Governments often lag behind technologists in awareness and adoption of new technology. Blockchain technology has presented the latest challenge.
But the European Commission is working hard to catch up with blockchain innovators. Earlier this month, the main governing body of the European Union created the Blockchain Observatory and Forum to address a host of fast-emerging regulatory and other issues. The European Commission’s timing appears particularly acute.
Among the most recent developments in Europe, several large utilities recently said they would start trading directly with each other later this year using bitcoin technology. Other major industries are exploring initiatives. A 2015 World Economic survey predicted that about 10 percent of the world’s GDP would be recorded on blockchain.
Blockchain technology appeared on the European Commission’s radar at least a year ago, when the body published a report on new technologies that noted the increasing importance of blockchain and cryptocurrencies. Since then, the Commission has hosted a blockchain conference and workshops, helped establish a 5-million-euro innovation prize, and invested 83 million euros in blockchain-based projects.
The new Observatory joining the list of initiatives is supported by the European Parliament as a collaboration between commissioner Mariya Gabriel and parliament member Jakob von Weizsäcker. It is also operated by Ethereum-based developer ConsenSys in a partnership with Lucerne University of Applied Science and Arts.
Focus on Fintech
The Observatory will focus on analysis and monitoring of blockchain use, primarily in financial technology. It is part of the Commission’s overarching strategy for fintech, which incorporates crowdfunding and record digitization.
Features of blockchains make them “fundamental for banks and other financial player ecosystems, especially when they bring on one side more efficient and transparent processes and on the other side new forms of decentralization, of which the bitcoin blockchain is the main evidence,” wrote a Commission spokesperson in an email interview with ThirtyK. “The financial sector has been leading the exploration of the potential of blockchain with many proofs of concept and pilot projects in a wide range of areas.”
The spokesperson declined to be identified by name.
The Commission is piloting its own blockchain projects, including the European Financial Transparency Gateway. The Gateway allows companies to publish their required financial reports in a distributed ledger, similar to a blockchain, that is standardized across borders and easily accessible.
“We want to build on use cases of EU interest and stay abreast of latest developments, shaping a viable framework for blockchain uptake for public services and private organizations and citizens, making the most of these new distributed, more transparent and secure models that blockchain propose,” wrote the Commission spokesperson.
The Observatory is already acting on its goal of staying up to date by requesting information from blockchain projects around the EU. It’s working on a crowdsourced map of projects, participants and events, and it’s looking for contributors in its two working groups. Those contributors will have “significant experience and expertise in the field of blockchain technology and its applications,” says a blog posting on the Observatory’s website.