TECNALIA has participated during the second half of 2025 in the Third Cohort of the European Blockchain Sandbox with one of the components of the EMERALD CaaS Framework, namely the EMERALD Trustworthiness System (TWS). This cohort refers to the third group of selected blockchain and Distributed Ledger Technology (DLT) use cases participating in the European Blockchain Sandbox, an initiative launched by the European Commission.

The Sandbox provides a structured and confidential dialogue framework where innovative companies, startups, and public entities can engage directly with EU and national regulators to discuss legal and regulatory challenges related to their blockchain solutions. The goal is to improve legal certainty, identify regulatory barriers, and promote best practices for blockchain deployment in Europe. For this reason, the cohort concluded with the publication of a Best Practices Report, summarizing lessons learned, regulatory insights, and recommendations. It reflects learnings accumulated from previous cohorts while highlighting concrete practices that improved performance, impact, and stakeholder engagement during the 2025 implementation cycle.

Application to the EMERALD Trustworthiness System

When designing a blockchain-based trustworthiness system, such as the EMERALD Trustworthiness System, the “substance over form” principle must guide the legal and technical architecture from the outset. Even where the primary objective is functional (e.g., access, validation, or governance), features such as transferability, revenue-sharing, or profit expectations could trigger financial regulation to be considered. In parallel, a detailed case-by-case regulatory analysis should document the nature of the services provided, the stakeholders involved, and the governance and control mechanisms embedded in smart contracts.

In addition, governance, decentralisation claims, and horizontal regulatory compliance must be embedded into the system design. Labeling a solution as “fully decentralised” does not automatically exclude it from regulatory scope, especially if identifiable actors design, control, upgrade, or economically benefit from the infrastructure. For this reason, adopting a clear legal entity, even where DAO-based governance mechanisms are used, is critical to manage liability, taxation, and compliance risks.
Furthermore, continuous monitoring of regulatory developments is necessary, particularly in relation to MiCAR, NIS2 cybersecurity obligations, eIDAS requirements for electronic evidence and trust services, and emerging standards for smart contract certification. A compliance-by-design approach ensures that the system remains robust, legally sound, and adaptable to evolving European regulatory frameworks.

Conclusion

The 3rd Cohort recommendations revolve around three main pillars:

• Legal clarity based on the economic and functional substance of the project.
• Early and structured interaction with regulators to reduce uncertainty.
• Active monitoring and adaptation to a rapidly evolving

European regulatory environment, particularly regarding MiCAR, AML, NIS2, eIDAS, and smart contract certification.
The first pillar does not apply to the TWS, as it does not involve economic or financial rights. The second pillar, has already been initiated through participation in the this thrid cohort, enabling constructive dialogue and legal certainty from the early stages of development. Finally, the third pillar is currently being actively addressed through continuous monitoring of relevant European regulatory developments, particularly in relation to NIS2 cybersecurity obligations, eIDAS frameworks for electronic evidence and trust services, and emerging standards for smart contract certification, ensuring ongoing alignment with the evolving regulatory landscape.