The European Commision invests in digital assets for the first time

Aug 24, 2021

The European Investment Fund has invested 30 million euros in a new blockchain technology and digital assets fund.

It is the first time that an EIF-backed fund has the mandate to invest in digital assets under the EU's InnovFin Artificial Intelligence and Blockchain Pilot.

It is very good news for us that institutional capital at the highest level begins to flow into the DLT ecosystem in Europe, while we await the final implementation of the regulatory framework for the sector. This is a move similar to that made by Japan through its sovereign investment fund, which participated in the financing round of a Singaporean digital asset exchange earlier this year.

The fund receiving the investment, Fabric Ventures, is based in Luxembourg and plans to put it to work on various decentralized tokens, platforms and applications, as well as investing in traditional equity capital.

Leadership at Fabric Ventures includes Richard Muirhead, who co-founded and led the Firestartr fund, Max Mersch, an investor in blockchain-related funds, and Anil Hansjee, who was a director of PayPal Ventures EMEA for five years.

Muirhead's official statement on his fund's association with the European Investment Fund takes on a broad geostrategic light: “The thing to note here is that there’s a recognition at European Commission level, that this area is one of geopolitical significance for the EU bloc. On the one hand, you have the ‘wild west’ approach of North America, and, arguably, on the other is the surveillance state of the Chinese Communist Party.”

In his statement, the CEO of the European Investment Fund, Alain Godard, said that the partnership with Fabric Ventures will support the needs of startups and entrepreneurs working in the field of blockchain, which, in his opinion, is “of particular strategic importance for the EU and our competitiveness on the world stage."

From the point of view of the tokenization of financial assets, given that the tokenizable capital is counted in hundreds of trillions (trillions) the strategic component seems clear.

However, while we fully welcome the implementation of a specific legal framework, the truth is that the EU regulatory approach, which modifies the previous regulatory model to apply it to digital assets, makes it especifically difficult for startups and new players to enter.

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