The blockchain hype is real — just ask Long Blockchain — but governments are taking a modest, more realistic approach to the technology.
In this week’s Blockchain Tracker, PYMNTS examines the latest government initiatives in the U.S. around blockchain, including the latest from the Federal Trade Commission (FTC) and Congress. As a whole, officials offer support — albeit vague — for blockchain and its potential.
But governments are also cracking down on companies that get carried away with the blockchain hype. State-backed stock exchanges, for instance, are jumping on companies that enjoy a quick share boost from the mere mention of blockchain, while one government was forced to do a bit of damage control after its presidential election process got wrapped up in its own blockchain hype. Catch the latest blockchain headlines below.
U.S. Government Vague on Blockchain
Several areas of the U.S. government advanced further into the world of blockchain this week, including the Federal Trade Commission, the State Department, the Department of Commerce and Congress — though its latest steps suggest they remain in exploratory mode, offering vague support of the technology and acknowledgement of its potential.
The FTC published a blog post this week announcing the formation of its Blockchain Working Group, an initiative to address cryptocurrency-related security issues. There are three goals of this group, the FTC noted: first, to build on the FTC’s existing expertise in blockchain and cryptocurrency; second, to facilitate communication and coordination of enforcement action based on that expertise and third, to act as a forum to brainstorm the impact of the FTC’s blockchain initiatives.
The State Department announced more of a concrete plan this week to explore the distributed ledger technology. The Department said it’s working Coca-Cola, Emercoin and Bitfury to address the issue of forced labor in supply chains using blockchain technology. Reports in Digital Trends said the State Department will serve as an advisor on the initiative. According to State Department Deputy Assistant Secretary Scott Busby, while blockchain cannot enforce anti-child labor laws, it can provide proof or evidence of labor contracts to aid enforcement officials.
The Department of Commerce’s National Institute of Standards and Technology (NIST) is preparing to finalize its own report that explores effective blockchain use, reports in Nextgov said. “Blockchain is a powerful new paradigm for business,” said NIST computer scientist Dylan Yaga, who also co-authored the NIST’s Interagency Report 8202. “People should use it — if it’s appropriate.” Reports noted that the NIST’s report falls short of fully embracing blockchain, highlighting some of the technology’s limitations, though the publication said the report is “quite favorable” to the tool.
Finally, Congress’ Joint Economic Committee published its own “2018 Economic Report” that highlights the potential of blockchain at the federal level. “Government agencies at all levels should consider and examine new uses for this technology that could make the government more efficient in performing its functions,” the report said, according to Fortune. “Blockchain technology has the potential to help the economy function more efficiently and securely.” However, the report did not go into detail on exactly how governments may implement the technology.
Cracking Down on the Blockchain Hype
The Chinese government got involved in blockchain this week too, though in an effort to mitigate risks associated with the hype and its impact on stock rallies.
Reports in CoinDesk said the Shenzhen Stock Exchange, operated by the Chinese government, is investigating one listed company’s links to blockchain. Reports said the exchange’s probe was triggered after IT services company Enjoyor saw a sudden surge in stock value after it revealed plans to test a blockchain tool developed by a company in which Enjoyor has invested.
Enjoyor is on a growing list of businesses that enjoyed a stock bump at the mere mention of the word blockchain, which has raised concerns among regulators, investors and exchanges around the globe.
In the U.S., perhaps the most notorious example of this trend is Long Blockchain — once an iced tea company — that became the target of Nasdaq officials. Last month, Nasdaq sent a letter to the company accusing it of taking “advantage of general investor interest in bitcoin and blockchain technology” when it switched its name from Long Island Iced Tea Corp. to Long Blockchain, resulting in a nearly 200 percent increase in share prices in a single day, reports in CNN said.
With its future on the Nasdaq in doubt, Long Blockchain announced it took a 9.9 percent stake in U.K.-based Stater Blockchain Limited, paid for in common stock. Reports in 24/7 Wall St. said the transaction enables the companies to have an equal, mutual share in each other and could prevent the company from being forced to delist from the Nasdaq, proving its blockchain interests are serious (and legitimate).
But public companies aren’t the only entities prone to the blockchain hype.
This week, reports emerged from Sierra Leone that its presidential election wasn’t actually using blockchain technology in the voting process — despite headlines circulating around the globe that voting technology company Agora was facilitating the world’s first blockchain-based election in the country.
Reports in Cointelegraph said the Sierra Leone government has officially denied use of blockchain, noting it instead uses an in-house vote tally solution it created in 2012.
“And it does not use blockchain in any way,” the nation’s National Electoral Commission said in a tweet.
Agora, meanwhile, defended its role in the nation’s election as an “international observer,” underscoring that it had never claimed to be providing an official tally service using blockchain technology.