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Blockchain and Distributed Digital Ledger Technologies (RP2023)

(A.) Policy and legislation

(A.1) Policy objectives

Blockchain has great potential in providing an infrastructure for trusted, decentralised and disintermediated services beyond the financial sector. 

While the FinTech industry has been an early adopter because of its early use case of Bitcoin, blockchain is benefiting and has the potential to transform many other industries. It is considered a foundational technology that some compare to the rise of the Internet in the early 90s. More than a technology, it could lead to a major institutional innovation by redefining the way we operate transactions, store and access information and share data (e.g. empowering patients to securely share e-health records and decide who to grant access to their data).

Many possible applications are being envisaged to deliver efficiency, immutability and transparency to the financial services industry, Fintech/Suptech actors, trust funds (e.g., for development or humanitarian programmes), eHealth, education, eGovernment,  public registries, security certification of Internet of Things, Trusted Artificial Intelligence, food safety, managing intellectual property rights, extending eIDAS framework for eID management, etc. 

It has also great potential for the private sector, in trading, contracting, supply chain management, traceability along industrial supply chains (e.g. on social & environmental conditions of work, on material composition or on the maintenance history of the item) and much more. It may also transform the governance of private organisations and of companies (concept of Decentralised Autonomous Organisation - DAO). Furthermore, from a regulatory and supervisory point of view, it could provide regulators with the same view into the data as the companies they are regulating, thereby reducing fraud and compliance costs and facilitating auditing. However, this process is hindered by a lack of coherent harmonisation and interoperability that constitute obstacles to cross-border and cross-sector transactions. European citizens, SMEs, Industry, Public sector and other relevant stakeholders need to support innovation within a safe and future-proof technological and regulatory environment, ensuring appropriate interoperability, transparency, accessibility, monitoring and governance. Provisions should be taken at all stages to be in line with General Data Protection Regulation (GDPR), electronic IDentification, Authentication, and Trust Services Regulation (eIDAS), the ePrivacy Directive, Anti-Money Laundering Directive (AMLD) and other relevant legal requirements.

In the context of the European Digital Single Market where the amount of online transactions and data is exploding, setting the right conditions for the advent of an open, trustworthy, transparent, compliant and authenticated transaction system is a real challenge for the EU. Existing decentralised environments lack trust, accountability, interoperability, regulatory certainty and mature governance models to interact among themselves and also with centralised systems.

On 24 September 2020, the European Commission presented a proposal for the Regulation of Markets in Crypto-assets (MiCA) as a part of its “Digital Finance package”, which will provide a legal framework for issuers of crypto-assets that are currently not regulated by EU financial services legislation and providers of related services. At the same time, it proposed a Regulation on a pilot regime for market infrastructures based on distributed ledger technology, which was published in June 2022.

On June 3rd 2021 the European Commission has published a proposal (COM/2021/281 final) for a Regulation “amending Regulation (EU) No 910/2014 as regards establishing a framework for a European Digital Identity" (eIDAS2) that introduces a new trust service for electronic ledgers, and the European Digital Identity (EUDI) Wallet, identification means for European physical and legal persons based on Self Sovereign Identity principles.

Furthermore, 23 February 2022 the European Commission has presented a proposal for the Data Act Regulation (COM(2022) 68 final) with the aim to harmonise rules on fair access to and use of data, which, among other provisions, includes essential requirements regarding smart-contracts for data sharing.

(A.2) EC perspective and progress report

In order to engage in and contribute to the development of the needed standards, starting from September 2017, the Commission is organising workshops on blockchain standardisation and follows up on the standardisation activities related to Blockchain and Distributed Ledger Technologies carried out by the different SDOs, such as ISO, ITU-T, ETSI or CEN & CENELEC. These workshops bring together standards development organisations, fora and consortia active in international Blockchain/DLT standardisation, as well as key stakeholders, and representatives of PPPs like INATBA and deployment initiatives like the EBP.  

On 17 June 2020 the European Commission and INATBA organised “Joining Forces for Blockchain Standardisation” webinar to encourage collaboration and cohesion in ongoing standardisation activities and prevent the emergence of conflicting standards. This webinar has been well received by the blockchain standardisation community, it brought together global blockchain standardisation experts together to discuss advances in standardisation of Identity, Interoperability, Governance, Smart Contracts. During this webinar the European Commission has run a survey to identify the most critical areas of blockchain standardisation where more cohesion is needed. Results were that “interoperability” would benefit the most, followed by “identity”, “smart contracts”, “governance” and “security”.

