Experts explored the challenges of regulating blockchain technology and introduced the newly launched ACEBRAIN research centre. They also discussed the anticipated impact of the "Markets In Crypto-Assets" (MiCA) legislation on tech regulation in the European Union. For a full breakdown of the sessions watch the takeaway video with panellist Joachim Schwerin (European Commission).
In the first part of the event, French legal scholar and artist Primavera De Filippi compared blockchain to a platypus, a whole different animal than other financial instruments when it comes to regulation, emphasising that it cannot be categorised simply as money, securities, or commodities. This poses a significant challenge for policymakers who are grappling with the need for a globally coordinated approach to provide certainty to the sector.
In response to this need, the European Commission's blockchain strategy aims to establish a "gold standard" for regulatory developments, emphasising energy efficiency and interoperability. The Commission recognises the need for blockchain users to have access to multiple services without being locked into a single provider.
Daiva Repeckaite, an investigative journalist and STG Policy Leader Fellow, attended the event and agrees that blockchain requires a distinct regulatory approach from other financial instruments.
She insists that blockchain technology, which gained prominence in the late 2000s, has always seemed destined for mainstream adoption. Over the years, researchers, policymakers, and tech experts have focused on developing a legislative framework for blockchain-based finances, service provision, and identification.
Discussions during the event highlighted the importance of distinguishing between the technology's use cases and the necessary supporting infrastructure. While blockchain technology enables automation, asset division, and intellectual property protection, blockchain businesses require access to capital, user protection, and risk mitigation mechanisms.
To address these necessities, smaller entrepreneurial states, such as Malta and Liechtenstein, experimented with blockchain regulation in the past, Repeckaite noted. However, the time is now ripe for unified EU regulation on blockchain technology.
The role of the EU
In the second part of the conference, Joachim Schwerin spoke about the role of the EU about in this regulatory journey. Schwerin, who is the Principal Economist in the unit responsible for the Digital Transformation of Industry within the Directorate-General Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) of the European Commission, stressed the importance of abandoning a top-down approach to regulation for a more inclusive one. He emphasised the importance of involving not only policymakers but also top experts, including the scientific community, businesses, and citizens:
“Blockchain is a technology that emerged about 15 years ago and in this very short time, we have come very far. [...] This is no longer about top-down decisions, as seen in traditional banking and financial markets. It is about empowering individuals to make their own decisions, equipping them with technology, enabling them to engage with like-minded people, and fostering the development of both financially focused and non-financial projects."
Schwerin also stressed that blockchain is a promising technology with numerous opportunities but also emphasised the need to manage and mitigate risks.
"Markets In Crypto-Assets" (MiCA)
The second session delved deeper into the EU’s Landmark Crypto Law, "Markets In Crypto-Assets" (MiCA). Featuring Christiana Vovidou, from the European Commission and Alessia Benevelli, from the European Banking Authority, the discussion provided detailed insights into MiCA's regulation and its implications. Benjamin Burlet from the European Securities and Markets Authority (ESMA) and Leonardo Giani from the EU-SDFA led subsequent discussions primarily focusing on the practical implementation issues of MiCA.
The recently released MiCA regulation, part of a wider digital finance package within the EU, has gained attention as one of the most significant crypto-specific regulations worldwide. Regulators are initially focusing on financial services, aiming to prevent unmitigated risks.
The EU's strategy emphasizes interoperability, potentially transforming crypto tokens into practical means of exchange across different platforms. Regulators are exploring applications of blockchain technology in automated contractual payments, shipping automation, and insurance, aligning with the growing readiness of consumers for a comprehensive blockchain rollout.
For more insights from the event, participant Max Bernt provides a breakdown of the sessions in his article.
Launch of ACEBRAIN
The policy dialogue also marked the launch of ACEBRAIN, a new research centre dedicated to the analysis of the compatibility between blockchain technology and EU legislation, the study of policy options to regulate blockchain-enabled services such as crypto assets and decentralised digital identity, the promotion of sustainable blockchain technology as a pillar of the future EU Single Market, and as a foundation for a more democratic, resilient and sustainable society.
ACEBRAIN is a joint initiative of the University of Rome 3, the Catholic University of Milan, the Ugo Bordoni Foundation and the European University Institute’s School of Transnational Governance. The project received funding for five years from the Algorand Foundation.
Watch and read more
Watch a takeaway video from the event here with Schwerin discussing the challenges and opportunities of regulating blockchain at the EU level and beyond. And learn out more about the future of Blockchain in the EU single market ACEBRAIN website.