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Ep 10: The European Blockchain Regulatory Sandbox
45 Plays1 year ago
Discover the European Blockchain Regulatory Sandbox's role in harmonizing technology and regulation in this episode. Featuring Helen Köpman from the European Commission, Marjolein Geus of Bird & Bird, and Yuji Develle from OXYGY Consulting, we delve into the sandbox's goals, its collaborative approach with regulators and SMEs, and focus on infrastructure development. Our guests discuss the selection criteria for innovative projects, their industry diversity, and the sandbox's response to regulatory complexities before the EU's MiCA regulation. Additionally, they highlight how cross-sector learning and best practices sharing could influence future regulations beyond blockchain.
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Transcript
Introduction to the Podcast
00:00:06
Speaker
Hello and welcome to this Owl Explains Hootenanny, our podcast series where you can wise up on blockchain and web3 as we talk to the people seeking to build a better internet. Owl Explains is powered by Avalabs, a blockchain software company and participant in the avalanche ecosystem. My name is Silvia Sanchez, project manager of Owl Explains and with that I'll hand it over to today's amazing speakers.
EU Blockchain Legislation
00:00:33
Speaker
Hello and welcome back to another exciting episode here on the Owl Explains Hootenanny. We are very excited today to have three very special guests with us in the studio talking to us today.
00:00:48
Speaker
The EU and of course Amika has been throughout the news globally for the landmark legislation that has been passed and the regulatory framework around blockchain and cryptocurrencies and digital assets.
00:01:04
Speaker
Depending on where you are located in the world, all of those terms mean different things. And one of the great works that Mika has done is to help to start to add definitions to these terms and start to really build out real life use cases in many jurisdictions, many legislators or lawmakers.
00:01:25
Speaker
regulators have been asking for use cases. And so we are excited today to be talking about the European Commission's sandbox that they have built specifically around blockchain projects.
Guests Introduction
00:01:39
Speaker
And to that end, we have our three guests. They each represent various aspects of this sandbox project. And so I think that they will each add a unique perspective that will
00:01:52
Speaker
add value and insight to what is happening. We also are excited to be able to talk about the types of projects that are participating in the sandbox. And so while it's still early and while the work is just very beginning stages of what is developing here,
00:02:13
Speaker
very promising of the results that will be garnered. So we're excited to be able to jump into that with you all today. In the studio, we have, of course, Helen Schulman. She's the Deputy Head of Unit Digital Markets for the European Commission. We also have Yuji Devell. He's a Senior Consultant at OxyG.
00:02:35
Speaker
And of course, we have Marjaleen Jusch, the partner at Bird and Bird. And she is the lead attorney for the Sandbox Blockchain Project. Good morning, all of you. Good morning. Good morning.
00:02:51
Speaker
Yes, excited to have you all here in the studio. Let's
Helen Schulman's Blockchain Journey
00:02:55
Speaker
just start. I think we need to start just by building some context for the audience, of course, and just give a little bit of background. But maybe, Helen, if we started with you, would you just give us just a short intro, sort of how did you be introduced to the blockchain, and how did you kind of start realizing that this was a technological innovation that needed serious consideration?
00:03:21
Speaker
Thank you, Andrew. That's a great question. Actually, I came across blockchain really from a research and innovation angle. I was working with digital innovation in the European Commission's department that works with connectivity issues and digital policy. And there we start to look into what blockchain could do to advance technology in general and into connection between different technologies and
00:03:51
Speaker
and services of people. And we set up a prize, actually a prize, a research innovation prize for what blockchain could do for public good. And that was around, I think, 2015. And from there, we have developed different initiatives from the Commission, both on research innovation, but also on regulation and
00:04:15
Speaker
very specific initiatives around blockchain for EU. So European Blockchain Partnership, the EU Blockchain Observatory, which gives knowledge, spreads knowledge and shares knowledge, as well as the European Blockchain Services Infrastructure, which is a common EU
00:04:37
Speaker
to actually deliver, to develop and roll out blockchain service infrastructure for public good. So those are a few, just a few initiatives that start around 15, 16, 17, 18, and here we are 23 and the blockchain development is going forward, although we have seen some challenges recently. And I think it's a good moment to take a bit stock of what we can do to help innovators
00:05:06
Speaker
to advance with the technology. Yes, for sure. That's wonderful. You've certainly seen many various aspects of the technology and seen it at play. And to your point, it seems that not just in the EU, but globally, it seems like there is a taking of stock across the board on the impact that this technology will ultimately have.
