The European Union takes an active interest in Bitcoin and blockchain, with multiple initiatives to study, encourage and, potentially, to regulate the sector.
At the heart of this work is the European Commission’s Digital Innovation and Blockchain Unit, whose head is Pēteris Zilgalvis, a political scientist and lawyer and, quite recently, a visiting fellow at St Antony’s College, Oxford where he wrote about fintech and blockchain.
Pēteris is keen to stress that the Commission is not intent on regulating unless there is a clear reason to do so. The overall approach, he says, is that “first of all, we don’t rush in”. The subject of Bitcoin and blockchain have been followed by officials within the European Commission for at least seven years, so “if it was ever true that ‘if it moves, the European Commission regulates it’, it hasn’t.”
So, “while …we support investment and infrastructure, for instance, in artificial intelligence, blockchain, IOT, 5G, we’re not going to have a regulation on blockchain – the same way we don’t have a regulation on transistors or on servers or on other items of technology.”
The focus will be at a higher level, in the applications working on blockchain, such as tokenization products. But again, the emphasis will be on waiting to be sure of what, if anything, is needed. In relation to smart contracts, for instance, “the question is still very open. Does anything need to be said about it legally? But we’re asking, especially in the cases of small cross-border use across the 27 countries of the EU for instance, if there are problems that perhaps need to be addressed to ensure you don’t have to have a different type of smart contract or a different registration in many different jurisdictions.”
A more pro-active EU approach is seen in the European Blockchain Services Infrastructure, an initiative through which the EU member states are setting up their own blockchain network with “nodes at the country level, probably ministry level, eventually municipality and regional level. So hundreds and maybe even thousands of nodes.”
With more than 30 nodes in the network initially, the project will be in deployment this year, starting with projects in a number of areas of interest to public service providers: “regtech, …diploma certification and also self sovereign identity and audit document authentication and publication.”
Another approach involves money from the European Investment Fund to back blockchain startups. This part of the fund is now worth 100m Euros, but will rise to 400m soon. It’s already backing Helios, a decentralised platform for building social media apps, for instance.
Pēteris stresses that it won’t be him or other EU officials deciding which startups to support. Rather, the money “goes out to venture capitalists who make the choices with no interference from us”. He draws parallels with SBIR in the United States, the Small Business Innovation Research programme which has been funding research and development in small companies in the States since 1982.
Being blockchain-agnostic, the EU is not able to back BSV specifically, of course. But what about, at least, the idea that a single blockchain, in principle, would deliver the best results for the ecosystem as a whole? “I think almost everyone agrees, whichever analysis you read, that there will be less blockchains than there are now or less blockchain projects,” Pēteris says. “Some go as far to say as saying there will be one decentralized blockchain.” But he doesn’t claim the right to decide on that kind of question: “this is where we have to be humble, as well as civil servants.”
As to where we are now in the long development of Bitcoin and blockchain, Pēteris is optimistic: “I think we’re at a healthy moment. The time when there was so much hype where you were going to a blockchain seminar or something and it felt like a rock concert with people cheering because they thought they were all about to become millionaires, had some positive sides but I think was a little bit unhealthy with unrealistic expectations. I think we’re at a point now where the investment and the projects that are going forward are realistic ones …So I think a realistic, optimistic time is one that we’re in now and that the hype is dying down, which is healthy in a way”.
Pēteris Zilgalvis was a speaker at the Asia Blockchain Summit 2020: https://abasummit.io/
Hear the whole of Pēteris Zilgalvis’ interview in this week’s CoinGeek Conversation podcast:
You can also watch the podcast video on YouTube.
And you can read a transcript of the interview here.
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