The second iteration of this event took place on 9 December 2021, giving an overview of ongoing standardisation activities and at the concluding panel encouraging standardisation experts to collaborate on several topics such as interoperability, safety and stability, localisation of conformity in the different regions, inclusivity, governance. In addition, the need for incentives and public support for the participation of relevant experts and under-represented stakeholders has been recognised. Future plans would be to continue with thematic discussions related to Smart Contracts, Identity, Governance, Interoperability and CBDC/crypto assets which i.e. could take place as part of the upcoming Convergence event to be organised by INATBA in 2022.

To bring together Horizon 2020 and blockchain standardisation communities the European Commission and INATBA has set up a set of roundtable discussions “ICT Verticals and Horizontals for Blockchain Standardisation”. These roundtables took place During the second half of 2020 and the start of 2021 within the following theme groups:

  • Fintech, Digital Assets and Smart Grids
  • Digital Society, Identity and Privacy
  • Digital Economy, SME's, Industry and Supply chains
  • Cybersecurity
  • IoT
  • eHealth
  • Future Internet, Media and Big data
  • Sustainable Development Goals
  • Smart-Contracts
  • Artificial Intelligence

More than 70 Horizon 2020 projects have participated as well as standardisation experts of ISO, CEN & CENELEC, ETSI, ITU-T, IEEE, W3C and IETF. 

The European Commission supports the EU Blockchain Observatory and Forum for gathering experts from Europe and beyond, to monitor, debate and report on trends and evolution of blockchain and DLT technologies and the innovation introduced by them. This includes their use in combination with other technologies, their applications, their adoption in different sectors or markets, and regulatory implications. Workshops and reports provided by the EU Blockchain Observatory and Forum aims to help European stakeholders to appraise, support and deploy blockchain-based services in Europe. 

Horizon Europe and InvestEU programmes by the European Commission support collaborative research and innovation projects, as well as some funding being allocated to standardisation via projects such as Stand-ICT.eu and Standardisation Booster. The Digital Europe Programme supports the European Blockchain Services Infrastructure (EBSI), the EU blockchain regulatory sandbox and also has some foreseen some for blockchain and DLT standardisation.

(A.3) References

(B.) Requested actions

Action 1: The standardisation community should continue analysing possible standardisation gaps and reflect on best way to fill them. Activities may focus on governance and interoperability, organisational frameworks and methodologies, processes and products evaluation schemes, Blockchain and distributed ledger guidelines, smart technologies, objects, distributed computing devices and data services.

Action 2: Regularly update the white paper on the EU perspective on blockchain/DLT standardisation.

Action 3: Continue identifying use cases which are relevant for EU (including EU regulatory requirements like from GDPR, ePrivacy, eIDAS, AMLD, TOOP, etc..) and submit them to relevant standardisation bodies, including CEN & CENELEC and ETSI, and also ISO, ITU

Action 4: Continue identification of actual blockchain/DLT implementations in the EU and assess the need for standardisation, harmonisation and workforce training or adaptation.

Action 5: Standardisation of the operation and reference implementation of permissioned distributed ledgers and distributed applications, with the purpose of creating an open ecosystem of industrial interoperable solutions.

Action 6: Standards Development Organisations active in blockchain/DLT standardisation to liaise and coordinate to take advantage of synergies and maximise resources, including with relevant public and private partnerships

Action 7: ESOs to develop standards in line with the Data Act legislative proposal, in particular regarding essential requirements for smart-contracts. In addition, it would be recommended to explore a general framework for Governance of the European networks based on DLT to allow the flow of smart contracts between different networks.

Action 8: ESOs to develop the standards needed for the introduction of Digital Euro (CBDC) and token economy (upcoming MiCA Regulation), in particular to ensure interoperability with smart-contracts, legacy systems, etc. The revised legislative proposal of MiCA regulation introduces links with the EU Sustainable Finance taxonomy, thus activities towards assessing CO2 footprint of different blockchains/DLTs are very welcome. 

Action 9: SDOs to develop standards to support the eIDAS2 proposal requirements related to Electronic Ledgers.

Action 10: Standardisation efforts to analyze and if needed, enhance the interoperability and international compatibility of the current and pending EBSI topics and capabilities previously mentioned.