00:05:31
Speaker
on various markets at large. Thank you so much for that introduction.
Growth and Legal Challenges in Blockchain
00:05:36
Speaker
Marjolin, I guess I would ask you sort of the same question. As an attorney, I'm sure that you have a slightly different perspective and different use cases, but for you, when was blockchain something that became a real serious matter of practice?
00:05:51
Speaker
Thanks a lot for the question. We have seen, as a law firm, very much specialized in technology and digital sectors, an increasing number of blockchain and distributed ledger technology projects.
00:06:10
Speaker
already for many years. Our blockchain specialists, attorneys in the firm, have been working on blockchain projects already for 15 years. So that is quite a long time. But what we have seen over the last, I would say, three to five years is an increasing number
00:06:30
Speaker
of those projects and also a broader spread of those projects across different industry sectors. So it started off perhaps especially in the financial markets. By now that is by no means the only sector that is very relevant to blockchain. We have seen projects coming up
00:06:54
Speaker
across many sectors, logistics, supply chain management, energy and utilities, health sector, automotive, you name it, government, of course, very important. I've personally been involved very, very much in blockchain for the last five years, I should say, both from a governmental perspective and
00:07:18
Speaker
from the private sector. I must say it's a fantastic innovative development. If you look at the possibilities that it creates, they are so impressive. But at the same time, of course, we see a lot of regulatory challenges. That is why we are also very excited to be involved in the Sandbox project of the European Commission.
00:07:42
Speaker
Yes, for sure. As a technology, one of its great benefits around blockchain or the distributed ledger is, of course, its scale and the ability to help facilitate great efficiencies.
00:07:59
Speaker
in a number of markets. But isn't that also the challenge with it? That it's because it's so broad, because it can affect so many different markets, it becomes very difficult to build a regulatory framework around that. And I think to your point, Marjolin, this is why Sandbox is going to be so effective in helping us to see some of these things in real
Consulting and Regulatory Insight in Blockchain
00:08:24
Speaker
practice. It's exciting.
00:08:26
Speaker
And of course, UG, you come to this sandbox from yet another perspective and perhaps one that is, well, it's certainly equally important to see how the projects are developing. So we'd love to just ask you sort of the same question. When were you first sort of introduced to this and what brings you to this point today?
00:08:48
Speaker
I would say that, so OxyG consulting could be seen as the consulting arm or consulting partner of Bird and Bird. And very much on the same vein as Bird and Bird, we are always interested in observing the developments in technology and seeing how we could adapt our consulting services to it. And something that we've noticed across many of our clients or found in many industries is, hey, they consider blockchain as a solution or as a tech
00:09:16
Speaker
technology that could respond to some of their challenges as the challenges are very various and many that the blockchain can respond to. But what we understand is there are some roadblocks, there's some obstacles to fully adopting or fully appreciating the potential of blockchain and solving those people's challenges. And those roadblocks could be partially answered by a clearer understanding of the regulatory landscape
00:09:45
Speaker
associated with blockchain. So what's really exciting, having come into this project, is that we are part of this big effort that is led by European Commission in this case, to make it easier to understand the regulatory situation, the regulatory landscape around blockchain.
00:10:05
Speaker
Also for regulators, it's easier for them to understand the full breadth and depth of blockchain applications today in the EU EEA. And just being able to help develop the infrastructure, the system around blockchain, not only focusing on blockchain as a technology is helpful because I think we're at that stage of the lifecycle of this technology where we now need to build a system around it as well.
