The first batch of blockchain use cases to debut in Europe’s regulatory sandbox was formally introduced on July 3, following a long wait and nearly 90 applications received in April. First disclosed in 2020, the initiative aims to bridge the regulatory gap between European nations and crypto companies.
According to the European Commission, 20 projects have been selected in the first cohort, with companies in finance and capital markets, telecoms and information technology, global trade, transportation, and cross-sectoral projects leading the group.
The projects are spread across five European regions, including Western Europe with 14 use cases, Southern Europe with 10 projects, Nordics and Central Europe with eight projects each and Eastern Europe with seven projects.
Plans to set up a regulatory sandbox for blockchain technology were announced by the European Commission and the European Blockchain Partnership in 2020. The goal, according to the Commission, is to foster dialogue between regulators, crypto projects and public authorities.
“In these dialogues, use case developers can present their business case to receive legal guidance from regulators,” the European Commission said.
Also behind the initiative is Bird & Bird, a British law firm with offices in Europe, Asia, the Americas and the Middle East. It will be responsible for setting up a “safe interface between developers and regulators,” providing legal advice and regulatory guidance to projects.
“The sandbox will allow supervisors to enhance their knowledge of cutting-edge technologies involving DLT [distributed ledger technology],” reads the statement, adding that lessons learned will be shared between regulators, helping the Commission to identify best practices.
The regulatory sandbox will work in conjunction with other frameworks, in particular the EU Digital Finance Platform and the Artificial Intelligence Sandboxes that will be implemented under the AI Act. According to the Commission, the integration is crucial given the “increasing convergence of innovative technologies in use cases often involving several industry sectors.”
The application deadline for the first cohort of proposals ended on April 14 for blockchain projects with valid proof-of-concept and cross-border elements. The initiative will select new projects every year until 2026.