While the Internet has enabled many types of transactions to become digital, many of these records are still maintained by a centralized authority, such as a bank or government agency. Blockchain is a powerful technology that creates a distributed digital ledger—a database—that allows multiple parties to engage in transactions with one another without a trusted intermediary. As a result, blockchain is having a significant impact on many different industries, from improving transparency in supply chains to enabling new methods of startup financing.
On April 30, 2019, the Information Technology and Innovation Foundation, the co-chairs of the Congressional Blockchain Caucus, and a panel of experts gathered at the Rayburn House Office Building to discuss how blockchain works, its potential benefits and uses, and the policy challenges and opportunities it creates. ITIF also released a new report, “A Policymaker’s Guide to Blockchain,” that provides an overview of blockchain and offers a set of principles to guide policymakers’ approach to this technology.
Alan McQuinn, ITIF Senior Policy Analyst, began the event by calling on policymakers to understand and adopt blockchain technology without over-regulating it.
The co-chairs of the Congressional Blockchain Caucus offered opening remarks. U.S. Representative David Schweikert began by explaining the broader implications of blockchain technology, noting the need for an honest conversation about who owns data on a distributed ledger. Despite blockchain’s core elegance to prove identity, data privacy still poses concerns.
U.S. Representative Bill Foster then spoke on long-term implications of blockchain technology. He stressed that there are still many unanswered questions around crypto-assets. The first: Is it truly anonymous? The second: Is there a mechanism to reverse a fraudulent or mistaken transaction? According to Rep. Foster, the government plays a unique role in provisioning secure digital ID. He suggested that there will need to be a discussion with the American public about blockchain technology and how it will be used in areas such as electronic health records.
U.S. Representative Darren Soto broadly spoke about the collaborative efforts needed to craft legislation that will support on-going innovation. He noted the current distrust in the Internet, and how blockchain will become a critical tool to ensure integrity and public trust in digital transactions. He also noted that the government must carefully balance in its embrace of blockchain. National blockchain strategies and the creation of pilot programs should be supported, and the government needs to avoid over-regulation.
Victoria Adams, Government Practice Lead for ConsenSys, then discussed the implications of identification in blockchain technology, noting that government support is critical. The government will need to provide regulatory sandboxes that enable experimentation with blockchain. Adams also noted that blockchain is the underlying technology that will enable us to fight the next century of war; without government support, our defense systems will be left behind. Adams stressed that the best initiative the government can take in adoption of blockchain is to launch pilot programs which can then be extended through federal agencies.
Interim Vice President of the Food Safety and Health for Walmart, Tejas Bhatt, then spoke about Walmart’s adoption of blockchain technology for supply chains. Blockchain is an enabling technology, and Bhatt noted that Walmart uses it to identify food safety risks in a supply chain to protect customers. Walmart is one of the first companies to implement this type of technology. While it would have been easier for Walmart to develop its own proprietary system, Bhatt noted that working with the ecosystem feeds value back into the system.
Then Daniel Gorfine, Chief Innovation Officer for the U.S. Commodity Futures Trading Commission and Director for LabCFTC, discussed how the LabCFTC engages with emerging technology. Gorfine emphasized that the underpinning of any technology is understanding, which relies on engagement.
Bhatt then stressed the immutability of blockchain technology, noting that once it is implemented, people will begin to pay closer attention to the accuracy of the information on the blockchain. He compared it to the difference between doing a crossword in pencil versus pen.
Alan Cohn, Counsel member of The Blockchain Alliance, then echoed similar concerns about the gap between agency and law enforcement in terms of governmental understanding of blockchain technology. Given the opportunities in enacted legislation and existing regulatory structures, Cohn urged governments to use these pre-existing structures to evaluate pilots and regulatory sandboxes. He also noted that agencies and commissions cannot solve jurisdiction issues on their own, and Congress will need to step in with guidance and clarification.
Adams also noted that Europe, China, and Japan are investing heavily in blockchain industries, and the U.S. should provide funding to support this technology, too.
Overall, the panelists agreed that legislation that supports the blockchain innovation and consumer protection will be key in the successful adoption of this new technology.