Statutes approved under the now former-Gov. Jerry Brown administration took effect Jan. 1 but action on blockchain, the subject of one Assembly bill, isn’t likely for several months, officials told Techwire.
The Legislature approved Assembly Bill 2658 and Brown signed it in September, formally establishing a working group on “blockchain technology,” the shared, incorruptible electronic ledger being eyed by states including Illinois, Colorado and New Jersey. However, it comes with a somewhat protracted timeline, giving state officials six months to establish the body; and until July 1, 2020, before a report on blockchain's uses, risks and benefits of use by state agencies or private businesses is due:
• The group, to be formed by the Government Operations Agency (GovOps), will include 20 appointees: three each from technology and non-tech industries, and with a background in law; two members each representing privacy and consumer organizations; the state CIO or a designee; the state director of finance or a designee; CIOs from three other state agencies, departments or commissions; and one member each from the state Senate and Assembly.
• In August, Majority Leader Ian Calderon told Government Technology, Techwire's sister publication, via email that the bill will task the working group with studying blockchain’s potential uses by “public and private entities”; and recommending policies that “protect consumers and ensure the growth of this technology in California.”
• Appointees with law backgrounds will be picked “in consultation with the Judicial Council.” The Senate member will be appointed by the Senate Committee on Rules, while the Assembly representative will be picked by the speaker of the Assembly.
• In response to a question from Techwire earlier this month, Calderon’s office said via email the group wasn’t made official until recently — but facing an establishment deadline of July 1, estimated GovOps will likely “begin making appointments shortly.” Calderon, D-Whittier, authored AB 2658 and is co-chair of the Legislature’s California Legislative Technology and Innovation Caucus.
• GovOps, created in July 2013 under Brown’s second reorganization plan, oversees 12 departments, boards and offices including the California Department of Technology (CDT). But Lynda Gledhill, GovOps deputy secretary for communications, said standing up the blockchain group is something of an unusual task.
“As far as I know, this is the first time I know that we’ve been asked to form a working group that’s been written into legislation,” Gledhill said, describing GovOps’ work as “in the early stages.”
• The bill defines blockchain as “a mathematically secured, chronological, and decentralized ledger or database” and calls for input from a “broad range” of stakeholders. It also requires the working group's report to include recommendations for modifications to the definition of blockchain; and for recommendations for amendments to other sections of code that could be impacted by any blockchain deployment.
• A state Senate analysis of the bill identified the “main value” of a blockchain as enabling a database “to be directly shared without a central administrator,” which “removes the need for third parties to check transactions.” However, the Senate also identified its complexity as one of blockchain’s “biggest critiques,” writing: “Critics argue that not only is the technology behind blockchain complex but once added to the complexity of a heavily regulated businesses environment, blockchain may not even get off the ground.”
Calderon’s office said it’s uncertain how many bills centered on blockchain will be introduced by the Feb. 22 bill introduction deadline, but added: “The interest level among members is increasing, as blockchain becomes an important issue.”