00:10:33
Speaker
Absolutely. No, that's a great summation of that. This actually leads us in, Yuji. You were maybe almost playing the host there by leading us directly into the next question.
EU Blockchain Sandbox for SMEs
00:10:46
Speaker
So I really appreciate that. But Helen, I'd love to talk to you just sort of to get a sense. And if you could introduce, perhaps some of our listeners aren't familiar with the sandbox.
00:10:56
Speaker
project of kind of where it started. What are some of the things it's trying to accomplish? But maybe you could give us some context around on the sandbox. Sure. Why the initiative came about and to follow up with what Judy and Marjolein said. I mean, we, in parallel to this fascinating blockchain development in terms of technology, you also see
00:11:22
Speaker
you know, the challenges around it, both in regulatory understanding from both sides, but also there are technological challenges. And we thought in particular, very important for the EU and the European Commission was to develop the capacity of the European ecosystem to take up this technology. We saw an opportunity here that had a pretty good position in terms of
00:11:51
Speaker
capability, but the understanding should be broader and particularly we wanted to help the SMEs to nourish them and accompany them. So the initiative came about actually when we thought about this from SMEs perspective, we set out an SME strategy and we were thinking about different ways to help SMEs to really take the benefit of the single market in EU.
00:12:18
Speaker
And since we were working here from my perspective on technology and blockchain, why don't we set up a regulatory sandbox for SMEs to really be able to adapt this technology and use that sort of mechanism, which is a regulatory innovation, basically a regulatory innovation process to have a discussion with regulators around blockchain technology and the regulatory framework around
00:12:48
Speaker
it for their particular services, for what they're trying to solve, the problem their client has solved for their clients, and see how we can help them to accompany them to an understanding how their service is best deployed in the EU. And at the same time, as we have already gone into, regulators give them a better understanding of where this technology is going, because
00:13:17
Speaker
because there's not much regulation actually coming. At the time, that was around 2020. And then we just had started to think about Mika. So it was about that. And so the initiative was the commissions should set up a regulatory sandbox around blockchain, in particular targeting small and medium sized enterprises. And that's what we have done.
00:13:42
Speaker
That's wonderful. What are some of the objectives or even timelines that have been set forward for the sandbox? Yeah, I mean, we just basically are in the beginning of the first cycle of the sandbox. We started beginning of this year in earnest, really setting up the parameters and the rules around the sandbox to make it comfortable and
00:14:12
Speaker
that both regulators and enterprises can go in with confidence and share information that could be confidential because we are talking about close to market services. So it's very important I think here we have had excellent support by the COSORCHA, Bird and Bird and OxyG to really draw up the parameters and make it very robust.
00:14:37
Speaker
that you can rely on. And so that was a lot of work actually doing, setting up that first. And then we have launched this first call for expression of interest to innovators to enter the sandbox. And that was with the deadline in April. After that now, when there's been a process of evaluating and we had an enormous interest,
00:15:01
Speaker
for innovators to attend the sandbox. Very positive reply to that. We had quite a bit of work to actually select them. The 20 that will be the first cohort to enter the sandbox this year. And there will be three consecutive years of this sort of process.
00:15:24
Speaker
The 20 innovators enter sandbox together with the regulators, and then there's a lot of preparation as well. But I would actually margin and talk more about that because she's the master of that. Yeah, no, that's great. So 20 projects were selected. Will there be 20 in each consecutive year? Or do you see that with success of the project, I'm assuming, do you see that expanding to larger numbers?
00:15:54
Speaker
No, I mean, we have set out, of course, we always would like to be able to culminate, but of course we have a certain
00:16:02
Speaker
project and the budget to respect. So 20 each year is what we set up to do. There are other sandboxes actually being formed right now. I mean, I think we can discuss a little bit on the pilot, for example, around MICA. But we also have a sandbox for artificial intelligence in the European Commission being set up now. So we have different places we can direct
00:16:27
Speaker
innovators too, but this is particularly for blockchain and we kind of kept it focused and sharp so that we can manage this because it's the first of a kind actually. This is the first of a kind pan-European sandbox and we have done it for blockchain. So it's to be able to have a clear scope and then the idea is also to evaluate afterwards what the experience is both for the innovators and the regulators.