(C.) Activities and additional information 

(C.1) Related standardisation activities
ISO

ISO/TC 307:  Blockchain and distributed ledger technologies has wide global outreach and involves majority of the EU Member States works with reference architecture, taxonomy and ontology, cybersecurity, identity, use-cases, interoperability and other aspects of blockchain standardisation. For more information please see: https://www.iso.org/committee/6266604/x/catalogue/

ISO/TC 154: Processes, data elements and documents in commerce, industry and administration works with data interchange processes of blockchain based negotiable maritime bill of lading related to e-Commerce
platform (ISO/WD 5909) and Processes, data elements and documents in commerce, industry and administration —Trusted communication platforms for electronic documents — Part 3: Blockchain-based implementation guideline (ISO/AWI TR 19626-3)

ISO/IEC JTC 1/SC 29 Coding of audio, picture, multimedia and hypermedia information has a work item on Smart contracts for media (FDIS 21000-23).

IEC

SyC Smart Energy has a working group Decentralized energy trading infrastructure which has links with blockchain/DLT.

IEEE

The IEEE Computer Society Blockchain and Distributed Ledgers (BDL) Standards Committee focuses on developing standards for blockchain-based digital asset management, digital asset classification, a digital asset exchange model, blockchain identity key management and on a digital identity system framework. In addition, the "Blockchain" Working Group develops a family of horizontal and vertical blockchain standards, address interoperability of blockchains, naming, cross-chain transaction consistency as well as data authentication and communication. IEEE also runs a pre-standardisation project on digital inclusion and agency, which leverages blockchain technology.

The IEEE Consumer Technology Society Blockchain Standards Committee (CTS/BSC) is focused on “Standardizing the decentralized world” from a consumer perspective. The scope of the Standards Committee is to develop and maintain standards, recommended practices and guides for blockchain technologies and applications, especially from the consumers’ perspective, using an open and accredited process, and to advocate them on a global basis.

For more information please visit https://ieeesa.io/eu-rolling-plan

ITU-T

The ITU-T Focus Group on Application of Distributed Ledger Technology (FG-DLT) concluded its work on 1 August 2019 and produced a number of deliverables, which were transferred to ITU-T Study Groups 16 (Multimedia) and 17 (Security).

More information at: https://www.itu.int/en/ITU-T/focusgroups/dlt/Pages/default.aspx 

In addition, some blockchain retaliated activities are taking place in SG5, SG11, SG13 and SG20.

ITU-T SG5 has approved Recommendation L.1317 "Guidelines on energy efficient blockchain systems" which focuses on blockchain energy demands and how these can be optimized. This Recommendation aims to explain the energy demand of blockchain, to define the blockchain energy model and to describe the energy efficiency parameters that can be calibrated in order to enhance the corresponding energy efficiency.           

ITU-T SG20 has approved Recommendation Y.4560 “ Blockchain-based data exchange and sharing for supporting Internet of things and smart cities and communities ”, Recommendation  Y.4561 “Blockchain-based Data Management for supporting Internet of things and smart cities and communities”, Recommendation Y.4907 “Reference architecture of blockchain-based unified KPI data management for smart sustainable cities ” and Recommendation Y.4476 “OID-based resolution framework for transaction of distributed ledger assigned to IoT resources”.

More info: https://itu.int/go/tsg20

ITU-T SG11 is developing draft Recommendation Q.DIVS-IMT2020 “Signalling Requirements and Protocol for Providing Network-oriented Data Integrity Verification Service based on Blockchain in IMT-2020 network” and Q.BaaS-iop-reqts “Interoperability testing requirements of blockchain as a service”.

W3C

W3C has formed a Blockchain Community Group, which is studying and evaluating technologies related to blockchain and use-cases such as interbank communications. Its work is complemented by a group on Blockchain and Decentralized Apps and one on Digital Assets.

W3C created the Decentralized Identifier Working Group (DID WG) https://www.w3.org/2019/did-wg/ URL-based identifiers (URIs) in use on the Web today (2019) require that the identifier be leased from an authority such as a Domain Name Registrar. A Decentralized Identifier (DID) is an identifier that does not need to be leased; its creation and use is possible without a central authority to manage it.

In addition to the "Blockchain Community Group" W3C has also a "Credential Community Group" (https://www.w3.org/community/credentials/) which has developed key standards for SSI (Self-Sovereign Identity) including Decentralized Identifiers (DID) Data model and Syntax and Verifiable Claims Use Cases and Data Model.

IETF IRTF

The Decentralized Internet Infrastructure Research Group (DINRG) will investigate open research issues in decentralizing infrastructure services such as trust management, identity management, name resolution, resource/asset ownership management, and resource discovery. The focus of DINRG is on infrastructure services that can benefit from decentralization or that are difficult to realize in local, potentially connectivity-constrained networks. Other topics of interest are the investigation of economic drivers and incentives and the development and operation of experimental platforms. DINRG will operate in a technology- and solution-neutral manner, i.e., while the RG has an interest in distributed ledger technologies, it is not limited to specific technologies or implementation aspects.

