Academic-Industry Stakeholder Closing Workshop Report

Workshop Proceedings

The Wellcome Trust Blockchain for Healthcare academic-industry stakeholder closing workshop was held on 28 November 2019 at the University of Birmingham. The workshop brought together a select group of key individuals involved in building blockchain applications for healthcare from the UK and USA, together with leading academics and from several disciplines including law, computer science, bioinformatics and medical ethics and clinicians, in order to share, reflect upon and critically discuss the provisional findings arising from the project. The workshop presented findings on research into the legal, ethical, technical and governance challenges pertaining to the regulation of healthcare through blockchain. The workshop commenced with an introductory session led by Prof Karen Yeung, the project Principal Investigator, who provided an overview of the project research aims, objectives and questions by way of context.

The workshop proceeded with a presentation of research mapping the development of blockchain for healthcare usescases and applications by project Research Associate Immaculate Motsi-Omoijiade, who also led discussions on the legal, ethical and governance considerations around the use of blockchain in healthcare. Presenting on the technological challenges and business opportunities, state of the art and future trajectories was project Research Associate and technical lead, Dr Alex Kharlamov. Dr Kharlamov was joined by Jim Nasr who provided industry technical insight into blockchain deployment in the context of healthcare.

The workshop concluded with some critical reflections on the current state of the healthcare blockchain industry by John Bass followed by critical insight, core findings and provisional answers to project research questions by Prof Karen Yeung. With active expert participation and feedback from leading academics and blockchain for healthcare industry stakeholders, the workshop served a vital contribution to the refinement and revision of the project's research findings and upcoming publications.

Notable Insights

a) Blockchain has established a presence in healthcare, but the industry is very much in its infancy. The early promises of blockchain-enabled electronic patient records have not come to fruition, as developers have discovered that these are fraught with difficulties, many of which are not of a technical nature. Hence most of the current activity is focused on the B2B sector, with a focus on finding use cases that will deliver real value to the sector.

b) There is ambiguity and lack of clarity in the terminology surrounding blockchain. Participants noted that there is no consensus around what is meant when we refer to 'blockchain' in healthcare. Often the term is used to refer to permissioned, distributed ledgers: yet these bear very little resemblance to the open, permissionless blockchain that rests on Satoshi Nakamoto's White paper, and which provides the foundational architecture for Bitcoin.

c) As the majority of blockchain for healthcare applications are permissioned blockchains, the legal challenges that are commonly associated with public permissionless blockchains where roles, responsibilities and liability are difficult to ascertain, including questions around jurisdiction and the challenges presented by pseudonymity, are unlikely to apply in the same way. However, there are real opportunities for blockchain to facilitate regulatory compliance in healthcare, for example, in tracking pharmaceutical supply chains and tracing and monitoring the credentials of healthcare professionals and providing an auditable record throughout.

d) The 'internal governance' dimensions of distributed ledger systems have yet to be fully grasped, given the industry's youth and the early stage of development. Similarly, the development of appropriate incentive structures will be critical, grounded in 'token economics' is likely to be critical to the success and sustainability of any blockchain for healthcare solutions.

Workshop Participants

Dr Abdullah Albeyatti - Medical Chain

John Bass - Hashed Health

Prof Alastair Denniston - University Hospitals Birmingham

Helen Disney - Unblocked

Madeleine Forster - Chatham House

Dr David Galindo - University of Birmingham

Dr Alexandra Giannopoulou - University of Amsterdam

Prof Andrew Howes - University of Birmingham

Ashley Kerr - Mills & Reeve

Matt Lucas - IBM

Dr Federica Lucivero - University of Oxford

Dr Maureen Mapp - University of Birmingham

Chris Miller - Guardtime

Jim Nasr - Certara

Dr Natalie Pankova - Metadvice

Vincent Racine - Guardtime

Dr Melek Somai - Medical College of Wisconsin

Dr Alex Szolnoki - Babylon

Dr Chen Zhu - University of Birmingham

Katarzyna Ziolkowska - University of Warsaw

GovChain: exploring the current state of public sector blockchain implementation

By Helen Disney - CEO and Founder of Unblocked, cofounder of GovChain and founding board member of the British Blockchain and Frontier Technologies Association (BBFTA)

15 November 2019

What is the current state of implementation of blockchain by public sector bodies around the world?

