Regulating Blockchain in the EU: Building a Global Competitive Advantage

Abstract

The current efforts to provide institutional and legal certainty around blockchain-based innovative solutions reflect the status of the technology as it appears in the market today, which emphasizes more the “disintermediation” properties of the DLTs and less the “decentralization” properties. With the improvement of the design architectures, the algorithmic efficiency of the smart contracts and the blending of DLTs with machine learning we expect “decentralized autonomous organizations” to become more efficient over time and reach more strategic industries. This will transform market structures, business and operational models and it is expected to have strong macroeconomic effects. This will pose significant challenges to the regulator. A principles-based approach is sine qua non for creating a sustainable competitive advantage in order for an economy to leverage the benefits of blockchain. European Union is a pioneer regulator in the space of distributed ledgers. It adopts a technologically neutral approach. We believe that this is an appropriate approach however technological neutrality should be coupled with business model neutrality. This is a requirement for making sure that the regulator will not be directed by short-term considerations and constraints. The European Parliament’s Blockchain Resolution is a text that reflected the views of how to approach, from a regulatory point of view, a technology which is still evolving. This text is the basis for the regulatory initiatives of the EU in blockchain-related topics and became a reference point for many other jurisdictions around the world. This chapter presents the views of the Rapporteur of the Blockchain Resolution and indicates the significance of creating demand for a new technology from a Political Economy point of view.