More details of the DIN RG are available.

https://trac.ietf.org/trac/iab/wiki/Multi-Stake-Holder-Platform#Ledger

CEN & CENELEC

CEN & CENELEC established a Focus Group on Blockchain and Distributed Ledger Technologies to identify specific European standardisation needs (for example in the context of EU regulations such as GDPR and eIDAS), to map these standardisation needs with the current work items in ISO/TC 307 and to encourage further European participation in ISO/TC 307.  https://www.cencenelec.eu/news/articles/Pages/AR-2018-04.aspx

Following the conclusions of the Focus Group, CEN & CENELEC set up the Joint Technical Committee JTC19 on Blockchain and Distributed Ledger Technologies CLC/JTC 19, working on the identification and adoption of international standards already available or under development and to pay attention towards specific European legislative and policy requirements supporting the development of the EU Digital Single Market. JTC 19 has established the first Working Group dedicated to Decentralised Identity Management. The JTC works in close contact with ISO/TC 307 Blockchain and distributed ledger technologies. 

CEN & CENELEC Sector Forum Energy Management & Energy Transition (SFEM) starting from April 2021 has a dedicated focus group for Blockchain and DLT which brings together stakeholders coming from the energy sector as well as from academic and research bodies. This focus group is preparing an overview of blockchain/DLT related activities and applications in the electricity sector (incl. sector coupling) and is elaborating a complete view of the current challenges (technical and non-technical) regulatory, RD&I, Pre-normative research (PNR), use cases, and standardization needs in the field of “DLT in energy”. The final report of the group is planned to be prepared by November 2022 for the review of the Swiss Federal Office of Energy and should be made available to the general public towards the end of 2022 or early in 2023, after validation by CEN/CENELEC.

ETSI

Permissioned distributed ledgers are the kind of DLT best qualified to address most of the use cases of interest to the industry and governmental institutions.

ETSI ISG PDL is committed to analyse and provide the foundations for the operation of permissioned distributed ledgers, with the ultimate purpose of creating an open ecosystem of industrial solutions to be deployed by different sectors, fostering the application of these technologies, and therefore contributing to consolidating the trust and dependability on information technologies supported by global, open telecommunications networks. The ISG PDL incorporates research and new development results in the field as they become available, especially in aspects related to smart contracts, interoperability among ledgers, data management, and trust and reputation support. The group is actively working to facilitate the coordination and cooperation between relevant standardization bodies and open source projects. ETSI via ISG PDL has published Specifications on the Distributed Blockchain “Smart contracts” and “reference architecture”. It is now working on the Specification of Redactable Block, Block Hashing, Reputation, etc. and collaborating with TC ESI on eIDAS and in support of smart contracts in the Data Act proposal context. 

ISG IPE (IPv6 Enhanced Innovation) studies how IPv6 could be applied to blockchain technology. The GR “IPv6-based Blockchain” outlines how the properties of IPv6, can be leveraged to achieve new direct payment mechanisms for users of the blockchain. IPE is working on GR “IPv6 and Cloud using Data Block Matrix for Food Supply Chain Tracking and Tracing” which introduces blockchain technology in the Food Supply Chain for food tracking and tracing.  

TC ESI plans to work on policy and security requirements for use of ledgers as a trust service in support of smart contracts as well as on the use of EU Digital Identity Wallets and advanced and qualified electronic signatures / seals for identification with smart contracts. Such standards will support both the proposed Data Act and the proposed eIDAS2 regulation which establishes a framework for trust services in regards to the creation and maintenance of (qualified) electronic ledgers.

OASIS

The EEA Community Projects, formerly known as the Ethereum OASIS Open Project, is the hub for open source-based standards development in the Ethereum industry. It aims to facilitate Ethereum’s longevity, interoperability, and ease of integration and intends to develop documentation and shared test suites that facilitate new features and enhancements to the Ethereum protocol. The projects seek to address interoperability of implementations. EEA projects include Ethereum projects like the Baseline Protocol and JSON-RPC API documentation under its stewardship. 

The Baseline Protocol OASIS Open Project combines advances in cryptography, messaging, and blockchain to deliver secure and private business processes at low cost via the public Ethereum Mainnet.

