The EU is leading the Blockchain race!
Blockchain startup Billon Group received almost two million euros from Horizon 2020, the EU’s biggest research and innovation program. The blockchain company announced the successful closing of its first round of funding. The new injection brings total funding for the company to $5 million. The company plans to use the money to expand its blockchain technology beyond instant corporate payments, support the launch of e-commerce and content monetization solutions, and provide additional investment in sales, marketing, compliance and operation. Billon Group disrupts fundaments behind money, changing the way its stored and moved between people and organizations. They have created an instant payments system based on distributed ledger technology that supports all national currencies. Their platform is compliant with financial regulations, eliminating time and distance barriers.
The 2016 Global Payment Report by Worldpay, shows that alternative payment systems are increasing in popularity in various markets around the world. Also, eMarketer reports that retail e-commerce sales are expected to grow from $1.915 trillion in 2016 to $4.058 trillion in 2020.
EU’s investment in Billon makes sense. It as allows users to send money to people and organizations in real-time, capitalizing on the opportunities presented by these increasing trends.
Blockchain and distributed ledger technology has been one of the main topics the European Union has focused on, over the past year. Despite uneasiness with cryptocurrencies, the EU has a positive outlook on blockchain and digital ledgers, pursuing several initiatives.
A year ago, in July 2016, the European Commission adopted a proposal for legislation to amend the 4th Anti-Money Laundering Directive (4AMLD) that will bring virtual currency exchanges and wallet providers into the EU’s anti-money laundering framework.
In February, the EU released an in-depth analysis that stated regulation could provide innovators with guidance as they develop the digital ledger technology in the EU. The analysis acknowledged the increased risks from virtual currencies, but called for a moderate regulatory approach in order not to hamper innovation at such an early stage. The analysis also set forth a list of key areas currently associated with blockchain technology, such as currencies, digital rights management, patents, e-voting, smart contracts, and supply chains. Its also suggested that the European Union expects more member states to face questions regarding blockchain and digital ledgers, beyond Germany, UK, and Estonia, where blockchain technology is gaining traction.
Last year, the EU Commission announced an initiative to give as many of Europe’s fintech and blockchain entrepreneurs the opportunity to become world leaders, giving them access to potential investors, business partners, research centers and universities.
Horizon 2020 is part of EU’s overall blockchain strategy. Horizon 2020 is the largest EU Research and Innovation program ever, with nearly €80 billion of funding available over 7 years (2014 to 2020). The goal of the program is to ensure that Europe produces world-class technology, removes barriers to innovation and makes it easier for the public and private sectors in creating innovation. An option offered within Horizon 2020 is the possibility for SMEs to apply without project partners. The grant can cover from 70% to 100% of the project costs and can amount to as much as €2.5–5 million for each project. In July, Horizon 2020 announced that it selected from 16 countries 64 SMEs for funding. It will be investing €97 million, to help these small businesses bring their innovations to the market.
Also, back in April the European Commission announced its plans to establish a European Union Blockchain Observatory, in response to a European Parliament mandate to strengthen technical expertise and regulatory capacity. The project, that was announced on the Commission’s website, includes an observatory and a forum to gather input on distributed ledger and blockchain technology. The goal is to establish an EU expert resource for forward-looking blockchain topics and develop EU use cases. Another goal of the initiative is to assist the EC in determining what role government authorities can play to encourage the creation of such technologies and to develop policy recommendations.
Also, the ECB has been on the lookout for ways to improve the efficiency and lower the costs of its market infrastructure, in the fields of payment transfers, securities settlement and collateral management. Last year the Eurosystem, which comprises the ECB and the national central banks of the euro area, launched a central bank service called TARGET2-Securities (T2S). Just like DLT, it is expected to be a game changer. T2S aims to change the European post-trade landscape, not only by offering an integrated settlement service in central bank money for securities transactions, but also to bring post-trade harmonization beyond what has been seen before. Together with TARGET2, the Eurosystem’s cash transfer system, T2S forms the cornerstone of financial markets in Europe.
In June, the EU’s Financial Technology Task Force requested feedback from stakeholders on how technology like blockchain and DLT will impact the European financial services industry.
In addition, the European Securities Market Authority (ESMA) stated that it would closely monitor EU market activity related to DLT. ESMA recently released a consultation document on the DLT applied to securities markets, reviewing its possible applications, benefits, risks and how it maps to existing EU regulation. ESMA’s position is that regulatory action is premature, as technology is still in early stage of development. ESMA believes that DLT could benefit small-to-medium enterprises (SMEs) by enabling the issuance of securities by the firms. SMEs could potentially reduce the cost of access to finance. In addition, the regulator stated that DLT could potentially remove the need for duplicate records and multiple reconciliations by providing a “record of ownership of unlisted securities.
A few weeks ago, the European Commission announced the launch of its #Blockchain4EU. The project, plans to take a look at how blockchain technology and other distributed ledger technologies can be applied to non-financial sectors.
The EU has been taking important steps to become one of the leading economic blocks in the blockchain race. The EU’s strategy to invest on blockchain could just prove to be one of its best initiatives it has taken, in a long time.
