European Blockchain Body Tells EU to Prepare for AI and Web3 Merging, CBDCs Emergence

The EUBOF has predicted that because blockchain networks offer interoperability, sustainability, and energy efficient tech solutions – it will see adoption.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 27 May 2024 18:40 IST

European Blockchain Body Tells EU to Prepare for AI and Web3 Merging, CBDCs Emergence

Photo Credit: Unsplash/ Clint Adair

The EUBOF is an initiative launched by the European Commission in 2020

Highlights

The EUBOF has lauded EU’s MiCA legislation to oversee crypto sector
The EUBOF report predicts multiple CBDCs will co-exist in the coming time
The report also says AI, blockchain merging will improve DeFi

The European Blockchain Observatory and Forum (EUBOF) has given a heads up to the European Union (EU) to get prepared to handle the upcoming era of decentralised AI networks. In a report addressed to the EU, the EUBOF said that the merging of blockchain and AI is surfacing as a trend in the tech industry being rapidly explored especially in the sectors of finance and health care. The report has listed property management and supply chains that will be among sectors benefitting from blockchain-related applications in the near future.

EUBOF is an initiative launched by the European Commission in 2020 in order to facilitate research and development around the blockchain technology. After the EU released its MiCA regulations to govern the volatile crypto sector last year, the EUBOF submitted its report to the EU aiming to nudge the body to start discussing steps to make the best use of blockchain's use cases in decentralised finance (DeFi), energy sector, metaverse, smart contracts, automative sector, and decentralised social media.

“MiCA has been pivotal in setting a harmonised regulatory standard for crypto-assets, issuers, and service providers, focusing on consumer protection, transparency, and market integrity. As CBDCs, the convergence of blockchain with AI, and other emerging trends continue to develop, they will drive more innovation and create new opportunities across various sectors,” the report noted.

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The EUBOF has predicted that because blockchain networks offer interoperability, sustainability, and energy efficient tech solutions – it will continue to see adoption in the coming years. The merging of AI and blockchain will improve the functionality of smart contracts, that could contribute to the growing ecosystem of decentralised ecosystem.

About CBDCs, the report has forecasted that various forms of CBDCs will coexist with traditional money in the near future. CBDCs or Central Bank Digital Currencies are the virtual representation of fiat currencies like Dollar, Pound, and Rupees. CBDC are supported on blockchains, where history of expenditure is recorded permanently bringing in more transparency. Issued by central banks, CBDCs would act as an instrument of online payments but with faster transaction speed, concrete history, and quicker transfer of funds internationally.

“It [CBDC] addresses regulatory, technological, and end-user experience considerations, alongside potential implications for financial stability and the banking industry,” the report noted.

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The EUBOF concluded its findings at the point that both regulatory and ecosystem maturity related to blockchain are advancing, driven by positive externalities with smaller agile countries initially leading the way, followed by larger nations capitalising on developed regulations.

The EU, as of now, has not commented on the findings of this report. After passing the MiCA regulations for the crypto sector in 2023, the EU passed the Artificial Intelligence (AI) Act on March 13, 2024. The aim of this is to safeguard citizens of the EU against risks posed by AI while also ensuring a safe developmental environment for the growth of AI in Europe. The Act is slated to be fully applicable after 24 months.

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Further reading: Cryptocurrency, EU, Blockchain, European Blockchain Observatory and Forum, EUBOF

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More