Why Blockchain Needs Standards: Lessons from the U.S. and EU Approaches

Blockchain has demonstrated tremendous potential across diverse industries, but without standards, their full promise cannot be realized. My latest article in IEEE Computer magazine, "Blockchain Standardization in Practice: Contrasting European Union and U.S. Approaches," explores why standardization matters, and how differing regulatory philosophies are shaping the blockchain landscape in the EU and the United States.

The 2024 valuation of the global blockchain market at US$31 billion underscores its potential, yet the lack of standardization continues to hinder its broader adoption. For instance, by 2025, the sectoral visibility of blockchain initiatives in Canada, particularly those extending beyond cryptocurrency applications, has experienced a measurable decline in prominence relative to prepandemic levels. Efforts by firms like Walmart Canada and major banks to implement blockchain in payments and supply chains have faced delays, primarily due to challenges in achieving the necessary standardization.

Standards are essential for global interoperability and market flexibility, facilitating seamless cross-blockchain data exchange. However, persistent fragmentation in standardization efforts remains a barrier. The inherent complexity of blockchain and related technologies, spanning diverse technical, regulatory, and operational domains, requires collaboration among diverse stakeholders, complicating both the development of unified standards and the evolution of current standardization ecosystems.

In the EU, governments have taken a more hands-on role, providing clear regulatory frameworks, investing in infrastructure, and even launching initiatives like the European Blockchain Services Infrastructure (EBSI) to promote cross-border applications. The EU’s Markets in Crypto-Assets (MiCA) Regulation and Digital Identity Framework demonstrate how standards can support governance, security, and interoperability while ensuring user control and protection.

By contrast, the U.S. leans more heavily on market-driven processes, resulting in a landscape where de facto standards, like Ethereum’s dominance in smart contracts and Chainlink’s blockchain oracles, have emerged organically. While this approach allows for rapid innovation, it also increases fragmentation, slows interoperability, and raises concerns over consumer protection and data integrity.

My article categorizes blockchain standards by their functional focus (e.g., interoperability, performance, process-oriented) and the processes by which they are established (e.g., regulatory, consensus-based, market-driven). For example, Ethereum’s gas system is a metric standard, while FATF’s guidance on anti-money-laundering constitutes a process-oriented standard. The EU Digital Identity Wallet offers a compelling example of a performance-based standard that prioritizes outcome—secure, user-controlled identity verification—over the process.

The development of technological standards is shaped by a confluence of technical, commercial, political, and moral imperatives. Governments can play a pivotal role in unifying fragmented blockchain standards. In the absence of such coordination, developers may continue to adopt divergent or incomplete standards, exacerbating fragmentation. A unified regulatory approach, requiring intergovernmental collaboration, clear leadership, and dedicated resources, can promote more secure and interoperable blockchain ecosystems across sectors.

Standardizing the Future: A Transatlantic Perspective on Blockchain Regulation

Europe and North America are key regions where standard-setting activities are predominantly concentrated, reflecting their strategic roles in shaping global blockchain interoperability, governance, and regulatory frameworks.

Interoperability

The EU drives blockchain interoperability through initiatives like EBSI, a public-permissioned peer-to-peer blockchain network with nodes operated by EU countries and the EC. It aims to create secure, interoperable infrastructure for cross-border services. In contrast, the U.S. approach is industry-driven, with agencies like the DHS and FDA supporting pilots focused on data sharing, digital credentialing, and pharmaceutical supply chain interoperability.

Governance

The EU’s MiCA Regulation promotes governance through transparency and accountability. Meanwhile, the U.S. faces ambiguity over whether the SEC or CFTC should lead crypto regulation. Wyoming has been proactive in recognizing DAOs as legal entities, while the EU has not yet addressed their governance directly.

Identity Frameworks

Europe’s eIDAS 2 grants legal status to blockchain-based trust services, fostering integration across sectors. The U.S. lacks a national standard; states like Utah are developing blockchain-based digital ID pilots.

Cybersecurity

MiCA proposes mandatory third-party cybersecurity audits, node registration, and strict compliance protocols. The SEC’s Cyber and Emerging Technologies Unit targets cyber fraud and crypto crimes in the U.S.

Smart Contracts

Smart contracts must be standardized to ensure interoperability and accuracy. The EU is advancing regulatory oversight, with France proposing a certification process. U.S. states like Arizona and Illinois have legally recognized smart contracts, but federal coordination remains absent.

Read my full article here: IEEE Computer

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