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Blockchain effort doubles down on state-led pilot

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By Dan Metz
Special to Delaware Business Times

In February 2018, top executives from IBM and members of Delaware’s business and regulatory communities gathered in one room for a workshop on how the state should push ahead with blockchain.

Their plan: create a series of state-run pilot programs to help ease companies into embracing the technology.
The Delaware Blockchain Initiative, a collaborative effort launched by former Gov. Jack Markell, hosted the workshop following a breakdown in the state’s partnership with Symbiont-the New York-based IT company hired to integrate blockchain into the Delaware Public Archives.

The goal was to make public records more accessible, while testing the power of blockchain in a limited setting.

“In a few years’ time, we’ll look back and see this as an historic moment in the adoption of distributed ledger technology,” said Mark Smith, CEO of Symbiont, at the time of the partnership’s announcement.

But that project never saw the light of day. The state ended the relationship with Symbiont in the spring of 2017. Deputy Secretary of State Kris Knight, who now heads of the Delaware Blockchain Initiative, said the two parties disagreed over the direction of the partnership.

“Symbiont felt that if they were not involved in a larger piece of the puzzle,” he said, “then they didn’t feel useful in doing that smaller piece.”

The first public rumblings of conflict came in a September 2017 meeting between Secretary of State Jeff Bullock, Deputy Secretary of State Knight and a group of New York corporate lawyers with financial ties to Delaware. At the meeting, Knight expressed concern over whether blockchain could hurt the state’s existing corporate franchise business.

Several attendees said the talk hinted at a loss of enthusiasm by the state for bringing blockchain into Delaware. Chuck Thompson, an organizer of the event, responded with an “Open Letter to Delaware,” urging the state to move forward. The letter pointed out how there is often resistance from established markets.

“But Delaware and its many stakeholders cannot be held captive to old ways of doing business: denial of this paradigm shift risks much more than prudently and sustainably embracing change,” Thompson wrote.

In the meantime, other states have gained ground. Wyoming passed five pro-blockchain laws eight months after Delaware passed a law clarifying the legality of blockchain.

A Wyoming native, Long has returned to her home state to assist with implementing blockchain. She said Delaware’s slow progress was part of the reason for the move. “Wyoming or Nevada were the logical candidates to leapfrog Delaware,” she said.

Knight, for his part, stressed the importance of caution with such a large project. “The next phase involves a lot more work, a lot more integration of the community as a whole, and making sure there are no unintended consequences relating to our steps forward,” he said.

With IBM in the consulting role, the state pilots aim to jump start the process once again with the introduction of two new pilots in the coming months.

As for other states adopting blockchain, Knight sees them more as collaborators than competitors. “To the extent that any other state might be moving forward with an initiative, it’s best of luck and we’ll probably be sharing insights and information with a lot of them,” he said.

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