Over the past year a project known as GovChain has attempted to answer this question. Our research team - composed of researchers with a mix of expertise in both blockchain and public policy - mapped the regulatory and policy environments of countries around the world to assess their degree of friendliness towards blockchain and Distributed Ledger Technology (DLT). We also spoke directly to leaders within public sector organisations, who had attempted to implement blockchain directly. We asked what were the key drivers that allowed them to make a change - was it funding, political leadership, policy environment, cultural factors or something else? And what could other countries learn from successful approaches to help them accelerate change?

The resulting body of work is, we believe, the first project of its kind to gather such detailed information about the progress of blockchain in the public sector around the world. Countries were ranked as Green (Adopters), Amber (Investigators) or Red (Sceptics) according to the “blockchain-friendliness” of their regulatory environment, as well as their level of blockchain adoption within the public sector. Twelve countries were ranked as Green as well as the EU area as a whole and the US state of Wyoming, which has been progressive in its approach to regulation. Seven countries were ranked as Amber, as well as 5 US states which have enacted blockchain-specific initiatives or regulations. Brazil and China were ranked as sceptics largely due to the high degree of political uncertainty surrounding implementation, although since the report was launched, China’s President Xi Jinping recently delivered a glowing endorsement of distributed ledger technology and the country has launched range of new initiatives including moves to create its own national cryptocurrency.

GovChain - Blockhain around the world

While our traffic light categories are necessarily subjective and rankings will change over time, the aim was to provide an ‘at a glance’ reference point for how countries are doing - as well as to stimulate debate and knowledge sharing on what can be improved and how we can learn from one another’s efforts and approaches. After scanning the results of both the regulatory mapping process and the in-person interviews we conducted with policymakers, we produced a set of policy recommendations drawn from the common themes which emerged from our research. These are summarised below:

1. Carry out a cost/benefit analysis of upgrading public sector IT Systems using blockchain/DLT

Trend: Blockchain can be understood as a more efficient way of recording and transferring data. Any application that involves exchanging data could thus theoretically make use of the technology. It therefore has the potential to be as ubiquitous as the internet, underpinning virtually all transactions. Therein lies a major challenge for Governments across the world. Blockchain functions best when all parties in the transaction take part, whether this is everyone on a supply chain, a benefit scheme, food traceability, and more. Even for the sophisticated and technologically advanced jurisdictions, this is a daunting task. The public sector is infamous for being slow at updating legacy systems. Whereas private businesses embrace innovation, governments are understandably more risk averse, constrained by major responsibilities. Perhaps unsurprisingly, it was observed that smaller jurisdictions found it easier to upgrade their existing infrastructure than their larger peers. Thus, while Estonia, Bahrain and Gibraltar have shown great flexibility in accommodating blockchain applications, whether that is via regulatory changes or use cases, larger countries such as China and the U.S. are taking longer to shift. Interestingly, it is often at the state or provincial level that developments first occur, such as in the Chinese Districts of Chongqing Yuzhong and Hangzhou or in the U.S. state of Wyoming.

Recommendation: Governments should look to the successes at the local level, learn from the experiences gained and carry out a cost/benefit analysis of upgrading public sector digital systems nationwide using Blockchain/DLT.

2. Promote international and cross-border cooperation

Trend: Due to being decentralised and distributed, blockchain is cross-border by nature. The most popular applications, such as Bitcoin and Ethereum, enjoy users from across the globe, who are subject to drastically different regulatory frameworks. These differences hamper growth and result in uncertainty for developers and users alike. It also leads to regulatory arbitrage, making it difficult for authorities to clamp down on illicit activity such as money laundering and terrorist financing via cryptocurrencies.

Recommendation: Some of the jurisdictions observed, such as the EU, UK, and Australia, suggest agreeing to a set of international rules and standards, further enhancing cross-border cooperation. This would allow blockchain projects to scale. Public policy should also focus on closer cooperation between national authorities, namely competition authorities, financial regulators and data protection authorities, in order to mitigate criminal activity.

