While politicians welcome blockchain, civil servants don’t wait for legislation to be implemented.
On Sept. 17, Europa Press reported on the contract the autonomous community of Aragon, one of the 17 Spanish autonomous communities, signed with Alastria — a blockchain ecosystem of more than 274 entities, including companies and institutions which create blockchain-based tools in line with Spanish and European Union legal frameworks.
This blockchain is aimed to improve the transparency and efficiency of the administration, which in turn will attract business and investments. A week later, federal officials decided to keep up with their regional colleagues with the national Ministry of Agriculture, Fisheries and Food sharing plans to apply blockchain technology in the forestry industry.
With all this in sight, Spain remains a uniquely optimistic example of welcoming declarations toward crypto and adoption cases of blockchain. The country’s top bankers, politicians and civil servants rush unanimously into the possibilities DLT can provide.
Northern regions lead the progress
What would the Alastra constellation provide under the contract to the autonomous community of Aragon? The blockchainization of civil services. As Fernando Gimeno, the counsellor of Finance and Public Administration in the Aragonese government, stated that the technology will bring transparency and efficiency of the administration, which is important to attract business and investments.
He further added that employees of the regional administration are already being trained to work with the technology in order to get acquainted with its “enormous potential.” The signing of the contract is only the start of a series of activities scheduled by the Aragonese government to take place through the end of the year, such as training and consultancy sessions to identify more use cases for blockchain within the government.
Neighboring Catalonia — also the autonomous community of northwestern Spain, but with a notable economic power and separatist tendencies — revealed a plan for blockchain tech implementation in its public administrative activity in July. The aim also lays in “improving digital services to the public and promoting the potential of this technology between the administration, companies and the [citizens].”
According to the press release, Catalonia’s Department of Digital Policies must develop a plan for incorporating blockchain tech in all areas of the public administration’s activities by the end of December 2018. The success of this project is especially important for the newly elected Catalan government, as it wouldn’t want to miss a chance of ‘out-governing’ the rivaling Madrid.
Alex Sicart Ramos, a Spanish tech wunderkind and member of Forbes ‘30 under 30’ list, imagined the vast area of blockchain implementation that could help Catalonia with its business DNA and cold conflict with the federal authority: For example, all citizen information could be encrypted and stored on the InterPlanetary File System (IPFS) to avoid censorship and access control. The perfect way of accessing this information could be a digital ID card that will provide digital access to all of Catalan e-services (this kind of system is already implemented in Estonia).
Spanish banks step in the adoption race
In April 2018, Banco Bilbao Vizcaya Argentaria (BBVA), the second largest bank in Spain by assets and capitalization, became the first global bank to use blockchain technology throughout the entire process of issuing a 75 million euro ($87 million) loan.
BBVA CEO Carlos Torres then said that blockchain technology was “not mature” and added that it could face major challenges in the future. However, in July, BBVA signed off on a new blockchain-based loan of 100 million euro ($117 million) for a civil engineering firm ACS Group. Prior to that, in June, the bank signed another blockchain-based agreement with Repsol, one of the world’s leading oil and gas industry companies, to renew a credit line worth 325 million euro ($377 million).
In the latter case, the choice was hardly accidental — Repsol and BBVA have signed an agreement to develop blockchain-based solutions for corporate banking, using multiple different blockchain technologies, namely Hyperledger and the Ethereum test network. Nuria Ávalos, the head of Blockchain and Digital Experimentation at Repsol, welcomed the collaboration:
“Repsol wants to actively take part in collaborative environments. Blockchain is a disruptive technology that is here to stay and the agreement with BBVA advances our strategy of driving digitization in all areas of our activity.”
One of BBVA’s fiercest national competitors, Banco Santander, also isn’t a stranger to blockchain. Santander has become the first company to use the technology for investor voting. The bank partnered with United States electronic data processing services company Broadridge Financial Solutions to facilitate an investor ballot at its annual general meeting on March 23.
Earlier in April, Santander confirmed the launch of its Ripple-powered blockchain payment network. One Pay FX, currently available on iTunes, is the first mobile application for international payments powered by blockchain technology. The app, now limited to transferring euros to eurozone countries and dollars to the U.S., shows remittance customers the total cost of their payment, including bank fees and foreign exchange rates, and a delivery time quote.
But apparently this is only the beginning: In July, the company announced the creation of a blockchain research team to look into the technology’s potential to change securities trading. The Digital Investment Banking team, headed by current leader of Santander’s blockchain lab, John Whelan, will “[explore] the use of tokenized securities in debt capital markets, derivatives and other products.”
