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Europeum: A blockchain network for the EU

blockchain  Frankfurt, Germany - April 24, 2022: Euro sign sculpture in a park among modern office towers in Frankfurt and Ukrainian flag- Ukraine and Europe concept
The EU needs to develop its own blockchain, according to Belgian digital minister Mathieu Michel. Photo: Getty (Marina113 via Getty Images)

The EU needs its own blockchain for digital payments and smart contracts that would rival existing networks such as Ethereum, says Belgian digital minister Mathieu Michel.

The bloc plans to introduce landmark regulatory framework for cryptocurrencies and digital assets in April.

If the EU's Markets in Crypto Assets (MiCA) legislation is accepted in next month's vote, it will see the world's first multi-national regulatory framework for crypto and digital assets.

The bloc now needs to develop its own blockchain that would be able to record property ownership, driving licenses and professional qualifications, according to Michel.

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The scheme would take blockchain use cases into Gov-tech, public services and supply-chain management for the first time.

Michel has dubbed the conceptualised EU-wide blockchain, “Europeum”.

Michel told Coindesk that if MiCA is ratified, then the EU needs “a blockchain network constructed around the foundational values that underpin European society".

European Commission President Ursula von der Leyen gives a statement on Ukraine at the EU headquarters in Brussels, Belgium, January 24, 2022. John Thys/Pool via REUTERS
European Commission president Ursula von der Leyen. Photo: John Thys/Pool via Reuters (POOL New / reuters)

He said: “Imagine you have Europeum, a blockchain that contains a whole series of conditions for protecting private life and so on, which are very transparent".

He added that the blockchain could focus on the digitising of administrative documents or on-chain storage

However, questions have arisen over whether the EU would get adequately qualified developers to build a robust enough blockchain to handle all of the functions that the Belgian digital minister has conceptualised.

"At the moment there are not a vast horde of blockchain developers sitting out there waiting for something interesting to work on.

"Furthermore, the market price for such developers is actually quite high", blockchain researcher Dr Keir Finlow-Bates told Yahoo Finance.

Bates, who is an EU-based blockchain consultant and founder of Chainfrog, pointed to the Bank of England's recent job posting for a specialist to develop the UK's Central Bank Digital Currency as an example of public sector initiatives being much less attractive to developers than private sector alternatives.

He said the job posting detailed "a laughable yearly salary of £65,000, which would not get you anybody of any kind of calibre".

"You can imagine if the EU was to build their own blockchain they would be looking for a very specific set of developers, whose salary would be very costly.

"But if they use a standard government tendering system, they would end up bringing in a very sub par set of contractors to develop the system for them, and there would be problems with this as it would result in an inadequate system".

He advised that building the EU's blockchain on top of existing networks makes more sense as that is where the experts are available and the systems have been tested.

Instead of inventing its own blockchain, "the EU could piggy back on top of the existing blockchains", he added.

He added that any EU-developed blockchain would be a fairly centralised network, when compared to existing ones such as Ethereum or Cardano.

"Each country in the EU could run their own node, but I don't think the bloc has the mindset to be able to consider the idea of individual citizens participating in the maintenance of such as system.

"I would imagine that they will end up building a blockchain in a highly bureaucratic manner, which I think will have problems", he added.of educational qualification that could be recognised by all institutions across the bloc.

What is MiCA?

The EU is set to vote on the proposed Markets in Crypto Assets (MiCA) law in April, which if ratified will create a common licensing regime for crypto wallets and exchanges operating in all 27 members of the bloc.

European legislators have already agreed upon the law in principle, but the almost 400-page text needs to be formally signed off by the lawmakers and national governments that make up the EU's Governing Council.

The planned legislation was introduced by the European Commission in September 2020 as part of the broader Digital Finance Package, and is meant to foster innovation, enhance consumer protection, and contribute to financial stability as the digital asset market expands.

Read more: Bank of England official hails digital pound as 'new frontier' of money

The key components of the planned MiCA regulation include:

Classification of crypto assets

MiCA establishes a clear definition and classification of various types of crypto assets, such as utility tokens, asset-referenced tokens, and e-money tokens.

This classification helps in determining the appropriate regulatory treatment for each type of token.

Issuance and trading

The proposal sets out rules for the issuance and trading of crypto assets. Issuers are required to publish a detailed whitepaper containing information about the project, the token, and the risks involved.

They must also register with the any appropriate national authorities.

Licensing requirements

Crypto-asset service providers (CASPs), such as wallet providers, exchanges, and custodians, are required to obtain authorisation from their respective national authorities to operate within the EU.

This ensures that these entities adhere to EU-based anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, as well as other operational and organisational standards.

Market abuse and transparency

MiCA introduces rules to prevent market abuse and manipulation, such as insider trading and front-running.

It also mandates transparency and disclosure requirements for issuers and CASPs to foster trust and confidence in this burgeoning market.

Consumer and investor protection

The proposal introduces safeguards, such as a requirement for issuers to segregate customer assets, mandatory insurance or similar guarantees for CASPs, and clear communication of risks associated with crypto assets.

Supervision and enforcement

MiCA establishes a harmonised approach to the supervision and enforcement of crypto-asset markets across the EU. This includes cooperation among national authorities and the creation of a single rulebook to ensure consistency in the application of regulations.

Mathieu Michel did not immediately respond to a Yahoo Finance UK request for comment.

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