Benchmark Update on Blockchain in State Government
By Brian Domoretsky, SVP, Benchmark Strategies
Nearly a decade after blockchain appeared in Satoshi Nakamoto’s white paper Bitcoin: A Peer-to-Peer Electronic Cash System, the National Association of State Chief Information Officers (NASCIO) struck up a national dialogue on the new distributed-leger technology among state CIOs through its 2017 brief Blockchains: Moving Digital Government Forward in the States.
The NASCIO brief helped corral the many informal conversations and explorations into blockchain that had been happening across state capitols and drive a more focused discussion on how best the new technology could serve state government and its constituents. Among the areas where state CIOs and officials saw major potential for blockchain applications were birth, death, and marriage licenses; property deeds and titles of ownership; educational certificates; medical procedures; insurance claims; vehicle registrations, and votes.
Below we will dive into some of the potential applications for blockchain in state government and highlight recent state and municipal experiments in blockchain from across the country.
State Experiments in Blockchain
The Illinois Blockchain Initiative (IBI) was a major focus of the 2017 NASCIO brief, as it was one of the most significant state explorations into blockchain at press time. The IBI and the resulting Blockchain Task Force pointed to the opportunity in front of state governments at the time to “help shape and adopt innovative solutions” using blockchain technology such as creating a more secure platform with irrevocable digital identities, providing universal access to financial services and government benefits, and fostering an environment for economic growth in the region.
Since 2017, a host of other states have taken deeper dives into blockchain technology, and several state legislatures have instructed their executive branch agencies to investigate potential applications for record keeping and other state services.
Examples of state ventures into blockchain include pilots in Oregon, Utah, and West Virginia utilizing blockchain-based mobile voting software for certain voting populations during the previous midterm and presidential primary campaign cycles. Colorado hired its first Blockchain and Distributed Ledger (BDL) Solution Architect to lead the state’s efforts to safeguard state data and other potential use cases. And as a follow up to the 2020 California Blockchain Working Group Report, Governor Newsom signed an executive order earlier this year to position California among the first states to create “a comprehensive and harmonized framework” for assessing how state and public institutions can use blockchain technology.
Cities have also hopped into the action. South Burlington, Vermont tested blockchain’s ability to enhance the recording of property records changing hands. Berkeley, California launched a pilot program to incorporate blockchain into its municipal bond program. There was also an Austin, Texas pilot that tested the viability of a blockchain-enabled digital identity platform.
Lastly, in a new project the Rhode Island Secretary of Commerce wants to streamline identity management for residents and businesses by moving away from today’s practice of individuals separately providing their personal and business information to the different agencies that they interact with across RI state government. She is hoping blockchain can facilitate a new process where individuals would enter information in just one place and then use digital wallet applications to access their information and interact with applicable state agencies.
As might be expected with any emerging technology, these initial pilots and explorations across the country have produced mixed results. There were encouraging results for sure, but also lingering questions around security, environmental impacts, and logistical challenges – among other issues raised.
Blockchain in Massachusetts State Government
Here in Massachusetts, the Executive Office of Technology Services & Security (EOTSS), its Secretary/CIO, and various CIOs at state agencies have kept tabs on what fellow states are doing and continue to explore blockchain technology and its potential uses in government. However, with the Commonwealth in the middle of its five-year IT modernization efforts and a growing list of technology and cybersecurity capital projects in the queue, EOTSS and other agencies have yet to initiate a pilot program or initiative that would test this emerging technology in the field.
Members of the MA Legislature have also made efforts to study blockchain and cryptocurrency in the recent most legislative session. State Representative Kate Lipper-Garabedian and several co-sponsors filed a bill to create a special commission to investigate “blockchain technology and cryptocurrency and to develop a master plan of recommendations for fostering the appropriate expansion of blockchain technology and the cryptocurrency industry in the Commonwealth.” One important component of this legislation is that it would define the term “blockchain” for the first time in Massachusetts law, a critical factor in determining how blockchain is included and understood in Massachusetts public policy moving forward. The bill did not make it to the floor this year and also struck out as a potential amendment to the state budget and other legislative vehicles. We anticipate it will reemerge in the upcoming 2023-2024 session when lawmakers reconvene in January.
Another bill of note was the June filing by Representatives Cutler and Lipper-Garabedian relative to education and training programs specializing in uses of blockchain technology – which had a hearing with the Joint Committee on Labor and Workforce Development in September.
Per State House News Service, the bill would set up a Blockchain Labor Force Career Training Trust Fund that would “finance grants for employers, workforce development entities, vocational technical schools and higher education institutions to develop and expand blockchain training opportunities, and to sponsor scholarships and paid internship programs for individuals seeking careers in this industry.” It would also set up grants for regional employment boards to develop strategies to support blockchain. Through these efforts, the bill aim is to ultimately help establish the Commonwealth as a leader in blockchain to drive economic and workforce development over the next decade.
