European Commission report says public permissionless blockchains represent a promising alternative to permissioned platforms.
The European Commission has released a report exploring the potential of public permissionless blockchains to enhance traditional financial services.
The report underscores the key advantages of an open base layer, including transparency, inclusivity, and increased competition, while addressing critical challenges such as scalability, privacy, transaction sequencing, settlement finality, and governance.
The report provides an overview of proposed solutions to these challenges, drawing on insights from academic research and open-source development. It also presents a series of questions to assess a blockchain’s operational robustness and resilience, focusing on neutrality, liveness, recoverability, scalability, and transaction fees.
The analysis concludes that public permissionless blockchains represent a promising alternative to permissioned platforms, reducing dependencies on centralised intermediaries and mitigating monopolistic tendencies at the platform level.
It highlights that compliance and regulatory requirements do not necessarily require centralised gatekeeper or base-layer enforcement but can instead be implemented higher up on the technology stack, allowing for more flexible and activity-based regulation tailored to different asset classes and applications.
The report underscores the importance of continued interdisciplinary research and transparency among stakeholders to navigate inherent trade-offs and fully realise the potential of permissionless blockchain technology.
It acknowledges that challenges exist but encourages a balanced and unbiased approach to comparing decentralised alternatives with centralised solutions.
Finally, the report discusses the policy implications and potential regulatory treatment of public permissionless blockchains, suggesting that initial experimentation should be conducted with caution and on a small scale.
It also addresses the importance of recognising decentralisation as a useful policy tool and considering the potential advantages of such systems in fostering innovation and competition.
The full report is published here.