3. Establish Sandboxes and Innovation Hubs

Trend: Blockchain still suffers from an image problem, as the media continues to report numerous cases of fraud, financial loss, and money laundering (ML) and terrorist financing (TF) in the use of cryptocurrencies. As a result, many Governments have in the past taken a prohibitive approach to the technology. However, as their understanding of blockchain’s potential becomes clearer, some jurisdictions are looking at ways to promote domestic innovations. From Indonesia’s Batam Island, to Bahrain’s FinTech Bay and the EU’s Blockchain Observatory & Forum, regulatory sandboxes and innovation hubs are at the heart of this strategy.

Recommendation: In order to mitigate regulatory uncertainty and promote innovation, Governments should continue to promote sandboxes and innovation hubs, supported by adequate levels of investments and continuous dialogue through public-private partnerships. Further, jurisdictions should look to participate in global forums, such as the FCA-led Global Financial Innovation Network, where they can share best practice and collaborate on common challenges or policy questions. This would not only enable regulators to share experiences of innovation in respective markets, but also provide firms with an environment in which to trial cross-border solutions, accelerating global blockchain/DLT adoption.

4. Avoid premature termination of use cases

Trend: A number of jurisdictions, including the UK, lament the habit of testing use cases, only to let the project die upon completion. There seems to be a lack of understanding from certain Ministerial Departments in the technology’s potential as numerous successful proofs of concepts are never taken to the next stage. Certain use cases, such as benefit payments in the UK and Indonesia, the trading of agricultural goods in Haiti, and the drug supply chain in the U.S., show evidence of blockchain saving public money and driving efficiencies.

Recommendation: As expressed by representatives from Bahrain and Estonia, key to successful blockchain adoption is remaining technology agnostic i.e. assessing the clear benefit in applying blockchain to a particular area of the public sector. There must be an economic rationale for moving from the traditional database infrastructure to a blockchain-based model. Once the merit of using blockchain is established, Governments should ensure that sufficient resources are assigned to test the application and, should the test be successful, establish a clear plan forward. As expressed by the UK, public sector projects must be underpinned by strong leadership. Jurisdictions with a clear plan and vision when it comes to blockchain implementation in the public sector will be complemented by an equally ambitious and thriving private ecosystem.

5. Define public procurement criteria

Trend: Whether it is IBM providing the cloud environment for the Dubai Blockchain Platform, ConsenSys writing Thematic Reports in partnership with the EU Blockchain Observatory & Forum, or the Ghana Lands Commission support for the BenBen Land Registry initiative, public procurement for blockchain projects is common among most of the observed jurisdictions. However, this method currently faces a number of challenges. Successful public procurement must be based on a legal framework that encourages free and open competition and value for money. It must also be transparent. Due to the technical complexities and cutting edge nature of the current blockchain/DLT marketplace, government departments can have difficulty in establishing trust in and verifying the quality of contractors and their extended supply chains, as well as reconciling electronic payments with assets and services. At the same time, a system actually based on blockchain could itself help to improve the public procurement process.

Recommendation: In Lord Holmes’ Report on report Distributed Ledger Technologies for Public Good: leadership, collaboration and innovation (November 2017), he argues that the increased transparency, traceability and trust enabled by blockchain technology could be used to better regulate public procurements, whatever the project. A blockchain-based public procurement process could improve government performance as a buyer by providing greater visibility into and understanding of the entire supply market. This could enable a move towards a more distributed model for public sector buying, improving access for SMEs, promoting local growth and supporting regional policies. Beyond the use of blockchain for the procurement process, clear and transparent purchasing and quality criteria should be established for governments wishing to work with blockchain providers no matter the type of public procurement.

GovChain at Blockchain Live 2019

Our team launched and debated these findings at the Blockchain Live conference in London in September 2019. Now that the research is public, we are keen to encourage debate and dialogue on our recommendations and we are actively seeking additional suggestions for ideas or projects we may have overlooked. The GovChain project is by its nature a ‘live’ process – a bit like a ‘wiki’ for public sector implementation of blockchain and distributed ledger technologies. We have already been approached by a number of people keen to be involved or interviewed in 2020 and the feedback has proven that there is certainly a thirst for more high-quality research in this field. Our website is intended to be a resource for continuing updates and revisions to this body of work.