Sandbox Objectives and Practices
00:16:53
Speaker
And perhaps to add to the great explanation by Helen that actually Sandbox has two main objectives, I would say. The first is to have these dialogues, confidential dialogues between the blockchain use case owners on the one hand and
00:17:13
Speaker
the relevant regulators on the other hand in a confidential setting about the interpretation and implementation of existing regulations could be very different areas of regulation by the way. But the other element is that those dialogues will result in best practices and lessons learned. And those will become available for the wider
00:17:40
Speaker
blockchain community. These will also be made public. And then the fact that we have these three cohorts, that is very helpful. 20 use cases in a cohort is quite a substantial number.
00:17:58
Speaker
Because for each use case we have one to three regulators from across the EUEEA. The use case owners are coming from across the EUEEA. So we have actually quite a spread there. And as also the regulation is under construction and in development, the fact that we have three different cohorts in three consecutive years,
00:18:24
Speaker
enables us to actually build in the second and the third cohort on experiences and developments in regulation of that in the meantime are taking place. So the whole setup is actually very much helpful.
00:18:42
Speaker
to identifying the regulatory challenges in different regulatory areas and also, perhaps even more importantly, to find out where the solutions can be. That's very important. Yuji, you want to jump in on a comment there?
00:19:03
Speaker
Yes, so the formalization of this process of the discussions over three years will be that at the end of each year, and at the end of all three years, will be published best practices and learnings from the discussions that were taking place. So the learnings, once they have been anonymized and analyzed, will be converted into a document that
00:19:28
Speaker
will be presented to a large pool of regulators across the EU and EEA and also to European regulators. So very much at the end of these three years will be produced this very important document which summarizes our understanding of the blockchain ecosystems
00:19:47
Speaker
interaction with the regulation and the kind of legal issues that have been surfaced as a result of these discussions. Also, some of the solutions, as Marjolein mentioned, that were discussed, there are no commitments being made in the caterer of this
00:20:04
Speaker
of this project but this is why it's a sandbox so there are many solutions that are being investigated and looked into and that's going to be super important because as we know blockchain regulation is not something that is a question of one or two years but it will be a big topic for the many years to come.
00:20:26
Speaker
Right. No, for sure. And Marzlin, do you see the distribution of that, of those learnings of that information? I mean, you know, obviously there will be a culmination point after these three years where there'll be a big release, but do you see a dissemination of learnings coming even before the end of the project? And perhaps are there other mile markers along the way?
00:20:50
Speaker
Yeah, yes, because after every cohort, so at the end of each year, there will be a best practices report, and lessons learned. So it will not be that the community does not have to wait for, for three years, which is a very, very long time. For the first results that will already be at the end of this year is our current expectation, actually. And it will, because it's
00:21:19
Speaker
I don't know whether that is too early to start on that topic, but regulatory areas, that in itself is a kind of a big question because there actually we distinguish more or less between three categories of regulation. The first category of regulation is generic regulation that is already applicable across all industry sectors like data protection, digital
00:21:48
Speaker
identity regulation, consumer law, you name it. That has not been designed for distributed ledger technologies, but still is applicable to blockchain blockchain project and blockchain innovators if the criteria are fulfilled. That's the first category.
00:22:09
Speaker
The second category is more sector specific, so specific regulation in energy and utilities, in telecoms, in supply chain management. That is specific for those areas of blockchain applications. But there is now a third category, and that is DLT specific, so blockchain specific.
00:22:34
Speaker
regulation and that's of course also very important but we have these these three areas in a combination of EU-wide and national and so that is quite the thing if you are an SME to find your way in those areas and
00:22:55
Speaker
So for that is a very helpful project, but also what we hope to do with these best practices and lessons learned is actually also to make sure that industry sectors are learning from each other. That lessons learned in one area of regulation can perhaps be helpful in other areas of regulation.
