Governments Go Blockchain

First, governments took blockchain cautiously, especially towards cryptocurrencies their attitudes ranged from denial to outright bans. However, recently both national governments and intergovernmental organizations saw the possibilities of distributed ledger technologies in various fields, some launched adoptions, others chose regulations to bans. This study is an overview of major blockchain initiatives and responses by governmental bodies worldwide.

UN

The United Nation’s ID2020 Alliance digital identity system is a result of efforts by various agencies within the UN, most notably the UN High Commissioner for Refugees to establish a proper identity system for displaced persons.

USA

US SEC is widely credited as the governmental agency that halted the spread of ICOs in 2017. For quite some time the position of the agency, who has to ok any security to be offered to American investors, was denial. No special regulations were deemed necessary for digital securities. In reality, there were quite a few unresolved issues. Not only issuers and hodlers of crypto were waiting for clarifications, industrial and institutional actors could not figure out if they may proceed with tokenization projects. The SEC Guidance finally came on April 3, 2019, when the SEC’s Strategic Hub for Innovation and Financial Technology (“FinHub”) published Staff Guidance entitled Framework for ‘Investment Contract’ Analysis of Digital Assets (“Digital Asset Framework”). It paves way to security token offerings in the USA, but with restrictions, such as a 12 month “hodling” after first time purchase of freshly minted security tokens.

Also, SEC and FINRA recently issued a joint guidance to custodians of digital assets.

However, the main issue remains, SEC has to approve any issuance. So far, SEC approved 3 tokens, two of them ethereum based, both specifically not to be engaged in speculations. They are YouNow video streaming platform and Pocketfull of Quarters, a universal cross games token to purchase in game goods. The latter us invented by an 11 year old kid.

Another story, that attracted global attnetion is Facebook’s Libra and the efforts by both Congress and Senate to study and then ban the project. These efforts involved numerous hearings, from Circle CEO Jeremy Allaire testifying before the United States Senate Committee on Banking, Housing and Urban Affairs during a hearing titled, “Examining Regulatory Frameworks for Digital Currencies and Blockchain”, and Facebook’s Libra Director to the Joint Commission, in the end of July 2019. The immediate resultat is a draft law to ban large social media to involve in payments.

The US Department of Defence expands R&D efforts for a decentralised ledger to secure ground troop communications and logistics against foreign intrusions. Further, a major US based blockchain consultancy Consensys has a government section with a military consultant, Victoria Adams. She has recently published an outline for decentralized command and control system, as well a blockchain for swarm management.

US Health Department announced a contest in July 2019 to gather citizens’ ideas on how blockchain can be applied in healthcare services, winners to be announced in September.

The US Postal Service has released a report on ways it could adopt the tech: verifying identities; creating an IoT network; reinforcing its supply chain management; and as a digital currency to facilitate international payments.

State governments are also keeping up.

Delaware, home to 66 percent of Fortune 500 companies, already uses blockchain to help lower business transaction costs, automate and speed up processes and reduce fraud through “smart contracts” – e-records published on a digital ledger. Other efforts include moving state archival records to an open distributed ledger in order to simplify cataloguing and secure public sector records.

North Carolina created a task force of experts from the private sector and academia to explore how the state government can use blockchain technology. Lt. Gov. Dan Forest announced the North Carolina Blockchain Initiative to “study the unique attributes and use-cases of blockchain technology, virtual assets, smart contracts and digital tokens”.

A county in Utah has decided to facilitate mobile voting powered by blockchain technology in upcoming municipal primary election. By doing so, it has become the 3rd jurisdiction in the United States that has resorted to the use of this technology for the purpose of voting.

Oklahoma Senate study to gauge potential of blockchain technology

Blockchain implementation research is coming to New Jersey. Governor Phil Murphy signed bill S2297, the Blockchain Initiative Task Force, into law. The task force is commissioned with studying potential use-cases for blockchain technology on the state and local level. The bill specifically points out medical records, land records, banking, and property auctions as potential applications.

California: After Assembly Bill 2658 created a blockchain working group last year, the Government Operations Agency appointed the group’s members.

Connecticut: The state’s 2018 bill requires the Department of Economic and Community Development to form a blockchain working group.

The Florida Legislature passed Senate Bill 1024 in May 2016, and the governor signed it into law a few days later.

Illinois was an early blockchain researcher, forming a task force in 2016. That task force submitted its report on the technology at the beginning of 2018.

At the end of 2018, New York Gov. Andrew Cuomo signed a bill establishing a task force that will submit a report on cryptocurrencies and blockchain by the end of 2020.

In July 2019, North Carolina Lt. Gov. Dan Forest convened a blockchain working group to examine possible applications of the technology in state government.

