The European Blockchain Observatory and Forum (EUBOF) has warned the European Union (EU) to prepare to face the coming era of decentralized AI networks. In a report to the EU, EUBOF said that the convergence of blockchain and artificial intelligence is emerging as a trend in the technology industry that is being rapidly explored, particularly in the finance and healthcare sectors. The report lists asset management and supply chains as among the sectors that will benefit from blockchain-related applications in the near future.
EUBOF is an initiative launched by the European Commission in 2020 to facilitate research and development around blockchain technology. After the EU published its MiCA regulations last year to manage the volatile crypto sector, the EUBOF submitted its report to the EU with the aim of encouraging the body to start discussing steps to make the best use of blockchain use cases in decentralized finance (DeFi), the energy sector, the metaverse , smart contracts, the automated sector and decentralized social media.
“MiCA has been instrumental in setting a harmonized regulatory standard for crypto-assets, issuers and service providers, with a focus on consumer protection, transparency and market integrity. As CBDC, the convergence of blockchain with artificial intelligence and other emerging trends continue to develop, they will drive more innovation and create new opportunities in various sectors,” the report said.
EUBOF predicted that because blockchain networks offer interoperability, sustainability and energy-efficient technology solutions, they will continue to see adoption in the coming years. The merging of artificial intelligence and blockchain will improve the functionality of smart contracts, which could contribute to the growing ecosystem of decentralized ecosystems.
As for CBDCs, the report predicts that various forms of CBDCs will co-exist with traditional money in the near future. CBDCs or Central Bank Digital Currencies are a virtual representation of fiat currencies like the dollar, pound and rupee. CBDCs are supported on blockchains, where spending history is permanently recorded, bringing greater transparency. Issued by central banks, CBDCs would act as an online payment instrument, but with higher transaction speed, concrete history and faster transfer of funds internationally.
“It (CBDC) addresses regulatory, technological and end-user experiences, along with potential implications for financial stability and the banking industry,” the report said.
EUBOF concluded its findings by pointing out that both regulatory and ecosystem maturity regarding blockchain is advancing, driven by positive externalities with smaller agile countries initially leading the way, followed by larger nations capitalizing on developed regulations.
The EU has so far not commented on the findings of this report. Following the adoption of MiCA regulations for the crypto sector in 2023, the EU passed the Artificial Intelligence (AI) Law on March 13, 2024. The aim of this is to protect EU citizens from the risks posed by AI, while at the same time ensuring a safe development environment for the growth of artificial intelligence in Europe. It is envisaged that the Law will be fully implemented after 24 months.