00:23:19
Speaker
Yes, that's excellent to understand the scope and the outcome of exactly what will be taking place. I'm curious, what were the types of projects and some of the requirements or qualifications that you were looking for in adding these projects into the sandbox?
Criteria for Sandbox Selection
00:23:40
Speaker
Yeah, thanks a lot for asking the question. We went through a whole application and selection process because we had a large number of applications and there needs to be a selection. So what we did, and that was already at the start of the project, we published on the project website the selection criteria.
00:24:03
Speaker
for applications to select the project that would participate in the first cohort. Apart from eligibility criteria, the important award criteria are maturity of the business case and the reason behind that is that
00:24:26
Speaker
The project is there for news cases that are already almost on the market or on the market. So not pure theory behind the desk. So maturity of the business case was the first one. The second one is novel regulatory topics. Because
00:24:51
Speaker
the sandbox. It's a regulatory sandbox, so there should be a focus on regulatory topics that especially are relevant across industry sectors or across different countries EU and EEA countries. And the third award criterion was relevance and contribution to the wider EU policy objectives such as ESG environment and data etc.
00:25:22
Speaker
Very, very good. Yeah, and I can imagine, as you have all said, there was great interest. I know that there is a number of great projects that are there that would, of course, be very interested in participating in this. And UGU, I think, explained or have come to understand that there is perhaps even some early data that has been released, maybe even today or coming soon.
00:25:51
Speaker
Yes, so actually as of the recording day today, we just published a news item detailing a little bit more about the constitution of those pre-selected use cases for the first cohort. So, in fact, we're really pleased to note that across all of the EUEA regions, that we have at least, I think, I'm trying to remember exact number, but we have
00:26:18
Speaker
several use cases that are operational in all of the EU regions. So every region is covered. And so we're really pleased to know this because not only is blockchain something of concern for all of the EU regions,
00:26:35
Speaker
But also regulators from across the regions are also very much interested in participating in these discussions and dialogues. So we have a match, a place for many regulators who would like to get involved. And we know that there are many also from that side that want to get involved.
00:26:55
Speaker
It's an impressive number of applications, close to 100 applications actually, because our criteria for selection was quite strict. We know that there are many blockchain projects that aren't validated proofs of concept. That's the sort of line where we drew in terms of maturity of the business case. And so those who have achieved that level,
00:27:20
Speaker
there is only a certain amount across the EU that have achieved that level. And so that's the reason why we're pretty happy about this. In terms of the kinds of projects that have entered the sandbox,
00:27:36
Speaker
There's a nice spread also in terms of industry sectors. So we're very pleased to see that, to note that it's not only, as you mentioned at the beginning of this talk, financial services or FinTech related applications, but it is also about transportation.
00:27:56
Speaker
It's about telecoms. It's also about the preservation of artwork and various different use cases that we have observed and that we have seen applied to this sandbox. And we've made sure that a good spread of those also exists in the selection of the final preselected use cases. And then in terms of the blockchain use cases themselves, it's not only companies that have developed their own blockchain,
00:28:22
Speaker
So strict blockchain technology companies, but it's also companies that utilize blockchain as a core part of their business, but not necessarily creating that blockchain themselves. So a nice sort of analog that I like to use this non-tech is you imagine like a technology, the newspaper technology, like a newspaper. Yeah, sure. We have newspapers and publishers on our platform. We also have
00:28:50
Speaker
companies specialized in ads for the newspaper, companies specialized in the delivery of those newspapers. So we have the whole lot. And I think that was something we really wanted to include in this election criteria to note that blockchain is an ecosystem and not just a specific market.
00:29:08
Speaker
Excellent. Yeah, no, that's very good. I'm curious, Marjolin, this Sandbox sounds novel. It sounds really, obviously, as we had sort of mentioned previously, perhaps historic in its scope and objectives for sure. But how does this Sandbox in particular distinguish from the DLT pilot that the EC launched in 2022?
