The EU report acknowledges the potential of permissionless blockchains in traditional finance

The European Union recently released a report discussing the potential of permissionless blockchains in traditional finance (TradFi). The report suggests that permissionless blockchains should at least be considered as an option for traditional finance and financial market infrastructure, but with caution. The report argues that such blockchains can be more neutral than private ones, thus encouraging competition. Public blockchains offer unrestricted access, contrasting sharply with the burgeoning isolated permissioned chains. While public blockchains have drawbacks, there are many well-known solutions to address their challenges, especially by adding permissions at the smart contract level. The report states that permissionless blockchains could provide an interoperability layer for L2 Blockchains (including regulated ones). When smart contracts are located on a single chain, they can combine into more complex functions. Meanwhile, the report also mentions disadvantages of public blockchain like scalability, privacy, finality and governance issues. It delves deeply into each topic as well as controversial MEV issues.