European Commission's New Boost for Bitcoin and Blockchain Startups

The European Commission (EC) recently unveiled the new ‘Start-up and Scale-up Initiative’. Its aim is to increase Europe’s competitiveness for entrepreneurs and innovative startups by reducing regulatory barriers.

Also read: ECB to EU: Tighter Regulations, Less Anonymity on Digital Currencies

Problems for European Startups

According to the pan-European Trade Association EBAN, Europe has more entrepreneurs per capita than the United States.

“The problem, however, is that European companies seldom grow to scale,” EBAN wrote. Unlike U.S. startups such as Apple, Amazon, and Google, European startups often remain one to three-person companies. Their innovative ideas seldom leave local economies, usually confined to just a single country.

Commissioner for Digital Economy and Society, Günther Oettinger, explained that many EU businesses remain small. They “fail after a few years, or decide to move to other countries rather than tapping into the EU’s potential of a 500 million people customer base,” he said.

“The European Commission is determined to change that and help start-ups deliver their full innovation and job creation potential,” the EC announced. Oettinger noted that new businesses account for nearly all of net job creation in the EU.

Regulatory Changes to Benefit Startups

Commissioner Elżbieta Bieńkowska, responsible for Internal Market, Industry, Entrepreneurship and SMEs, said:

“Starting and scaling up a company across Europe has to become simpler. Europe needs to become the first choice place for great business ideas to grow into successful companies. This is about new jobs, innovation and competitiveness for Europe.”

Three regulatory changes are already in the works. Firstly, startups will have better access to finance. Secondly, the Commission will offer a second chance for entrepreneurs. It has already tabled a legislative proposal on insolvency law to allow companies in financial difficulties to restructure early on to prevent bankruptcy and avoid laying off staff. Lastly, taxation will be simplified.

The Commission wants to “help start-ups stay and grow in Europe,” said Vice-President Jyrki Katainen who is responsible for Jobs, Growth, Investment and Competitiveness.

Impact on Bitcoin and Blockchain Businesses

This initiative will benefit bitcoin and blockchain businesses starting out or scaling up in Europe. “There are now more and more successful scale-up stories in Europe,” Oettinger revealed, citing the Luxembourg-based Blockchain as an example.

Bitcoin startups, however, may face a different challenge when operating in Europe as the Commission has committed to ending anonymity associated with digital currencies.

The EC has recently adopted a proposal by the European Parliament to bring digital currency operators and wallet providers within the scope of the existing EU Anti-Money Laundering (AML) Directive.

“These proposals include a measure which would require the platforms to undertake due diligence when customers exchange virtual currencies for real ones,” according to the European Parliament website. “This would end the anonymity associated with such exchanges.”

EC Vice-President Valdis Dombrovskis recently revealed that:

“In all cases, VCs [digital currencies] are not attached to any identity but rather to public keys, which allow users to transact anonymously. For this reason, it is necessary to allow authorities to gain access to the necessary information (i.e. identities) in case of money laundering or terrorism financing.”

The Commission reiterates the importance of ending anonymity associated with using digital currencies but it is not offering any technological means to do so. Dombrovskis wrote that “the Commission is not putting forward any measure regarding the blockchain technology.” Instead, it “is addressing some key players that are fully identified as companies providing the targeted services,” he revealed.

He also clarified that some businesses are not targeted by the AML Directive. “Software or application providers for instance are not targeted by the Commission proposal,” he noted.

Do you think the new initiative will attract more bitcoin and blockchain startups to Europe? Let us know in the comments section below.

Images courtesy of Shutterstock, European Commission, European Parliament

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