So close, yet so far: Crypto comes to Brussels

While the European Union remain largely oblivious to blockchain technology, despite its potential to plug gaps in the bloc’s digital ambitions, a large-scale crypto conference took place in Brussels last week, the first of its kind.

The EthCC conference saw some 5,000 crypto and blockchain developers congregate just a stone’s throw from the European quarter. It came at a time when the EU is enforcing its new digital rulebook to break the monopolies of tech companies like X, Apple, and Amazon and mitigate their negative consequences.

Proponents say that many of the solutions offered by crypto and blockchain – the technology that underpins it- can solve the problems the EU is grappling with.

“I don’t know how many people are aware of how supportive blockchain can be for regulatory solutions,” said Nena Dukozov, coordinator of the strategy of digital transformation of the economy at Slovenia’s Ministry of the Economy, Tourism and Sport, said at a side event.

In addition to reigning in Big Tech, blockchain technology could, in theory, authenticate content and identities online while simultaneously preserving privacy and implementing data ownership.

While crypto is usually associated with cryptocurrencies like Bitcoin, it also refers to the underlying blockchain technology, which can create decentralised solutions, the opposite of monopolistic big tech companies.

Blockchain enables transparency, privacy and identity management, essentially taking “control from Big Tech” and “giving it back to the citizens,” said Robert Kopitsch, secretary general of Blockchain for Europe, a Brussels lobby group. 

Little progress in the Commission

While the European Commission has been working on building blockchain infrastructure for the last six years, there has been little progress, and only a few use cases have been developed, such as digital wallets and tracking of educational diplomas.

The Commission’s infrastructure remains unfinished, and while it has 20 separate “nodes,” “these nodes need to be interconnected”, Fabrizia Benini, head of the Next-Generation Internet unit at the Commission’s DG CNECT, told a panel at the event last week.

This project is also less decentralised than what the conference attendees are aiming for in their own projects, based on a review of its technical details.

Except for this project, awareness of and activity around blockchain technology within the EU institutions is limited and only a couple of officials are involved in conversations around full-blown decentralisation, otherwise known as Web3, several people with knowledge of the matter told Euractiv on condition of anonymity.

The chasm 

As for why the EU is not enthusiastic about blockchain, some say it’s because most policy attention has been on using it as a financial tool.

The crypto finance space is even getting regulated through the Markets in Crypto-Assets (MiCA) regulation, some parts of which became effective on June 30. 

However, the use cases discussed at EthCC and across the crypto space go beyond financial. On tokenisation, if “you look at it only from a financial services perspective, then you miss out on 90% of the use cases,” said Kopitsch.

Tokenisation is the process of creating digital representations that can then be traded or exchanged.  

The Directorate-General on Financial Stability, Financial Services and Capital Markets Union issued a tender last week on legal frameworks and obstacles for asset tokenisation in member states.

Kopitsch says one reason for the lack of attention to crypto from many EU officials is that “the governance model is not as they like it.” 

Where the EU is attempting to hold technology companies accountable through centralised power, blockchain is about decentralisation, aiming to make centralised authority obsolete, he added.

Dukozov said the solutions “need to be communicated […] on the right line and in a positive way, not only through negative use cases”.   

The blockchain infrastructure Benini is working on does foresee use cases away from finance, but these appear to be far from realisation or considered a solution within other policy circles.  

Blockchain for Europe is trying to change that, approaching MEPs to discuss non-financial use cases of the technology.

“Over time, and especially with the turnover [in the next European Parliament] being 50% of MEPs, we’ll see a broadened approach towards this topic that we haven’t had before, as the focus until now was nearly solely financial,” particularly as the EU pushes towards competitiveness, said Kopitsch.

[Edited by Eliza Gkritsi/Alice Taylor]

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