Blockchain, the underlying technology that powers cryptocurrencies, is not the favorite card for many governments after the furor over bitcoin impacted several customers.
However, the scenario is changing as most of the regulators are exploring the distributed ledger technology (DLT) powdered by blockchain for better governance. Countries like the U.S., China, India, France, and the UK are introducing strict crypto regulations; however, these rules do not stop them from recognizing the benefits of implementing blockchain technology for government applications.
In April, the Securities and Exchange Commission (SEC) sought action against Riot Blockchain, a cryptocurrency company, for indulging in illegal activities to manipulate stocks using blockchain. The law insists companies to provide adequate disclosures about the system and the risks involved for the user or other investors.
Meanwhile, the state of Illinois announced the Illinois blockchain Initiative, which explores the innovations presented by blockchain and distributed ledger technology. The agency also seeks to transform the delivery of public and private services, redefine the relationship between government and the citizen in terms of data sharing, transparency and trust, and make a leading contribution to the State’s digital transformation.
In the U.K., an estimated £10 million has already been invested in support of blockchain projects for the solar energy sector, clean water provision, electoral systems, and charitable giving.
On 19 April 2018, Matt Hancock, a member of parliament, gave a speech on the potential of blockchain technology and how it will transform the laws and regulation of the country. During the speech, he made a special mentioning of the World Food Programme Ethereum blockchain aid initiative, which has transferred vouchers based on cryptocurrencies to 10,000 refugees in Syria.
Innovate UK, an agency in the government sector, sought pitches which could implement blockchain tools into emerging health technologies. Prior to this, it had also awarded £248,000 to a blockchain startup to develop a cross-border financial transaction tool.
Recently, China’s State Council sent the highest-level order stating the need for blockchain technology development. The order, first issued on May 4 to provincial governments, addresses a variety of strategies required for the reformation of the Guangdong Pilot Free-Trade Zone. One area of focus includes the expedition of “developing and implementing blockchain applications under existing regulatory frameworks.” The Guangdong province has 71 blockchain startups, a number that accounts for 16 percent of industry players in China.
By the end of March 2018, there were 456 blockchain technology companies in the country, forming a complete industrial chain. A fund of $1.6 billion has also been invested in the blockchain technology on April 2018, 30 percent of which was backed by Hangzhou city government. The fund will be used to invest in promising blockchain projects, blockchain platform for identity and supply-chain tracking, and start-ups.
In India, the state of Andhra Pradesh has set-up a Blockchain University with an initial investment of $10 million. It has signed a MoU with Covalent Fund to create ‘Velugu Core.’ This will make the government data digitally available and can be used by developers for building apps. This will also transform the way the state’s economy functions. The state focuses on creating a world-class sustainable blockchain ecosystem.
Finance Minister Arun Jaitely in his budget speech mentioned that the government will pursue digital technologies like blockchain to achieve the country’s digital transformation goals. The government has already started initiatives to use blockchain to issue tamper-proof certificates in colleges and universities. The first batch is expected to be ready by 2019.
Australian Securities and Investments Commission (ASIC) has incorporated blockchain in their Immigration and Home Affairs department. A budget of AUD $530,000 was solely dedicated to the technology.
The country believes that blockchain technology could offer the most value for Government services and improving trade supply chains.
On 22 May 2018, lawmakers in Taiwan announced the formation of a new parliamentary group called the Taiwan Parliamentary Coalition for Blockchain (TPCB), which aims to help foster the nation’s emerging blockchain sector.
Seeking participation from industries, the group sets out to build a transparent, fair and reliable market in order to protect investors.
In Dubai, the most prominent holiday destination, blockchain technology is used to transfer the processing of a 100 million documents every year to a paperless transaction system that is hosted entirely on the blockchain technology. This has helped the Dubai government save up to $1.5 billion per year.
In Singapore, the world’s first blockchain-based platform for electronic certificates of origin was unveiled. The platform vastly improves transparency, security and efficiency in authenticating trade documents.
In the banking sector, the Monetary Authority of Singapore also partnered with the Bank of Canada, to use blockchain technology to enable entities across jurisdictions, to make payments to one another and to test and develop a cross-border solution using crypto tokens issued by the two central banks.
Both these regulations strengthened Singapore’s position as a global innovation hub and reinforces the city-state’s strong commitment to driving the digitalization of trade to improve productivity.
With its decentralized nature, blockchain promises transparency across transactions, so it is expected to revolutionize governance system by reducing corruption and improving efficiency. For this reason, blockchain is likely to see faster adoption across governments despite the concerns over data privacy and security.