00:29:37
Speaker
Yeah, that's a very good question. The DLT pilot regime is actually a specific regulation for DLT pilot cases. So that is actually a regulation that is introduced
00:29:57
Speaker
where parties could use and comply with. That is not a sandbox, it is a new area of regulation with certain exemptions from existing regulations, but specific regulations for DLT. Our sandbox is about the interpretation and the implementation of existing regulations.
00:30:26
Speaker
even the application of the DLT pilot regime could be a topic for our sandbox, because it's the application of this specific DLT-specific area of regulation. So the two are actually not two of the same, but they are complementary.
00:30:46
Speaker
And in the first group of selected companies, we also have examples of parties who have questions about the application, the interpretation of the DLT private regime. So that's interesting.
00:31:02
Speaker
If I may, because the reason why this is specific, the use case is specific, is actually there's more reasons for that. The first is it's across different countries. It's also across different industry sectors.
00:31:21
Speaker
It is also across different groups of companies, and perhaps I should have mentioned that before, but in our selection process we make a distinction between four different categories of companies that can participate.
00:31:39
Speaker
We have micro enterprises, we have small enterprises, we have other enterprises, could be very big enterprises, and we have public entities. There's four lots and actually each lot has five spaces and so that also means that
00:31:56
Speaker
If you look at the result of this first cohort, it's not only as a me or only large companies, there is also a spread amongst different sizes of companies. And there's also public entities that have been selected as part of the first cohort. I think that's extremely valuable from a perspective of gathering
00:32:19
Speaker
useful data across various spectrums. I appreciate what Yuji also added where the geographic diversity is properly represented across the EUDA and then of course the various sectors and sizes of business. I cannot imagine being the group trying to write down
00:32:42
Speaker
the qualifications and then also trying to weed through the over 100 applicants must have been an extremely challenging project. So hats off to those folks that were able to make that something of a success there. Curious, where do you think the regulatory framework for crypto and really blockchain is headed in the EU?
Impact on EU Blockchain Regulation
00:33:12
Speaker
And I think more specifically, how does this sandbox weigh into those discussions? You know, what's the connection between the work that's going to be done in the sandbox and the ongoing work that's being done around the regulatory framework? I'm not sure, Marjola or Yuji, if you guys have thoughts on that.
00:33:33
Speaker
Yeah, absolutely. And actually, this is in particular also for Helen to comment on, but happy to share my thoughts. I think this whole sandbox and the outcome of the dialogues will be very, very valuable for understanding where the challenges and the solutions are in existing regulations. Probably also,
00:33:58
Speaker
on areas where additional regulation would be helpful, actually, to make the most of all these fantastic blockchain applications. And then it is, of course, the lessons learned and the best practices are also available for EU legislators. So it's there to be used and help going forward.
00:34:25
Speaker
But I must say already the conversation that we are having right now makes it very clear that there is a lot that different stakeholders and different sectors can learn from each other.
00:34:46
Speaker
Absolutely. Helen, I think obviously you're probably on the panel, the one that's sitting most over the regulatory conversation and how the sandbox and the learnings from it will impact regulation going forward. But what are some of your hopes that come out from a learning perspective from the sandbox and impact the regulatory conversation?
00:35:12
Speaker
I mean, since we had this kind of lucky situation that we started with the sandbox at the same time as the Mika regulation went out, we will be able to have this feedback loop between what's happening in the sandbox and the experience there into how Mika is actually working for innovators and blockchain-based companies. So, and of course,
00:35:41
Speaker
Mika is not the end as we have alluded to them in the whole blockchain space is still so innovative and going forward we have areas like DeFi that of course everyone is looking into right now. There are pieces of blockchain technology which is excluded from Mika like NFTs. So there will be possibilities and actually since we have this fantastic intersection of different industries
00:36:08
Speaker
and ways of working with blockchain, we will be able to inform, at least get a very good overview where industry is going in Europe on this and how the existing regulatory framework is, you know, fit for purpose and then be able to feed into those other discussions. And it's not actually not only on sort of follow-up regulation to
00:36:33
Speaker
It could also be informing other areas like data. We are working on a data act for the moment in the EU as well to look into how to unlock all this big amount of data that are in IoT devices and so on.
