IBM, Government of Canada & CSE Jump into Blockchain Technology


Blockchain technology is so frequently linked to cryptocurrency that the main street investor may not yet realize the separate potential of distributed ledger technology. Recent proposals show how government and a traditional stock exchange can move into the field by finding new ways to use this secure, transparent, and expedient technology.

IBM’s cannabis regulation proposal to British Columbia

From September 25, 2017 to November 1, 2017, British Columbia’s provincial government welcomed public feedback on the regulation of recreational cannabis. Among the 48,281 submissions the government received was a three-page proposal from IBM entitled “Blockchain: An Irrefutable Chain of Custody Audit for the Seed to Sale of Cannabis in BC.”

The proposal opens by suggesting that “[b]lockchain is an ideal mechanism in which BC can transparently capture the history of cannabis through the entire supply chain, ultimately ensuring consumer safety while exerting regulatory control–from seed to sale.” The distribution, immutability, and transparency of blockchain are the features highlighted by IBM that make the technology ideal for cannabis regulation.

IBM proposed that blockchain’s distributed ledger would act as the sole set of real-time books for the government.

The hazard of redundant or incomplete data scattered across multiple organizations will evaporate with the arrival of a distributed ledger tracking the distribution of cannabis. In fact, the publicly accessible blockchain will ultimately assist each cannabis industry participant: the government, producers, retailers, and consumers.

Using this model, the government will gain control over the sourcing, selling, and pricing of cannabis. Producers will be able to exercise inventory management in real time and view consumption trends, which in turn will aid in the increased accuracy of supply and demand projections for both producers and retailers. Consumers will be able to satisfy themselves that the cannabis they purchased has legally moved through the production and distribution chain by tracing the product through the blockchain ledger itself.

At the time of writing, the provincial government has not responded to IBM’s proposal.

The National Research Council of Canada

Through its Industrial Research Assistance Program, the National Research Council of Canada (the “NRC IRAP”) launched a blockchain publishing prototype to record government grant and contribution data using Ethereum.

This trial allows NRC IRAP grants to be transparently available to the public in real time.

There are currently 3,748 entries published on the blockchain, showing grants ranging from $665 to $11,849,091. To help launch the prototype, the NRC IRAP sought the assistance from Bitaccess, an Ottawa blockchain technology company. Specifically, the prototype uses the Bitaccess product Catena Blockchain Suite, a suite of services built for public institutions to record intricate datasets on a blockchain.

Users can see the amount of the grant, the recipient, the location of the recipient, the date, purpose of the grant, along with the blockchain transaction ID and icon, block number, contract index, and the signed contract. This information allows the public to follow the flow of money from the government to the grant recipient as each transaction is verified in the blockchain.

The prototype is evidence of the blockchain advantage. More so than its use with cryptocurrency, the application of blockchain in areas requiring financial transparency, such as the government’s use of public funds, highlights the technology’s efficiency and accessibility.

Canadian Securities Exchange’s platform for clearing and settling securities

The Canadian Securities Exchange (“CSE”) announced on February 13, 2018, the launch of a blockchain enabled platform that allows companies to issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings (“STOs”).

The CSE plans to apply to regulators for recognition of the new clearinghouse, which aims to provide real-time clearing and settlement with blockchain technology that would cut costs and reduce errors when compared to conventional clearing services. The STOs will be subject to full regulation by applicable securities commissions.

Our Blog Series

We are excited to bring you a weekly blog series on blockchain, cryptocurrency, coins, tokens, capital market regulations, and legal approaches to this new industry. This is our eighth post, and you can expect to see at least one each week over the next few months.

If you have questions, or want a particular legal topic explored one week, please contact one of our team members with expertise in this area: Mahdi ShamsSteven Robertson, Kimberly Burns.

Read our previous blog post, “The Future of Blockchain Mining – POW or POS?”

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Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.