Representatives Cutler and Lipper-Garabedian are two of the most active lawmakers when it comes to exploring blockchain in MA. In fall of 2021, they formed the House Blockchain Technology Caucus to look into blockchain’s potential benefits to state and local government as well as its potential privacy risks, impacts on state revenues, virtual currencies, and oversight. We also anticipate the Blockchain Technology Caucus to reemerge and be more active in the upcoming session.
The National Picture of Blockchain in State Government
Massachusetts is not alone. While states some states continue to experiment with blockchain, and legislators in others such as Hawaii, Maine, and North Dakota have directed their executive branch agencies to find out how blockchain technology can enhance record keeping and other state services, the majority of states have not been able to bump blockchain technology up on their long list of priorities.
Blockchain shot to the top of mind for state CIOs after the 2017 NASCIO brief; however, since the COVID-19 pandemic, you would be hard pressed to find a blockchain reference in the past two publications of the National Association of State Chief Information Officers (NASCIO) Annual State CIO Survey or their annual listing of the Top 10 State CIO priorities. Rather, CIO top priorities in 2021 and 2022 continued to be some combination of cloud solutions, identity & access management, and legacy application modernization/rationalization. Other priorities included “x”-as-a-service, AI/robotics, and security enhancement tools.
These recent surveys reflect the fact that states are still battling through years of technical debt, new identity and security concerns driven by the push to hybrid work, and ever-evolving cybersecurity threats. Most state governments are also laser focused on finding new ways to improve the citizen digital experience and ensure the continuity of government services through more available, scalable, and resilient solutions.
Blockchain may ultimately prove valuable in these areas, but for now the technology is still too young for most CIOs to consider it when looking to solve today’s most pressing issues. Given all that state CIOs and state governments are working through, it is easy to understand why blockchain technology has taken a back seat for now.
These public sector findings also echo a 2021 Deloitte study that found 40 percent of senior private sector executives have little or no knowledge about blockchain technology. But, just as in government, those executives who are aware of it believe blockchain will transform the world around us in the not-to-distant-future.
Heading into 2023, we anticipate that governments will continue to explore the potential uses of blockchain technology in form of new pilot initiatives and local studies. We also expect more states and municipalities to renew their focus on blockchain as a future driver of economic and workforce development.
Locally, the Commonwealth is poised to build on its legislative momentum from last session, and we expect that the companies, higher education institutions, and thought leaders across the state will continue to ensure that blockchain technology remains in the forefront of public debate.
About the Author
Brian Domoretsky, SVP, Benchmark Strategies
Brian Domoretsky joins Benchmark Strategies as Senior Vice President of Public Affairs after serving more than seven years at the cabinet level of government in the Commonwealth of Massachusetts. He brings expertise in government enterprise information technology & cybersecurity, public safety & law enforcement, state finance & procurement, government affairs, and business development.
Most recently, Brian served as an Assistant Secretary and Chief of Staff at the Executive Office of Technology Services & Security (EOTSS), where he was chief strategy officer, gatekeeper, and senior advisor to the EOTSS Secretary. During this time, Brian led enterprise technology planning and modernization efforts across the Executive Branch and directed the statewide COVID-19 Technology response, facilitating the immediate and unprecedented expansion of telework to 20,000 state employees. Brian also served during his tenure as a Massachusetts Government liaison to the National Council of State Chief Information Officers and to the Massachusetts Digital Summit.
Prior to joining the Executive Office of Technology Services & Security, (EOTSS) in 2019, Brian was the secretariat Chief Financial Officer for the Executive Office of Public Safety & Security (EOPSS), where he coordinated $1.1B in spending across 14 law enforcement, emergency response, and public safety agencies comprised of more than 8,200 employees. In addition to managing payroll, day-to-day spending and procurements, Brian negotiated annual appropriations and agency spending plans with the Governor’s Office and A&F, while also advocating for new funding for complex policy proposals and statutory/regulatory changes before the Joint Committee on Ways & Means.
Brian’s leadership serving the Commonwealth of Massachusetts earned him recognition as a two-time recipient of the Manuel Carballo Governor’s Award for Excellence in Public Service. In 2021, he was recognized for leading the Governor’s “Future of Work Initiative” Technology work stream and received his first award in 2017 as part of the A&F Regulatory Review Team that simplified and reduced undue regulatory burdens across all 1,723 Executive Branch regulations under Executive Order #562.
A State House alum and an accomplished Democrat political campaign strategist, Brian began his career as Legislative Aide and Campaign Manager for the House Chair of the Joint Committee on Taxation, State Representative Paul C. Casey of Winchester. Later, he advised on communications, operations and strategy for several state and local campaigns and was the campaign manager in 2014 that helped State Representative Michael S. Day overcome fierce opposition to become the first Stoneham candidate to win a seat in over 40 years.
In between government service, Brian was Director of Communications & Development and a Wealth Management Advisor at Commonwealth Financial Group in Boston. There he earned Leaders Conference recognition managing a practice that included small business owners, special-needs families and young professionals. As a key member of the senior leadership team, Brian jumpstarted stalled recruiting efforts and cultivated strategic partnerships with allied professionals and financial institutions.
Brian received a BA in Economics from Boston College in 2003. He currently resides in Stoneham, MA.