00:36:51
Speaker
you know, help sharing that in business processes in the industry. So that is also there, I think, that we have seen in those use cases that were selected. That was a very interesting area of regulation for the innovators. And then, of course, we have the AI regulation as well. So all this is sort of linked. And it's true that the US has gone through quite a massive period of putting in place regulation in the last two years. I don't think we ever had such a big
00:37:21
Speaker
let's say production of regulation in data, in digital policies the last year. So it is challenging. We do need to help the ecosystem and the innovators navigate this. And also regulators, I think that we all need to understand the
00:37:42
Speaker
interdependencies of these different regulations. That I think I hope, my hope is that this European blockchain sandbox will be able to help that. Yeah, I think it's a very interesting point and it has been a discussion that we've talked about where
00:37:56
Speaker
innovation seems to be and of course as the nature of innovation is increasing rapidly and we're reaching as you have just said Helena a convergence of multiple various technologies that that suddenly seem to be a very connected it seems to me like in web 2 you had sort of a you know standard issues whether it would be
00:38:22
Speaker
data or perhaps social or various things like that. Whereas in Web3, it seems like there is a whole new set of potential challenges from a regulator's perspective.
00:38:37
Speaker
And, you know, I think that that is one of the very key pieces that seems to me that can come out of the sandbox is to not only inform the current regulation, but also, Helen, as you just mentioned, see where perhaps there are some blind spots or learn about new areas that perhaps just weren't considered because the technology hasn't been fully developed. Is that something that's also a part of the
00:39:05
Speaker
the pathway here for regulators? Yeah, I would hope so. I mean, this is clearly, I think, one of the reasons you would set up a sandbox. And we have seen different sandboxes in national context being set up. But as come back to that, this is the first pan-European one. And the idea is also really to help not have a fragmented regulatory situation.
00:39:36
Speaker
That's why Amika was there. That's why I think we also have other regulations in place to avoid this fragmentation that doesn't help innovators roll out services across a market. So indeed, yeah, indeed it should inform the sort of roadmap of future regulation as well. So we hope this best practices report that comes every year would be,
00:40:05
Speaker
of course make sure that they're as much spread as possible, communicated so that everyone can learn from that.
00:40:14
Speaker
For sure. No, absolutely. Also interesting that at this time, of course, blockchain has been on the table, as you folks know, for a number of years. And now rapidly, of course, the rise of AI. I don't know if it's possible to hold a podcast today and not mention AI at some level. It seems to be a part of every conversation. It seems to be included in all of these things.
00:40:38
Speaker
Certainly especially from a distributed ledger technology seem like there's a great overlap perhaps even in in the merging of those technologies regulating one or the other seems exciting you gee are there are there reasons or benefits.
Benefits for Sandbox Projects
00:40:55
Speaker
for the projects or companies that are joining the sandbox? Could you give us just a sense of what's happening on their side? Are these projects excited about it or are they hesitant about it? Give us a sense of where they're at.
00:41:11
Speaker
So in terms of the benefits that use cases would have in joining this project, I think, so we've gone through quite a massive campaign of talking to many use cases over the past few months, the months before the deadline of the application in mid-April. And there was no shortage of excitement. Let me assure you in terms of wanting to join this sandbox from the use case side. I think the general feeling was that they're very happy
00:41:40
Speaker
to see that this step has been taken at the public level because there was an expectation and a need definitely to have discussions with quote on quote the other side right it's quote on quote because everyone's on the same side.
