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EU Commission’s Head Of Blockchain Shares His Views On DLTs

April 10, 2020

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EU Commission’s Head Of Blockchain Shares His Views On DLTs

Pēteris Zilgalvis, the EU Commission’s new head of digital innovation and blockchain, submitted his views on distributed ledger technology during an interview with Financial Times’ subsidiary “The Banker”, published yesterday. 

In a nutshell, Zilgalvis stated that although blockchain technology might not be a Mida’s hand for everything, it is extremely potent in specific scenarios that include fast, secure, and accurate information exchange on the digital domain. 

“While we don’t believe it is the solution for everything, distributed ledger technology [DLT] is proving useful in such applications as audit documentation certification, diploma certification, self-sovereign identity and regulatory reporting, where it is shown to be 30% to 80% more efficient.”Peteris Zilgavlis, EUC’s head of blockckhain said to The Banker.

Furthermore, he mentioned the European Blockchain Services Infrastructure (EBSI), which is basically a decentralized ledger shared among centralized governments, more specifically the 27 EU member states, including Norway and Liechtenstein. 

He believes that in this scenario blockchain will enable a data-sharing infrastructure previously impossible. Instead of storing all the data in a single database, each countries respective data are stored domestically, while they are published and shared with the rest of the network in a DLT fashion. 

At the same time, Zilgavlis underlines the importance of blockchain infrastructure in traditional financial institutions in order to fight money laundering, which is surprisingly positive for the blockchain community that was created upon that specific “upgrade”. 

Read More: Deribit Flees EU Under New Anti-Money Laundering Regulations

In addition, being able to carry identification attributes in a cross-border fashion is also one of the suitable use-cases the head of blockchain of the European Commission sees fit for a state-level utility. 

The interview continues analyzing how blockchain could be used in AML (anti-money-laundering) operations, and if you’re still struggling with the concept, you might as well read this or this article to get an in-depth idea. 

What was the most interesting part of the intel exchange between Pēteris Zilgalvis and The Banker tho, for me, was his approach on CBDCs, and whether Europe should be considering a digital currency on its own. 

“Currently, there’s a public consultation open on digital assets that will look at the classifications of, for example, investment tokens, payment tokens and utility tokens, among other things. If something is done to change the way e-money is regulated or the development of a specific regulation for cryptocurrencies, this will be very much done in a ‘pro-innovation’ spirit to allow initiatives that are not fraudulent to flourish in Europe, while perhaps getting some legal certainty at the same time.”

What I get from this, is again, a Europe that’s not really behind the global developments in the sector, but one that is frightened to take the first step towards the blockchain era. 

The EU is one of the most advanced world regions when it comes to blockchain understanding and regulations, yet it tends to make assessments, diplomatic analysis, and regulate foreign attempts on the matter, instead of paving the way on its own accord.

Read More: ECB Announces Proof-of-Concept for EUROchain Distributed Ledger

That could be a double-edged blade, as the EU could be waiting to learn from the flaws other countries will encounter and instantly create a patch and its own ‘better’ blockchain afterward, or it could be left far behind when China finally releases its CBDC when private tech-giants such as Facebook get Libra loose, or when public cryptos like Bitcoin (BTC) would be the choice of the many.

In any case, Zilgalvis was confident about Europe’s current status and stance when it comes to DLTs, and even reassured us that Bitcoin is not regulated, because it is not considered a threat.    

“We haven’t made any moves to prohibit anything, which stands against the stereotype of ‘if it moves, Europe regulates it’. We’ve been aware of Bitcoin and the like since at least 2012 and have been looking at them in detail. Nothing has been done at a regulatory level, except for things that apply to any kind of currency, such as AML and anti-fraud requirements.”

Should we be considering a CBDC in Europe or not, with all that’s happening, I really can’t tell. I believe that the EU has well comprehended the importance of DLTs in the gov, private, and public sectors altogether and tries to be the one who labels, and regulates matters regarding the subject, no matter what blockchain-creators whether private entities, public organizations or central banks, might be experimenting with. 

Nevertheless, we shouldn’t forget that Zilgalvis is the top hat when it comes to blockchain in the EU, and still, he’s not fully convinced either. 

If we dig inside the EU Pyramid from downwards, we can find political figures such as Bruno Le Mair, and Yves Mersch who characterized CBDCs and private digital currencies such as Libra as ‘cartel-like operations’, insisting that they should be banned before ever entering European soil. 

Now if that’s not a cocky, diplomatic, fancy-suit-spelled expression against the adoption of digital economic models, they might just really hate Facebook.