The EU is accepting applications for blockchain regulatory sandboxes, promoting the exchange between technology and regulation.

The European Commission launched a regulatory sandbox for innovation in Distributed Ledger Technology (DLT) last week, encouraging cross-industry DLT projects to facilitate cross-border dialogue with regulatory authorities. The program will run from 2023 to 2026, supporting 20 projects annually. Source

European Blockchain Regulatory Sandbox

Distributed ledger technology, including blockchain, has a wide range of applications. Distributed ledger technology can support regulatory technology to help combat counterfeit products in global supply chains. Companies can leverage non-personal data exchanges to train algorithms and create unique digital twins for their assets.

Financial institutions are looking to use distributed ledger technology to reduce securities trading costs. While various pilot projects have demonstrated the enormous potential of distributed ledger technology across industries, the high level of regulatory uncertainty has hindered industry development. Therefore, there is a need for enhanced dialogue between regulatory agencies and innovators. The European Blockchain Regulatory Sandbox aims to meet this need through a trusted participatory environment.

The sandbox will be open to private and public enterprises from all industries and will close on April 14th. Any technology based on proof of concept and involving the use of DLT can apply, but use cases from the European Blockchain Services Infrastructure will be given priority. Project selection will be completed by sandbox coordinators according to standards agreed upon with the European Commission. The coordinators will be supported by an independent academic expert group, but selection does not imply legal endorsement of the business model.

This sandbox is funded by the Digital Europe program and receives legal advice from Bird & Bird law firm, acting as a bridge between developers and regulatory agencies, and providing legal advice for selected blockchain use cases. The sandbox will also enhance regulators' understanding of DLT technology. Participating regulatory agencies will share experiences to help the European Commission identify best practices for the future.

DIGITAL Europe Programme

The DIGITAL Europe Programme provides strategic funding to address the digital challenges of Europe, focusing on five key areas: supercomputing, artificial intelligence, cybersecurity, advanced digital skills, and ensuring broad application in the economy and society through organizations such as digital innovation centers. The program has a total budget of 7.5 billion euros aimed at accelerating economic recovery and shaping the digital transformation of European society and economy.