00:41:56
Speaker
But just the ability to understand better the regulatory landscape, which is one of the big risk factors today in terms of running a blockchain-based business. And then the ability to speak with the people, the practitioners in the regulatory space is just an incredible benefit and very rare. If you're not a large company, having access via lobbyists is just not possible.
00:42:20
Speaker
And so someone in the SME situation would have the chance to speak. The fact that it's free, of course, free legal advice from Bird and Bird, one of the best technology firms in the world, is amazing. And I think as a third point, participation in this sandbox is not a given. It's actually very selective, as we've mentioned before. And so just having this as a green flag to stakeholders, like investors in those blockchain companies,
00:42:48
Speaker
is an amazing signal to send out that the blockchain company is not only focused on technological development, which is important, but also in making sure that they manage the risks of running a blockchain company. And part of those risks involves being authorized and able to run the business in the way that you plan to run it. Yeah, yeah.
00:43:11
Speaker
No, that's great. So we're running right up on our time. Let me just conclude with just one simple question for each of
Panelists' Takeaways and Hopes
00:43:20
Speaker
you. What is sort of the one takeaway that you are sort of personally interested in?
00:43:27
Speaker
Obviously, we talked about some of the larger takeaways and bigger things, but what is something that, on a personal level, you're looking at with curiosity kind of saying, I wonder what we're going to learn about this area. Maybe, Yuji, why don't you go first, and we'll go Marjolin and Helen. Yeah, I'm very curious to understand how the... Let me just rephrase this maybe.
00:43:55
Speaker
how the discussions are going to start between use cases and regulators, and how they will evolve once they better understand each other's perspectives and each other's ways of working. I think there's going to be a big evolution in terms of those who are involved in the projects, and that by the end of the projects, they will understand the language with which they need to speak in order to work productively with the other side. And I think that is already, in a certain sense, an incredible education that we are providing.
00:44:26
Speaker
Marcellin. Yeah, thank you. Thank you very much. Well, first of all, I'm.
00:44:33
Speaker
hugely inspired by the fact that this is such a fantastic European project. What we have seen in this first phase, when preparing the application process, engaging with regulators, is that this is really a joint effort from stakeholders in the European Union and the European Economic Area.
00:44:59
Speaker
And that is a fantastic project to be part of, and then looking at it a bit more from the legal perspective.
00:45:10
Speaker
the fact that we are able to hopefully contribute to regulation that works, that is consistent, that is effective, and that can be applied in an efficient way. Well, that is just a fantastic project to work on. Well, we will work very hard to make that work, actually. Right. No, that's excellent. Helen, how would you answer that?
00:45:39
Speaker
Those are already two excellent outcomes that I would also like to see, but okay, what can I add? I think that we also have a very good snapshot and sample of projects that comes in Europe as well in build on blockchain technology. And I think one of the challenges we've seen before is that it's been so much focused on financial services and we want this larger spread
00:46:05
Speaker
across sectors of utilizing blockchain. I think that this this sandbox can also give us a better overview on how you can use blockchain in different industries and what the challenges of different industries are in the EU. And of course, I have to come back when you just say I think it's a fantastic learning experience for everyone that answers here.
00:46:29
Speaker
Of course, it takes some time, you know, you have to put some effort into it, but you will probably reward it a lot with what you learn or participate.
00:46:39
Speaker
Right, absolutely. Thank you so much for the time and input. We are very excited about this project. Thank you to each of you for the time and effort that you put into helping make this sandbox a reality. Like I said, I think you are truly impacting the course of history, and so it's an amazing thing.
Conclusion and Resources
00:47:02
Speaker
For our listeners, if you are interested in learning more about the Sandbox, please visit blockchain-sandbox.eu to learn more about the project. Yuji, Marjolin, Helen, you have been wonderful guests, full of knowledge. I have one request that at touch points along the way, perhaps we could circle back and learn more and see how this very important project is going. I would love to check in with you folks along the way.
00:47:32
Speaker
We look forward to that in future episodes. Again, thank you so much and hope that you have a wonderful, wonderful day.
00:47:44
Speaker
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