European Commission Gives Bitcoin/Blockchain Startups New Shot in the Arm

Officials of the European Commission (EC) made public a new initiative recently. The goal of the Commission is to assist start-up enterprises present their complete innovation along with the potential to create employment opportunities.

This is known as “Start-up and Scale-up Initiative” and aims to help resourceful entrepreneurs in the Euro Region the chance to turn into major corporations worldwide. The EC observed there is overabundance of novel concepts and entrepreneurial character in the region. Unfortunately, a lot of these start-ups are not able to go through the initial stage. In most cases, these enterprises leave Europe, which has a massive client base of around 500 million, and explore possible markets in under-developed economies.

This year, one European Commissioner Günther Oettinger described how a group of prominent start-up enterprises at CeBIT, the leading international event for digital enterprise in Hannover, Germany. The outcome was The Scale-Up Manifesto. This is a 49-point roadmap based on inimitable insights of numerous European startups and thriving entrepreneurs. The measures are classified into six headlines:

  • Complete the single market
  • Mobilize capital
  • Motivate talent
  • Give power to innovation
  • Develop education
  • Monitor, measure and evaluate

European Single Market

A European Commission executive remarked that local entrepreneurs have the capacity to become international success stories tomorrow. The EC wants to help these people remain and flourish in Europe by teaching them important things. They must know how to cope with regulatory impediments and benefit from the Single Market. It is important to improve access to finances. This is achieved by supporting “private venture capital investment.”

The Single Market indicates the European Union (EU) as a sole territory without international boundaries or regulatory barriers to unhampered flow of commodities and services. A functional Single Market capable of doing the following:

  • Encourage trade and competition
  • Enhance efficiency and quality
  • Help reduce costs

This Market is considered one of the EU’s milestones particularly in the economic sector. It has helped stimulate economic development and helped consumers as well as businesses to become more at ease. The EC formulated a Single Market Strategy that will harness mobility for entrepreneurs; ensure that pioneering business models thrive, make it less difficult for retailers to provide business across border lines; and, promote access to merchandise as well as services within the Union.

What the Initiative Brings?

The idea combines current and new activities. It generates a more consistent framework enabling start-ups to transact business within the region and make money. There is better access to financing and less complicated tax compliance. The Commission will propose insolvency legislation to make it easier for trustworthy business proprietors to have a second chance. There are no apprehensions to be punished for not succeeding in past business undertakings. They will be freed from debt after three years. To sum it up, said Initiative was out together to improve conditions for start-up firms to reach a higher level, produce more jobs and add to the region’s competitiveness.

Primary proposals for the “Start-up and Scale-up Initiative” are the following:

  • Eliminate obstacles for Start-ups to Scale-up in the Single Market.
  • Forge more opportunities for mutual cooperation, skills and trade opportunities.
  • Make possible faster access to funding.

The truth is many start-up companies fail to maximize benefits offered by the Single Market. Starting and promoting a business organization across the continent must become straightforward. The Euro Zone has to become the primary option for innovative business ideas. The EC realizes the full potentials in Blockchain technologies and highlighted its decision to collaborate with the European Supervisory Authorities (ESA), European Central Bank (ECB), member-states, and other relevant entities. The ultimate target is to come up with a synchronized policy approach supporting the progress of the financial technology industry in a suitable regulatory ecosystem.

When it comes to virtual currencies, there is always the risk of crypto-currency transfers being utilized by terrorist and rebel groups to hide their financial actions. The good news is digital currencies enable full monitoring of transactions provided implements like mixers are not employed. That is why government authorities must be give access to important information such as identities to avert funding of terrorists or money laundering. The European Commission has recommended amendments or changes to the Fourth Anti-Money Laundering (AML) Directive. It will not propose measures about Blockchain. However, the Agency will address certain key players identified as business corporations offering targeted services. These are not software apps, codes or apps providers.

