The European Blockchain Sandbox for innovative use cases involving Distributed Ledger Technologies (DLT) is an initiative of the European Commission. The aim of the project is to provide a framework for regulators, supervising authorities and blockchain innovators to engage in regulatory dialogue, identify obstacles from a legal & regulatory perspective in a safe and confidential environment, and thus increase legal certainty for innovative decentralized technology solutions, including blockchain. The Sandbox will allow regulators and supervisors to enhance their knowledge of cutting edge blockchain technologies. Legal advice will be provided and regulatory experience and guidance will be contributed in a safe and confidential environment. The dialogues will be held across industry sectors and geographic regions, which will help to identify and exchange best practices in the interest of the wider EU/EEA blockchain community. The best practices reports will identify regulatory and legal issues and solutions with a focus of sharing insights and lessons learned across sectors.

The initiative will annually support 20 projects starting in 2023 and is open to use cases based on any blockchain infrastructure. Blockchain use cases will be selected on the basis of the maturity of their business case, legal/regulatory relevance and their contribution to the EU’s wider policy priorities and matched with national and EU regulators. Further information about the selection criteria and the application process can be found on the website. Companies (including start-ups and scale-ups) and public entities with a validated proof of concept are invited to participate. Every year, the most innovative regulator participating in the Sandbox will be awarded a prize.

This pan-European Blockchain regulatory sandbox is set up and operated by a consortium of legal experts from the law firm Bird & Bird and its consulting arm OXYGY supported by blockchain experts of WBNoDE which has been procured through an open call for tenders in 2022. The selection and the award process will be overseen by a panel of independent academics consisting of Professor Roman Beck (IT-University, Copenhagen), Professor Soulla Louca (University of Nicosia, Cyprus) and Professor Walter Blocher (Universities of Kassel and Vienna).

Companies (including start-ups and scale-ups) and public entities with a validated proof of concept can apply. EEA-based companies can operate in a consortium with non-EEA companies provided that the beneficiary project in the Sandbox is under the lead of an EEA-based company. The Sandbox is open to use cases based on any blockchain infrastructure. The applicant must have been a legal person for at least six (6) months either as: i) a legal entity registered in the professional or commercial register according to the rules of the EEA Member State where it is established, or ii) a public body established in one of the EEA Member States. The applicant should submit a validated proof of concept for a blockchain/DLT application (e.g. case studies, financial information, results document, press release, which can be strengthened by a proof of an EU funding decision, an EU Seal of Excellence, or 1st place award in an EU competition in the last 5 years). In addition, the applicant should submit the application form that is available online in English. The application form should be complete, accurate and up to date.

Use cases that fulfil these eligibility criteria will be selected on the basis of the maturity of the business case, legal/regulatory relevance and their contribution to the EU’s wider policy priorities. Further information about the selection criteria and the application process can be found on the website. Only one application may be made per applicant.

A company may apply as part of a consortium, association, or group of companies with a shared use case. If applying on behalf of a consortium, the applicant must have permission to submit on behalf of the group.

The regulatory Sandbox aims to provide legal certainty through facilitating regulatory dialogue and cooperation between innovators and regulators at the national and the EU level. Blockchain companies participating in the Sandbox have the opportunity to demonstrate their innovative solutions and highlight their needs regarding regulatory guidance and legal certainty to regulators and supervisors in a safe and confidential environment. They will receive legal advice from legal experts and be part of a constructive dialogue with national and EU regulators. Also, they will be able to develop their regulatory understanding and extend their network and reputation through their participation in this pan-European project. No fee will be charged for the application and participation in the Sandbox but there will not be reimbursement of costs.

National regulators and supervising authorities will be able to discuss regulatory issues that have arisen on a national level in a cross border setting with other EU and national regulators making use of the pan-European Sandbox framework that is established for this project. Regulators have the chance to support applications of use-cases for the Sandbox that they find particularly relevant for a regulatory dialogue. Further details about the support that regulators can give are included in the Selection Criteria that are published on the website: here. Participating regulators and supervising authorities will have an opportunity to contribute to the development of best practices and lessons learned which can be shared between them. Moreover, regulators will be able to cooperate and exchange experiences and insights with other national and EU regulators participating in the Sandbox for a specific use case. In addition, the Sandbox will allow regulators and supervising bodies to enhance their knowledge of cutting edge technologies involving blockchain and distributed ledger technologies. The best practices reports will identify regulatory and legal issues and solutions with a focus on fostering mutual learning across sectors. The best practice reports will be prominently published, highlighting the contributions of the participating regulators and supervisors. Each year there will be an award for the most innovative regulator.

The application process and operation of the Sandbox will be organised in a streamlined manner. Selected use cases will be provided with legal advice in the form of a first written legal assessment, identifying applicable EU and national laws and pointing to areas where particular regulatory questions may arise. Two Sandbox meetings will be organised per use case with the selected use case owner and the participating national and EU regulators/supervisors. Bird & Bird legal experts will participate at the meetings to provide legal advice also on the basis of questions that can be submitted in advance. The meetings will be held virtually and minutes will be prepared during the meetings. All documents that are exchanged or prepared as part of the meetings will only be accessible for the participants safeguarding confidential information. Further details about the operation of the Sandbox are given in the Protocol for Participation that is published on the website: here. The use case owner and the regulator(s) are requested to submit the feedback form at the end of the Sandbox operations.