The process of implementing blockchain in the public sector is still a work in progress and can perhaps best be summed up by our interviewee from Bahrain who said: “We ask ourselves: does blockchain really add value here? How does it add value and, if it does, is the item mission critical? If it is, then do we have a fallback strategy in case of failure? This thinking has enabled us to approach policymakers, regulators, and institutional leaders, and speak to them about the benefits of the blockchain as a tool, on their own terms”.

Blockchain and DLT is at a critical stage where it needs to prove its worth in order to ensure traction in the future. It will only be able to do this by being tested - first through smaller pilots and controlled adoption and eventually, when proven to work, via widespread adoption. Companies associated with the technology will not survive if there is not a concerted push from the nascent industry and from public sector leaders to push this technology forward to those who have the power and resources to use it more widely. There is an onus on our industry to prove that the technology genuinely provides added value and will help future societies to function more efficiently and effectively.

If you have comments or we missed your project, please get in touch at info@govchain.world.

Implementing Blockchains in the Public Sector - Legal Perspective

By Katarzyna Ziółkowska, PhD candidate at the University of Warsaw, visiting research student at the University of Birmingham, member of the Centre for Research on Legal Aspects of the Blockchain Technology at the University of Warsaw

15 August 2019

The emergence and further rapid development of distributed ledger technologies have made the administration face unprecedented challenges. On the other hand, the public sector was given a new instrument with the potential to improve its functioning. The blockchain technology has been noticed first by the private sector as a solution for eliminating the middle-man from transactions between two parties, an undeniable information storage medium and a secure and effective data processing tool. Due to distinctive features of this technology (decentralisation and anonymity or pseudonymity of its users) and the lack of regulation in this area, public administration (regulators of capital markets, tax offices, prosecutors) are experiencing serious difficulties in preventing or even tackling opportunistic behaviour.

Simultaneously, as the experience of some countries shows, blockchains can be also successfully used to improve the functioning of public administration, adapting it to the new technological reality. This notwithstanding, the possibilities of using blockchain for this purpose are not unlimited. In addition to the obvious technological, economic and social aspects, there are also legal restrictions. What's more, the public sector is more intensively regulated, the regulations are often very detailed, which is why the implementation of blockchains in the public sector looks completely different than in the private sector. In this blogpost, I will try to point out some of the problems that legislators have to face while regulating the implementation of blockchains in public administration as well as a potential solution to these problems.

The importance of an adequate legal framework for blockchain implementation in the public sector

Public administration, as the emanation of imperious functions of the State, processes and deals with the registration of much larger amounts of data than private entities. At the same time, it has to guarantee the transparency and accountability of data processing, correctness and security of the recorded data. Therefore, legal obligations towards public administration should be much bigger than towards private entities. And this is, in fact, the case - administrative bodies are, as a rule, subject to very detailed regulations related to data circulation, storage or exchange, just to name a few. However, this does not answer the question: “Why the legal framework for blockchain implementation in the public sector is so important?”. There are many private entities that also process large amounts of data (like social media platforms), but legal regulations interfere in their activities to a much lesser extent.

The answer to this question results from the rule of law and the right to good administration. At the core of the rule of law, that underpins the legal order of most of the western countries, has traditionally been the principle of legality. It means that the state, government, and any person acting under government authority (including a corporation), may only act according to law, and legal norms must specify their competences, tasks and procedures, thus setting the limits of their activity. In other words, public authorities can operate only within these limits. Consequently, as individuals are free to act in accordance with the principle that what is not expressly prohibited by law is permitted, public authorities may act only there and in so far as the law authorizes them.

Therefore, the possibility of transforming administration by means of blockchains is not only limited by various existing legal regulations, but also new regulations are necessary to enable that transformation. So as the first and most important requirement is ensuring compliance with the principle of legality, there are also obligations arising from relevant legal safeguards, the need to ensure the highest technological reliability and - last but not least - preparing the society (combating digital exclusion, providing information, training public officials).

Building the legal framework when discretion, technological failure and incompliance aren’t an option

When it comes to blockchains and public administration, the introduction of new laws, modification of or even simply compliance with existing ones must be done with a view to the features of this technology. In this blogpost, I purposely use the term blockchains, not blockchain. Although some basic assumptions may be common, information systems based on blockchain technology will eventually be as many as there are practical applications of this technology.

