1. OECD Report on Blockchain for start-ups and innovative SMEs

On 10th September 2020, the Organisation for Economic Co-operation and Development (OECD) has published a report (entitled "Blockchain for SMEs and entepreneurs in Italy"; the Report), which illustrates the current use of the blockchain by Italian start-ups and innovative small and medium-sized enterprises (SMEs) that are developing Distributed Ledger Technology based applications and infrastructures (DLTs).

In particular, the Report has as object (i) entrepreneurial landscape, (ii) development of a blockchain eco-system, and (iii) recent trends in regulations and policy, in Italy.

1.1 The entrepreneurial landscape

The Report provides for an overview of the Italian start-ups and innovative SMEs particularly in terms of their size and productivity, in comparison with other OECD countries.

In particular, Italian business sector is characterised by a very high number of SMEs, with a predominance of micro-enterprises and a relatively low share of medium enterprises. In Italy, SMEs account for 99.9% of the total business. According to the OECD, although the number of Italian SMEs has decreased by 4.0% between 2010 and 2017, they still have a higher level of productivity than the OECD average.

However, although the digitalisation of the afore-said sector has been object of a number of recent initiatives launched by the Ministry of Economic Development (the Ministry), the same is still too low, mainly, due to the difficult access to digital infrastructures by the companies in question.

In particular, Italian SMEs seem to lag behind in exploring the potential of big data and adopting cloud computing solutions.

1.2 The development of a blockchain eco-system

Italy is well positioned to access the benefits of DLTs due to a large, diversified and export-oriented economy, which favors the development, testing and adoption of blockchain solutions in a variety of sectors. Besides, the adoption of digital technologies can improve firms' productivity.

Nonetheless, the Report shows that only a few companies in Italy have an in-depth knowledge of DLTs, and, more specifically, of blockchain applications.

Among the above companies, innovative SMEs stand out for having been long active in testing DLTs with the intention of putting them at the service of different sectors, such as supply chain management, intellectual property and copyright protection, human resources, as well as public procurement. Leveraging data from the Ministry and the academic research centre ("Osservatorio Blockchain & Distributed ledger" of Politecnico of Milan University), OECD has identified a total of 67 companies, based in Milan and its surroundings, whose goal is to develop DLT-based market products (excluding crypto-exchanges and wallet providers), which suggest some solution for removing barriers to the development of blockchain applications, as follows:

  • complying with regulations, since the EU and Italian regulatory frameworks on DLTs are still too fragmented;
  • lightening the complexity of relevant administrative procedures;
  • strengthening the financing channels, which are still scarce due to the limited access to venture capital funding, negligible use of Initial Coin Offerings (ICOs), and lack of definition and availability of public financing solutions.

1.3 Recent trends in regulations and policy

The Report also provides for a brief overview of the national policy framework and programmes relating to DLTs. While Consob (Commissione Nazionale per le Società e la Borsa; the national financial markets authority) and the Bank of Italy have been working lately on how to effectively regulate crypto-assets (the first and most widespread application of blockchain), the Ministry has launched the following initiatives aimed at promoting a long-term view of the development of the sector:

  • the appointment of a group of thirty experts (e., legal experts, engineers, economists, and academics, who share a consolidated experience in the field of technologies), whose task is to draft a national strategy on blockchain;
  • the review of Invitalia (Agenzia nazionale per l'attrazione investimenti e lo sviluppo di impresa; the national agency for the attraction of investments and undertakings' development)'s "Smart&Start" program with a view of simplifying it so as to provide incentives to innovative start-ups, including those focusing on blockchain; and
  • the launch in 2019, together with Cassa Depositi e Prestiti (CDP), of the "CDP Venture Capital Sgr – Fondo Nazionale Innovazione", in order to stimulate the venture capital market in Italy and unleash innovation (including through the use of blockchain).

Finally, the Report lays down a set of actionable policy recommendations addressed to the Italian Government, which are based on OECD's analysis and international experience, and aimed at enhancing the diffusion of DLTs in Italy. In particular, OECD suggests (i) to promote the development of digital skills among SMEs' executives and managers, in order to create a virtuous cycle that would strengthen SMEs' awareness on this topic, as well as (ii) to cooperate at national and international level so as to ensure coordinate actions in this highly-technological market sector.

2. Conclusive Remarks

The challenge of creating a DLTs eco-system in Italy can only be met by increasing the level of digital culture among both citizens and interested companies.

In this regard, a stronger cooperation between the relevant business sector and the professional and academic worlds, would likely favor the development of advanced research systems on the possible industrial applications of DLTs, while helping the training of qualified skills. This should, in turn, promote the long-awaited establishment of the blockchain eco-system, which represents the first step towards a real digitalisation of the Italian business environment.

Originally published by Carotenuto Studio Legale, September 2020

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