of settling a dispute. It further proposes the use of blockchain technology for E-voting for both elections and citizen participation platforms as it proposes it will increase ease of use, transparency and reduce any corruption prone voting processes. The country of Estonia has taken the lead in this in regards to their governmental blockchain solution.
A commission has been set up to establish the European Union’s approach to blockchain. It has identified some uses of blockchain, especially in the financial services arena; for example, it recognised the following use cases that should not be ignored:
- automatic execution of insurance contracts;
- money transfer
- peer-to-peer lending; and
- transfer of securities.
The commission recognises that blockchain has a wider scope than financial services, and that close collaboration between innovators, users and regulatory bodies is beneficial. The EUBOF was established in February 2018 for a two-year period, during which − among other things − it will conduct a feasibility study of an EU public blockchain infrastructure. The EUBOF will propose initiatives, funding measures and even a framework to enable scalability, develop governance and standards, and support interoperability. Twenty-two member states signed a declaration establishing a blockchain partnership as a cooperation vehicle for sharing technical and regulation experience and expertise among member states.
The Pilot Project
There is also a pilot project for applying blockchain technology to the Prospectus Directive and the Transparency Directive, both of which regulate securities offerings. The pilot project aims to test and explore blockchain capabilities for:
- sharing financial data within the European Union;
- promoting cross-border investment; and
- providing investors with easy access to regulated financial information on companies listed in EU regulated markets.
Further piloting programmes are being trialled throughout Europe. Germany is trialling the use of blockchain in relation to Covid-19 health passports. The Estonian Government are also trialling blockchain and their own distributed ledger technology called KSI to verify the integrity of government documents and records.
For all questions regarding the topics raised in this blog, please contact a member of our team of digital asset legal experts.