Wyoming legislators slipped a provision into the state’s 2018 appropriations bill that established a blockchain task force focused on developing policy recommendations for the statehouse to consider.

Germany

The chief executive body of the German government, the Cabinet of Germany, has revealed that the country’s blockchain strategy will be introduced by mid-2019

The German Ministry of Finance has recommended that the country recognize blockchain-based securities as a legitimate form of financial instrument and regulate them as such. The ministry said securities can be issued in electronic form and shouldn’t have to be documented on paper. “German law should generally be opened up for electronic securities, i.e. the currently mandatory documentary embodiment of securities (paper form) should no longer apply without restriction”.

France

Members of the French Parliament are pushing for the investment of 500 million euros to develop the country’s blockchain ecosystem. “2018 was year zero of the popularization of blockchain in France. The year 2019 must be that of the emergence of this ecosystem,” says Jean-Michel Mis, co-rapporteur of the report for recommendation. “The idea would be to ‘arrow’ 500 million euros over three years,” he added. The 500 million euros investment will come from France’s National Research Agency and Bpifrance, a French investment bank. “With the blockchain, we would like France to take the lead this time,” says Laure de La Raudière, the other co-rapporteur of the report.

In April 2019, France’s Minister of Economy and Finance, Bruno Le Maire, has stated that blockchain technology is a priority for his country’s government. Bruno Le Maire has revealed the government’s plan to invest 4.5 billion euros in blockchain and other cutting-edge technologies over the next three years.

United Kingdom

In June 2019, the British Government launched a blockchain pilot to track the distribution of welfare funds and how they are spent. It hopes that this will provide insight on financial inclusion and provide budgeting support, according to the Department for Work and Pensions.

The Government’s Chief Scientific Advisor, Sir Mark Walport, has said that Blockchain should be used to replace “large legacy IT systems located within a single institution”. He proposed the technology be used to secure hospital records in the National Health Service. He also suggested its potential to collect taxes, issue passports, record land registries and secure supply chains.

The British Minister for digital and the creative industries Margot James layed out the UK government’s plans for technology of the moment, blockchain. “As the prime minister said recently, the UK is 100 percent committed to supporting the development and adoption of new technologies,” said James, drawing a parallel between the government’s interest in blockchain, and the push to roll out 5G. James also held up the example of the UK’s financial regulator, the FCA, and its sandbox approach which “lets firms test products and services in a live market setting” but with “appropriate safeguards”.

“We’re investing over £10 million pounds through Innovate UK and our research councils to support Blockchain projects in diverse areas like energy, voting systems and charitable giving.”

The U.K. Ministry of Justice is investigating blockchain as a possible tool for securing digital forms of evidence, its deputy director said Thursday. The idea is that the technology can be used to simplify court processes for handling digital evidence, according to Balaji Anbil, who is also the head of digital architecture and cybersecurity at the Justice Ministry. The agency involved in the test is Her Majesty’s Courts and Tribunals Service (HMCTS), and according to Anbil, a working group focused on the tech recently held its first meeting on the matter.

HM Land Registry is partnering with software company Methods, who will utilise R3’s blockchain platform, Corda, for the second phase of HM Land Registry’s groundbreaking research and development project, Digital Street.

Russia

According to Anatoly Aksakov, chairman of the National Duma Financial Market Committee, the Duma is considering deferring the adoption of the DFA bill to the autumn meeting, while delegates have basically agreed to approve a financing bill. Aksakov further explained that officials could not reach a consensus on the legal issues related to Russian digital currency. He said that DFA-related laws would determine whether we would prohibit encrypted currency as a medium of trade in Russian legislation. This means that there is no exchange outlet for encrypted currency and no encrypted exchange.

In the meantime, in the Moscow Region, the administrative province that surrounds the nation’s capital, a pilot blockchain-based project was launched by the regional energy authority. The project is in invoicing, according to Leonid Neganov, the energy minister of this Russian region, and is currently being tested at one municipal enterprise for years time.

Russian Ministry of Education attempts to launch a blockchain platform for knowledge sharing and copyright management, but has had problems in tender.

Moscow’s residents may soon be able to use Blockchain to vote on referendums. The city government wants to use it to record citizen votes on laws and projects under its “Active Citizen” scheme. It is also investigating different uses of the technology, and plans for a wider implementation in service delivery. However, the elections were from the start wrecked with gross violations and police violence.

China

Starting 2017, China Electronics Technology Standardization Institute (CESI), a government authorized institution founded in 1973, has been conducting Standard Blockchain System Function Test in order to pressure test and certify the top blockchain projects operating in China. Since inception, the organization has certified only 30 projects globally, including Lenovo, Alipay, and most recently, aelf.

