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Governments Sending Mixed Signals On Blockchain

Bitcoin doesn’t necessarily have the blessing of government agencies, but what about blockchain? It seems governments are a bit more open to distributed ledger technology (DLT), though that doesn’t mean blockchain companies get a free pass with regulators.

The U.S. Securities and Exchange Commission (SEC) recently made that clear with news this week that the agency would crack down on businesses using the blockchain name to boost shares, a recent phenomenon in the market hitting everything from an iced tea firm to a solar energy company.

SEC Chairman Jay Clayton spoke Monday (Jan. 22) and warned that greater scrutiny will be placed on companies that change their name or business model to focus on blockchain for the mere benefit of a shares bump.

“The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering,” Clayton said at a conference this week. “I have instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the U.S. securities bar.”

The remarks followed a tongue-in-cheek tweet sent out by the agency earlier this month.

“We’re contemplating adding ‘Blockchain’ to our name so we’ll increase our followers by 70,000 percent,” the official Fort Worth SEC Twitter handle stated.

It also follows a more serious initiative by the U.S. government to explore the potential of blockchain, proving the Feds haven’t written the technology off. Reports in Cointelegraph this week noted the General Service Administration’s Emerging Citizen Technology Office as one of the government agencies exploring the tool, having launched a federal blockchain program for government agencies and businesses interested in using the technology.

The U.S. Department of the Treasury is also deploying a pilot program to explore the use of blockchain for supply chain management and anti-money laundering, the publication said, while the U.S. Department of State has also expressed support for the exploration of DLT.

“The State Department supports public-private partnerships. For example, in maximizing the impact and accountability of foreign development/assistance, blockchain technology, by bringing transparency, may address corruption, fraud or misappropriation of funds and inefficiencies within the public procurement funding process itself,” said Deputy Secretary of State John J. Sullivan last year.

The U.S. government isn’t the only jurisdiction going hot and cold on blockchain.

The China Banking Regulatory Commission (CBRC) reportedly published a paper last week that discusses the regulation of various financial technologies, including blockchain. But while the Chinese market is known for cracking down on bitcoin, it appears the CBRC is open to the use of blockchain to promote the growth of its secondary loan market.

“As the time goes on, blockchain technology will enhance the efficiency of sharing critical data, such as balance sheets, and foster a more liquid secondary loan market,” the paper said, according to reports. “Integrating this technology to our financial service platforms should be part of the future strategy.”

But again, China’s position on blockchain is far from black and white: Earlier this month, reports in Reuters said the Chinese government made several efforts to contain the risks associated with blockchain, though much it — including attempts to ban initial coin offerings (ICOs) — centered largely around cryptocurrency, not DLT.

The United Nations (UN) has even stepped into the world of blockchain, issuing a blog post this week to announce the launch of its Climate Chain Coalition, which includes the exploration of blockchain to facilitate various initiatives in environmental protection. In its post, CoinDesk reported, the UN said the coalition “will cooperate to support the rapid advancement of DLT solutions to address climate change across mitigation and adaptation through enhanced climate actions, including but not limited to the measurement, reporting and verification (MRV) of the impact of all sorts of intervention, and the mobilization of climate finance from diversified sources.”



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.