Project head Marco Houwen says Infrachain aims to implement distributed ledger technology in compliance with national and EU regulatory and legal requirements.

How did the Infrachain project arise, and what makes it unique?

"At a Digital Luxembourg meeting in 2016, it became clear that several companies wanted to use blockchain applications in the future. The challenge was that regulatory and compliance restrictions meant they couldn’t use public blockchain solutions, while private blockchains didn’t have third-party distribution. Luxembourg companies wanted the government to offer a solution.

I was asked to be involved as I had experience in Bitcoin. I gathered some like-minded people to see whether we could build something that made sense. We met 22 times in the following months to discuss why Infrachain was necessary and what the solution should look like."

What are the potential opportunities and benefits to Luxembourg of an initiative such as Infrachain?

"We needed to ensure that the blockchains on this network are not owned by anyone. It needs to be completely independent of everyone who uses it. If there was a profit motive, it would be perceived by the market as a private chain, so it was very important for it to be non-profit.

In a public chain, the problem is not knowing your counterparty. Who has a copy of the ledger or the database? It is impossible for a risk manager to allow the use of a solution where this is not clear – they always need to know and understand their counterparty. There is also no standard service-level agreement defining the conditions under which such a chain will operate. Perhaps most importantly, there is no regulatory certainty. A new piece of EU regulation, the General Data Protection Regulation, will increase privacy standards without addressing blockchain and its specifics: who will be the controller, who will be the processor and what about the right to be forgotten?"

How does Infrachain address these issues?

"With Infrachain, we are certifying the host operator (the entity operating the blockchain node), so users know who it is running it. This is the first problem tackled for a risk manager. There is also a service level agreement in place for users, which will clearly specify the roles and the responsibilities of the host operator, Infrachain and its users. We are now working on a comprehensive proposition for the Luxembourg regulator and the European Commission."

What have been your challenges in implementing the project?

"It had never been done before. This is uncharted territory in terms of the technology and the governance. There is also a lot of hype surrounding blockchain. Everyone wants to run it. The danger is that we are not fast enough to turn hype into reality, so we need to leapfrog the adoption curve. Another challenge is the non-mature technology environment. This is a difficult technology to put into operation. However, today we have 18 members working in action groups, and we are close to implementation."

What are your priorities for the future?

"We are looking at the products we can develop, at the governance implications and the new EU data rules. Most importantly, we are working on real life cases, which should lead to the first operation of the application. We have our first interested party on board and are working to bring the solution to reality.
It is important to remember that this is not simply a Luxembourg initiative, but a European effort. We want to build a European network of host operators. There is a need for this type of solution in France, in Germany and across the continent, but we are still not aware of any other European initiatives that are doing the same thing."