Background paper to the preparation of the 24th CSTD priority theme on Harnessing Blockchain for sustainable development Author: Rasim A Policymaker’s Guide to Alam, MPP, Harvard Kennedy School Blockchain Technology Implementation and Innovation Abstract: As Blockchain technology matures and applications of the technology become more widespread, policymakers will need to assess their country’s ability to harness Blockchain technology and recognize the best pathway to Blockchain adoption. This research paper presents a country-level assessment framework for Blockchain implementation and recommends pathways to improve the rate of learning. The assessment framework can be used to identify the stages of Blockchain development, the steps towards full Blockchain adoption, and the opportunities and challenges in the implementation process. Keywords: Blockchain, Assessment Framework The findings, interpretations, and conclusions herein are those of the author and do not necessarily reflect the views of the United Nations or its official Member States. The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, cities, or area or of its authorities, or concerning the delimitation of its frontiers and boundaries. This paper represents the personal views of the author(s) only, not the views of the CSTD, UNCTAD secretariat or member States. The author accepts full responsibility for any errors. Any citation should refer to the author and not the publisher. This paper has not been formally edited. Funding National Resources Coordination ❖ ICOs/STOs ❖ Access to credit/capital ❖ National Digital Strategy ❖ Grants and Research ❖ Blockchain Steering funding Committee ❖ Digital Economy ❖ Ease of Starting Business ❖ Intellectual Property Education, Digital Research, and Infrastructure Training ❖ Workforce training ❖ Research Institutes National Innovations ❖ Knowledge Transfers System: Blockchain ❖ Blockchain in Gov ❖ PPPs ❖ Taxonomy ❖ Innovations Strategy ❖ User Protection ❖ Innovations-friendly Regulation Regulation Public-Private ❖ Legal and Regulatory Engagement Framework ❖ Standard Setting ❖ Blockchain Consortiums ❖ Tech Giants and Int’l Bodies International Cooperation Table of Contents Executive Summary ............................................................................................................................................................................... 1 Section 1: Introduction ........................................................................................................................................................................ 3 Section 2: Methodology ...................................................................................................................................................................... 5 Section 3: Benefits and Challenges of Blockchain Platforms ................................................................................................ 6 Section 4: Blockchain and the Regulatory Landscape ............................................................................................................. 8 Guiding Principles for Regulation: ........................................................................................................................................... 11 Section 7: Framework ......................................................................................................................................................................... 12 Actors: ................................................................................................................................................................................................. 13 Connections and Networks: ....................................................................................................................................................... 14 Environment: ..................................................................................................................................................................................... 15 Section 8: Assessment Criteria ........................................................................................................................................................ 15 Assessment 1: Digital Infrastructure ........................................................................................................................................ 16 Assessment 2: Funding Resources ........................................................................................................................................... 17 Assessment 3: National Coordination .................................................................................................................................... 18 Assessment 4: Education, Research, and Training ............................................................................................................. 20 Assessment 5: Regulation ............................................................................................................................................................ 21 Assessment 6: Public-Private Engagement.......................................................................................................................... 23 Assessment 7: International Cooperation ............................................................................................................................. 24 The National Innovation System at work: Malaysia .......................................................................................................... 25 Section 9: Recommendations ......................................................................................................................................................... 29 Section 10: Conclusion ...................................................................................................................................................................... 34 Appendix: ................................................................................................................................................................................................ 35 Appendix A: Blockchain Consortia: .......................................................................................................................................... 35 Appendix B: Stable Coins ............................................................................................................................................................. 35 Appendix C: Privacy Coins ........................................................................................................................................................... 35 Appendix D: The Need for Regulation ................................................................................................................................... 36 Appendix E: Central Bank Digital Currencies: ...................................................................................................................... 37 Appendix F: The Malta Digital Innovation Authority ....................................................................................................... 37 Appendix G: European Blockchain Services Infrastructure (EBSI) ................................................................................ 38 Appendix H: The Digital Europe Program ........................................................................................................................... 38 Appendix I: Trends in Blockchain Financing ......................................................................................................................... 38 Appendix J Environmental Factors of the National Innovation System .................................................................... 39 Appendix K: Questionnaire ......................................................................................................................................................... 40 Figures Figure 1: National Innovation System - Blockchain .................................................................................................................. 2 Figure 2: The NFT “Everydays: The First 500 Days” sold for $69 million in March 2021 ............................................. 3 Figure 3: Blockchain Attributes, Benefits, and Challenges ..................................................................................................... 7 Figure 4: Barriers to Blockchain Adoption ................................................................................................................................... 8 Figure 5: Regulatory Framework for Cryptocurrencies (2018) ........................................................................................... 10 Figure 6: National Innovation System Framework .................................................................................................................. 13 Figure 7: Number of Blockchain Developers Relative to Population Size (2018) ....................................................... 20 Figure 8: Use of the Assessment Tool .......................................................................................................................................... 28 Abbreviations: AML - Anti-Money Laundering IEEE: Institute of Electrical and Electronics Engineers API