UNECE

The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) has developed two White Papers on Blockchain and a Sectoral Use Case paper. The first White Paper provides an overview of the base principles of Distributed Ledger Technology; the second explores the needs for standardisation in this area and concludes a strong needs for semantic data standards in order to ensure clear understanding between the issuer of information on a Blockchain and all users of that data. The UN/CEFACT Core Component Library can cover the data needs in trade transactions. The final UN/CEFACT Blockchain paper explores the specific needs of each sector (Maritime Transport, Suppy Chain, Agriculture, etc.) and provides a number of use cases.

See: White Paper 1: https://www.unece.org/fileadmin/DAM/cefact/GuidanceMaterials/WhitePaperBlockchain.pdf

White Paper 2: https://www.unece.org/fileadmin/DAM/cefact/GuidanceMaterials/WhitePaperBlockchain_TechApplication.pdf

Use Case paper: https://www.unece.org/fileadmin/DAM/cefact/cf_plenary/2019_plenary/CEFACT_2019_INF03.pdf

UN/CEFACT CCL: https://www.unece.org/cefact/codesfortrade/unccl/ccl_index.html

UN/CEFACT continues work on interoperability of ledgers. See: https://uncefact.unece.org/display/uncefactpublic/Cross+border+Inter-ledger+exchange+for+Preferential+CoO+using+Blockchain

(C.2) Other activities related to standardisation 
INATBA

INATBA, the International Association of Trusted Blockchain Applications, has been launched with the support of the European Commission on 3 April 2019. It brings together representatives of the stakeholders across the value chain: industry, startups and SMEs, policy makers, international organisations, regulators, civil society and standard-setting bodies to support blockchain and Distributed Ledger Technology (DLT) to be mainstreamed and scaled-up across multiple sectors. It offers developers and users of DLT a global forum to interact with regulators and policy makers and bring blockchain technology to the next stage. On 11-13 November 2019 INATBA together with EU Blockchain Observatory and forum, Alastria and the European Commission co-organised the Global blockchain congress CONVERGENCE, of which the next iteration is being anticipated in 2023. INATBA has a Working Group on standardisation to support the development and adoption of interoperability guidelines, specifications and global standards, to enhance trusted, traceable, user-centric digital services, liaise with standards development organisations and to develop contributions to standardisation, such as use cases and requirements. Relevant for standardisation are also the interoperability and governance working groups https://inatba.org/

EBSI

The European Blockchain Partnership (EBP) has been set up on 10 April 2018 following the agreement of 28 European countries which signed a joint declaration to cooperate in the establishment of a European blockchain services infrastructure (EBSI) that will support the delivery of cross-border public services, through interoperability and open interfaces and with the highest standards of security. Today the EBP includes all EU Member States, Norway and Liechtenstein. The EBSI initiative has advanced in the following topics:

  • EBSI created a generic profile for the full life-cycle of Verifiable Credentials and Verifiable Presentations for all use cases that involve the request, storage and presentation of personal data. This profile was based on the W3c specification of Verifiable Credential 1.0 data model (currently updated version v 1.1 has been released), the GDPR and other relevant EU Regulations.
  • Natural person and legal entities are identified in EBSI by decentralized identifiers, a pseudonym which is resolvable using DID Documents. This data structure is based on the DID Document data model. and it contains information associated with a DID, such as verification method and services to interact with the subject of the DID. 
  • EBSI has designed and implemented two DID methods, which are the mechanism by which a particular type of DID and its associated DID document are managed. 
  • EBSI is currently working in the definition of a validation service for SSI objects, which will enable to check the status of verifiable credentials and other information data.
  • All the information that supports the EBSI Trust Framework is stored in the EBSI trusted registries. This repository of data does not contain personal information and is stored in EBSI ledgers. EBSI has worked in the definition of these registries, and the accreditation objects that enable entities to play a role in this trust framework. Trusted registries are managed via authoritative channels.

In the short-term EBSI will address pending capabilities such as selective disclosure of information contained in a verifiable credential by using techniques such as BBS+ signatures represented in a JSON-LD structure, but the specification and implementation of this technique is still on progress or is not mature enough. Other topic that will be faced in EBSI is the implementation of JAdES signatures to permit the verification of verifiable credentials and presentations in a more interoperable way. 

(C.3) Additional information

One direction of blockchain technology innovation in recent years was towards a highly promising area of secure, tamper-proof public data, eliminating the need for initial trust among involved stakeholders. 

The clarification and mutual definition of several aspects of blockchain technology (such as blockchain interoperability, governance, trust, security of blockchain and of the underlying cryptographic mechanisms, blockchain compliance to legislation, the impact of blockchain on different sectors, etc) are crucial prerequisites to introducing the technology to society.   

Global blockchain congress CONVERGENCE: https://blockchainconvergence.com/

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