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Blockchain Working Group Discusses Potential Use Cases, Statehouse Report

In its first-ever virtual meeting, the California Blockchain Working Group heard potential use cases considered by a linchpin state agency, and discussed its looming July 1 report to the state Legislature, which will include policy recommendations on the technology's potential uses, risks, and benefits to state government and business.

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State departments aren’t necessarily moving quickly toward blockchain, but some are exploring uses for the electronic distributed ledger technology, members of the California Blockchain Working Group heard at its meeting Tuesday.

The group, which includes legislators, state IT officials and private-sector leaders, also discussed its report on blockchain due to the Legislature July 1 and considered how those recommendations might quickly translate to actionable legislation given the recess due to the novel coronavirus (COVID-19) pandemic. Among the takeaways:

• The California Department of Motor Vehicles, which gained a new director in July and continues a technological modernization, has considered three potential use cases for blockchain, Chairperson Camille Crittenden, executive director of the Center for Information Technology Research in the Interest of Society (CITRIS) and the Banatao Institute, told the group, which met via Zoom.

These included using blockchain to make the California driver’s license “the trusted ID” — via a “verified online profile managed by DMV” — to which other state agencies could request access with the bearer’s permission; using blockchain to reduce fraud and create efficiency in registering vehicles; and using it to address issues of transferring driver’s licenses across state lines, via a system that now relies greatly on Social Security numbers.

“There are, of course, challenges in any of these. One would be to ensure all the data sharing and data use agreements are aligned among the interested parties,” Crittenden said. She summarized slides provided by DMV Chief Deputy Director Kathleen Webb and its Chief Digital Transformation Officer Ajay Gupta — who had been slated to deliver a presentation but were instead occupied helping coordinate the state’s response to the pandemic.

Group member Arshad Noor, CTO at StrongKey, suggested that any such credentialing process “might actually be better off” undertaken by an independent agency — giving DMV the ability to focus on vehicle registrations and licensing drivers.

Member Liz Chien, one of the working group’s two legal representatives, agreed but highlighted the need for “uncompromisable” security when handling residents’ personally identifiable information.

Benjamin Bonte, chief information officer for the California Department of Industrial Relations, and Sergio Gutierrez, agency information officer for the California Environmental Protection Agency, updated the group on results from a survey the California Department of Technology sent to state CIOs in January. Roughly 23 respondents were asked about their familiarity levels with blockchain and about their concerns and needs for a successful blockchain implementation. Among the findings, Bonte said, was that “there doesn’t seem to be a lot of certainty among state departments about how blockchain could help solve business problems.” Conversely, he noted, there was some indication that blockchain could lead to efficiency, especially around shared data governance and security.

Gutierrez reminded members that “state government is typically not an early adopter of new technology,” but said responses revealed that some departments could find benefit from proofs of concept or initiatives around so-called “low-hanging fruit.”

“There are some opportunities to find some lower-hanging fruit for lower dollar value,” Bonte said, referring to smaller projects that could deploy more quickly.

• Staffers for Assembly Majority Leader Ian Calderon, D-Whittier, and state Sen. Bob Hertzberg, D-Van Nuys — both of whom are group members — discussed three placeholder bills that were introduced before the Legislature recessed March 20. Chief among them is Assembly Bill 2004, introduced by Calderon and designed to be a vehicle for the working group and its recommendations.

Cynthia Castillo, a policy consultant for Hertzberg, reminded those attending online of the “whole additional layer of uncertainty” posed by the pandemic. “Currently we won’t be going back into session until May. We still don’t know what this legislative session is going to turn out to be, even as folks in leadership,” Castillo said, referring to the possibility of a “much more quick timeline.” Per the state Constitution, lawmakers have until June 15 to approve a state budget for the 2020-2021 Fiscal Year.

• Voting, election records and campaign finance are among the “potential application areas” for blockchain that members writing the group’s report were considering. But member Michele Neitz, a professor of law at Golden Gate University School of Law, indicated she doesn’t believe “we should move forward with voting” for reasons outlined in a short report submitted. Neitz asked whether that assessment should still be included in the report, prompting Crittenden to say: “I think it’s important that we consider and show that we have considered it.”

Theo Douglas is Assistant Managing Editor of Industry Insider — California.