With regards to suggested amendments for AML, any new legislation will see virtual currency exchanges and wallets come under scrutiny of the AML and KYC or Know your Customer policies. These new statutes may be reinforced further to compel users of virtual currencies to identify themselves of their own accord. The policies will surely impact different Bitcoin platforms that offer prepaid cards since these are also governed by new revisions.

Diagnosis and Remedy

The “Start-up and Scale-up Initiative” includes positive components and other concerns of lesser impact. It aims at identifying issues and finding appropriate remedies. Focus of the EC is to ascertain proper functions of the Single Market. It is a package consisting of ongoing and projected measures plus new ideas.

Among these are Pan-European Venture Capital Fund of Funds which can leverage equity for pioneering; high-growth Small and Medium Enterprises (SMEs) and the EC’s intent to expand the program called “Erasmus for Young Entrepreneurs”. The significant contribution of the EU is to help these enterprises scale up. This “main thing” must remain as priority for the European Commission.

Meanwhile, national and regional policy-makers should enact more specific measures so the appropriate bionetwork is fixed. During the European Parliament for Enterprises last month, 87 percent of entrepreneurs were unanimous in declaring the Single Market has not been fully integrated for their enterprises to transact business and compete without restraint.

Blockchain Platform Regulation

Through a vote, Members of the EU Parliament decided not to interfere with the regulation of Blockchain. Following this decision, EC personnel are working to figure out digital currencies’ distributed ledger platform. This is roughly seven years after Bitcoin was launched. Venture capital investments reached over €1 billion.

The MPs voted based on a proposal prepared by Jakob von Weizsäcker. It proposed a new task group to be supervised by the European Commission. It needs to acquire expertise in the fundamental technology crypto-currencies. The proposal was passed by 542 votes to 51 and 11 abstentions. It will be forwarded to the EC.

The proposition explains without a doubt that distributed ledger technology must not be suppressed by regulations at a very early stage. The new group is tasked to suggest necessary laws. However, caution was issued against implementing an oppressive approach to this new technology. It says there can be meaningful opportunities for consumers and economic growth. There should be preventative monitoring instead of preventive regulations to refrain from holding back innovation.

Nonetheless, modernization in Information Technology spreads quite fast. It can become universal so the EC needs to set up this team to monitor the evolution of said platform. The group is expected to come up with prompt proposals for specific controls if this becomes necessary.

The report does not promote the suppression of any innovation through regulation. On the contrary, it should be careful monitoring of progress. The body must be at the level of the European Commission. Regulation must be made only when it is time to do so and once all structures are in position. It does not imply that nothing should be done at the moment. For example, it will be practical to apply the Anti-Money Laundering Directive right away for digital currencies like the Bitcoin.

Crypto-Currency Watchdog

At present, the European Parliament and European Central Bank do not see eye to eye about Bitcoin matters. The ECB does not see any risk in the pipeline with regards to virtual currencies provided the volume is stable and usage is not widespread. On the other hand, MPs prefer to create a watchdog for these currencies immediately. The supervisory body will be tasked to keep track of possible distrustful activities or illicit moves.

It may be a plain proposal but it will definitely set the tone for what will happen to the Blockchain and Bitcoin in the Euro Region eventually. This may not be favorable for the technology and currency. Still, efforts by Parliament will not really alter the fact that Bitcoin cannot be regulated. The proposals will simply affect start-ups.

For its part, the EU is not in a rush to introduce regulations for Bitcoin within the entire region. This provides a relief for all stakeholders in said industry. Bitcoin along with its core technology has been gaining headway recently as the international banking sector expressed its interest in Bitcoin.

The “Start-up and Scale-up Initiative” of the EC is fast getting the attention of the international community. There will certainly be many supporters and detractors as well. However, players in the Blockchain and Bitcoin marketplace particularly in Europe stand to benefit from this move. Expect a lot of developments within the next few months.

Source: Read Full Article

Leave a Reply