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Executive Summary

A decade after the launch of Bitcoin, Blockchain is fast becoming recognized as a core technology capable of providing greater efficiency, autonomy, and security. Although many technological and organizational challenges remain, sectors as diverse as healthcare, central bank digital currencies, supply chains, finance, and government are experimenting with Blockchain. As Blockchain technology matures, and Blockchain derivatives such as cryptocurrencies become non-trivial parts of the economy, policymakers must familiarize themselves with the technology, manage risks, and promote innovation in Blockchain.

How can policymakers assess their country’s innovation and implementation capacity for Blockchain? How can policymakers design development pathways for Blockchain implementation with the policy instruments available to them?

This paper presents a policymaker’s guide to Blockchain innovation and implementation. It provides a country-level framework to assess Blockchain-readiness in seven assessment areas and pairs it with policy recommendations with real-world examples. The research will guide readers to find technological and organizational bottlenecks, understand the pathways to better Blockchain implementation, and examine policies that can improve the rate of learning and adoption capacity.

This study uses the National Innovation System (NIS) as a guiding framework. The assessment tool and recommendations were designed from analyzing national Blockchain strategies, data from a United Nations Conference on Trade and Development survey to stakeholders in member countries, and secondary sources in the Blockchain literature. The assessment framework was curated with input from six experts in academia, research, and industry.

The assessment tool comprises of seven policy areas: (1) Digital Infrastructure, (2) Funding Resources, (3) National Coordination, (4) Education, Research, and Training, (5) Regulation, (6) Public-Private Engagement, and (7) International Cooperation. Each of these assessment areas is subdivided into “low,” “medium,” and “high” capacity levels, so readers can identify a particular country in one of these levels for each assessment area. The exercise provides a matrix of capacities that can be used to find the strengths and weaknesses of a particular country’s National Innovation System for Blockchain. Lastly, the paper ends with a recommendation section that provides tailored suggestions for countries at different levels of innovation capacity. A summary of these recommendations is provided below:

Maturing NIS Countries:

• Develop the base infrastructure upon which developers and entrepreneurs can build applications with frontier technology. Invest in Blockchain education and research through grants, workshops, and training opportunities, especially through public universities. Establish a taxonomy of digital tokens to assist in regulation. Lighthouse projects that integrate Blockchain appendages to legacy systems can highlight Blockchain’s uses and build institutional knowledge. Finally, forming a Blockchain steering committee can start the process of assessment, strategy, and skill-building within the government.

Intermediate NIS Countries:

• Prepare a national Blockchain strategy to align national priorities on frontier technology development. Protecting users and investors will require a licensing process for cryptocurrency exchanges and other ancillary services. Research centers, regulatory sandboxes, conferences, and workshops can create new linkages between regulators and stakeholders that benefit the innovation process. Lastly, connect the local Blockchain ecosystem with international stakeholders.

Mature NIS Countries:

• Support ventures that are addressing technical, organizational, and interoperability challenges through funding and institutional support. Improve the digital operations of financial services for better integration of fintech. Design regulations with flexibility and innovation as guiding principles. Address standardization challenges through international cooperation, and lastly, improve each layer of the Blockchain infrastructure for a more robust innovation ecosystem.

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