The implementation of blockchains in the public sector is, therefore, first and foremost, not a legal but technological and management issue. Modernization of public administration with the use of blockchains should not be an end in itself, but serve to solve a problem of specific public authority, introduce a better (safer, faster, more accessible) way of providing a specific public service or create specific facilitations at the state level. Such a focus on increasing the efficiency of public administration with blockchains makes it possible to determine the particular features that a given blockchain-based system should have. Only at this stage, a comprehensive legal analysis can begin to identify additional features of the system that are needed to ensure compliance with legal regulations.

For instance, the main issue that potentially hampers blockchains’ development and adoption in the public sector is, ironically, the same thing that made them so appealing at the first place: public, immutable ledger. There are multiple doubts and concerns as to the compliance of blockchains with privacy laws and data protection rights, but computer scientists also managed to come up with several potential solutions to these problems[1]. Their usefulness, however, will always depend on the particular implementation case.

But what about the principle of legality and restrictions related thereto? The purchase and widespread implementation of the system based on blockchain technology by a public authority (in particular in external contacts with citizens) cannot take place until legislators create the appropriate legal framework (authorizations and procedures). That creates a paradox – new laws cannot be introduced because there is no fully deployed technology in use, and the technology cannot be fully deployed because there are no laws enabling that.

Technology neutrality – another complication or a potential solution?

At this point, it is necessary to add to the discussion one more notion – the principle of technology neutrality. There is no consensus among experts as to the exact meaning of that principle but one of the most frequently cited is particularly relevant to the problem of blockchain implementation in the public sector. Therefore, the principle of technology neutrality could mean that legal rules should not favour or discriminate against a particular technology (Reed, 2007). To be more specific, legislators should refrain from using regulations as a means to push the market toward a particular structure that the regulators consider optimal. In a highly dynamic market, regulators should not try to pick technological winners (Maxwell, Bourreau, 2014). The requirement of technology neutrality, understood in this way, is particularly important in the public sector, as a highly regulated sphere.

Adding that to the impasse that was described before (no regulation without technology and no technology without regulations), at a glance, the situation seems even more complicated – the legislators cannot directly support the use of blockchains in the public sector. But in reality, it's not a complication, but actually a hint. The emphasis in regulations aimed at allowing the use of blockchains in public administration should be put not on ordering public authorities to implement blockchain, but simply on enabling such implementation next to other technologies. For the rest - legislators, instead of describing the features that blockchains used in public administration must have, should rather indicate the effects (including legal consequences) to be achieved in a given area of ​​administration (without discriminating or favouring existing technologies as well as future technologies). Such an approach would not only ensure compliance with the principles of legality and technology neutrality but also incentivises technology providers to propose tailored and effective solutions.

The above-described regulatory problems are obviously of a much more complex nature and the term “blockchain revolution in public administration” created in public discourse well reflects that[2]. New perspectives for public administration include: the possibilities to benefit from the use of blockchains, the need to fight effectively against abuses carried out using blockchain technology, and the general necessity to keep up with changing reality. Technological modernisation of public administration in that broad sense is therefore essential and it has to be done in line with the rule of law and in order to ensure the rule of law.

References:

Berryhill, J., Bourgery, T., Hanson, A., 2018, June. Blockchains Unchained: Blockchain Technology and its Use in the Public Sector, OECD Working Papers on Public Governance, 28.

European Parliament resolution of 3 October 2018 on distributed ledger technologies and blockchains: building trust with disintermediation (2017/2772(RSP)).

Maxwell, W.J., Bourreau, M., 2014, November. Technology neutrality in Internet, telecoms and data protection regulation. Computer and Telecommunications L. Rev. (2014 forthcoming), p. 1.

Reed, C., 2007, September. Taking Sides on Technology Neutrality. SCRIPT-ed, 4(3), p. 266.

Key words: blockchain, public administration, legal framework, regulation, principle of legality, technology neutrality

[1] See more at: https://www.ibm.com/downloads/cas/2EXR2XYP and https://www.eublockchainforum.eu/sites/default/files/reports/20181016_report_gdpr.pdf

[2] See: https://openledger.info/insights/blockchain-public-governance/ or https://www.eublockchainforum.eu/sites/default/files/reports/eu_observatory_blockchain_in_government_services_v1_2018-12-07.pdf