Also, Chinese officials in the southern city of Shenzhen decided to pilot blockchain technology into the city’s invoice system — also known as ‘fapiao’ — which allows the government to track purchases and prevent tax evasion. Yet more than 5,300 companies in the city have already gotten behind the initiative, issuing more than 6 million blockchain-based invoices with a total face value of 3.9 billion yuan ($552 million) between Aug. 10 last year and Aug. 5 2019, according to Shenzhen’s tax bureau. On average, 44,000 invoices are issued each day, with transactions occurring in some 113 sectors including transport, catering, parking, retail, and internet services, the bureau said.

Also, China is no 1 in the number of blockchain related patents awarded.

The Decree by the Communist Party of China includes blockchain in the list of top priority technologies to be supported.

India

India stands sixth on the list of patents and trends in the blockchain space. Countries such as India and China have banned cryptocurrencies, while a few countries such as Japan and Korea are regulating them.

Many Indian state governments such as those of Telangana, Kerala, Karnataka, Andhra Pradesh, and Maharashtra are supporting blockchain startups and projects and organizing conferences and hackathons on the topic.

At the federal level, a project built for the public, IndiaChain, aims to transform the functionality of public administration using blockchain for efficient and transparent distribution of government subsidies, streamlined record-keeping, systematic tax monitoring, and regulated supply chain management. The project also has plans to step into the education sector to curb fraudulent degrees and certifications, and seamlessly manage massive amounts of data in the pharmaceuticals and healthcare industry.

The Government Blockchain Association (GBA) was establish to find ways into the Indian marketplace, through the establishment of a dedicated localized chapter within the country. The organisation functions as a Not-For-Profit enterprise that will look towards the education, adoption and adaptability of ledger based solutions in India. The GBA-India Chapter is spearheaded by Mr Sharat Chandra, who is renowned as a ‘Top 20 Thought-leader’ in GovTech.

Malta

The government of Malta has again broken new ground in the blockchain sector, after announcing plans to run a new government department powered by blockchain. In a first-of-its-kind move in Europe, the government announced the new Malta Business Registry (MBR) would be run on blockchain with the help of artificial intelligence, in a bid to deliver efficient services. MBR is a national agency created out of the Registry of Companies of Malta, which initial reports have identified as the government agency that will be powered by blockchain.

Canada

The new ‘Policy on Service and Digital’, outlines the future of government service delivery in Canada, with blockchain technology and artificial intelligence the preferred technologies to help drive digital transformation within government departments.

Also, Canada has launched an HR blockchain for temps in governmental agencies.

Australia

Australia Post has set out a plan to use Blockchain in election voting. The system will be “tamper-proof”, providing traceability, anonymity and security in voting records, said Tim Adamson, the government-owned entity’s State Director for Victorian Government and Tasmania. It wants to start small in corporate and community elections, before adopting wider use in parliamentary elections. The ballot would be integrated cryptographically within the blockchain, and votes will not be accessible by the public. Citizens will use voting credits to attribute their preferences, and receive unique digital access keys before casting votes to verify their identity. Votes that are cast cannot be changed; election counts can then be easily done by gathering data from the platform.

Estonia

Estonia is one of the most digitally advanced nations in the world. The government is already using blockchain in its tax and business registration systems, and has this year secured citizens’ electronic health records with the same approach. Citizens hold smart cards which paves access to over 1,000 online government services, including their health records.

Georgia

The Republic of Georgia is building a blockchain-based land registry with a bitcoin firm. The National Agency of Public Registry hopes to secure the data, allow real-time audits and streamline property registrations with the platform.

Singapore

The Singapore government is exploring blockchain to prevent firms that handle the export and import of cargo from defrauding banks. Trade invoices will be recorded on a digital ledger, and any duplicate entries will raise alerts across banks. The system will improve coordination between the trade and finance sector, and help authenticate invoices for banks – a role that they cannot perform on their own. “Banks are not allowed to share data, either through competitive reasons or by the secrecy acts”, told Shue Heng Yip, Director of Services Sector from the Infocomm Development Authority. To further verify trade invoices, IDA wants third-party authorities like shipping lines, customs and port authorities from Singapore and foreign countries to come on board. The government recently completed a proof of concept with private and local banks in December.

Sweden

Sweden is trailing the use of the tech in its land registry system. Real estate transactions will be placed on blockchain once agreements are made between both the buyer and seller, and all parties will be able to monitor the deals in real-time and ensure that no fraudulent activity takes place. The platform will also allow all parties involved in the transactions to monitor progress: buyers, sellers, real estate agents, banks, and the land registry itself.