Neither Banco Santander nor BBVA are collaborating with the banking consortium Niuron, but that in no way that makes the latter less influential. Formed in 2017, Niuron, as its official site states, is “the first blockchain consortium in Spanish financial sector.” The consortium includes Abanca, Bankia, Caixabank, Caixa Ontinyent, Ibercaja, Kutxabank, Liberbank, Unicaja Banco and Cecabank. According to a report based on assets and capitalization, Caixabank was Spain’s third largest bank in 2017. Ibercaja, Kutxabank and Abanca were also included in country’s top 10.
The group of banks reportedly plans to create the blockchain platform by the end of 2018, with the goal of developing a blockchain technology-based system to identify and record clients when they open an account for the first time. Once the platform is completed, clients’ data will be shared between different banks and financial institutions. While ostensibly simplifying digital identification, it will also comply with recent EU General Data Protection Regulation (GDPR) rules and modern security standards.
Niuron believes that the new blockchain platform will improve the speed of operations, reduce fraud and prevent money laundering. The platform will reportedly benefit clients in that it will decrease the time required for the registration process and provide clients with more control over their personal data.
Left-wingers and conservatives unite to welcome blockchain
On May 30, the Spanish Congress unanimously supported draft legislation that would favorably regulate blockchain technology and cryptocurrencies in the country. Due to the absence of a supervisory framework, the draft called for a review of regulations pertaining to Bitcoin and altcoins, as well as to blockchain, proposing to introduce the technology to the Spanish market through “controlled testing environments,” commonly referred to as regulatory sandboxes.
As a result of the hearing, the Congress has also agreed to promote blockchain as a cost-efficient and disintermediated system for payments and transfers, which is no surprise given the recent pro-blockchain leanings in the country. The draft proposed the government cooperation with the National Securities Market Commission (CNMV) and the Bank of Spain to coordinate a common regulatory position regarding crypto in the broader European context.
A month later, another bill — this time by the ruling Partido Popular — proposed to use blockchain in the public administration of Spain. It wasn’t the first crypto-friendly move by the center-right Partido Popular — a party that considered giving tax breaks to companies that use blockchain technology back in February 2018. Surprisingly, this interest in the adoption of distributed ledger technology (DLT) has been shared by the main opposition force as well: Left-wing political coalition Unidos Podemos called on the state to explore and implement the benefits of blockchain technology in August.
Unidos Podemos has suggested that the Spanish government establish a subcommittee responsible for studying the potential of blockchain technology as well cryptocurrency regulation. Alberto Montero, the deputy of the political alliance, has reportedly registered the request in the lower house, along with a project plan.
The blockchain-focused body would bring together public administrations, state authorities and public officials, as well as industry experts. The initiative aims to explore the “enormous potential” of blockchain tech in terms of reducing costs of government operations and boosting the level of security for social and economic transactions.
The alliance has suggested addressing regulatory approaches for cryptocurrency use in Spain. According to the report, digital currencies such as Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC) are currently “located in a gray area of regulation.” The coalition also proposes to base policy on the outcomes of the EU Blockchain Observatory and Forum, launched by the European Commission in February 2018.
This aligned multi-partisan hospitality toward blockchain may seem ironic given that the technology could play a vital role in the future eradication of the political corruption, still a whip of Spanish society, as recent scandals have shown. The EU Blockchain Observatory has already invested more than 80 million euro in various related projects. As a member of the European Blockchain Partnership, Spain is committed to building EU-wide blockchain and artificial intelligence (AI) applications that can be used in the fight against corruption across the Digital Single Market for the benefit of the public and private sectors.
The more promising blockchain applications relate to the registration and tracking of transferred crypto-asset transactions. With the support of the European Regional Development Fund, a Spanish blockchain company is developing an Ethereum-based blockchain solution that will allow parties to legally/contractually transfer ownership of crypto assets by reducing the possibilities of manipulation and fraud, by adding verifiability and auditability to digital transactions and by tracking information and digitized assets without the need for intermediaries. The system will incorporate a public-key infrastructure — such as electronic time stamps and certified electronic delivery services — for such contracts.
Government bodies aren’t waiting for the legislation to be implemented
While the kind words in the blockchain’s address and the promises to keep up with the technical progress frequently occur in the political declarations still remain only words, various Spanish government bodies have decided not to wait for the final legislation and are already diving into the adoption.
On July 26, the Spanish Society of Authors and Publishers (SGAE) and the Madrid School of Telecommunications Engineering (ETSIT-UPM) announced a research partnership into implementing blockchain for copyright management. The two institutions have reportedly signed a one-year agreement to carry out collaborative research into building a digital processing platform for copyright management that would use blockchain alongside big data, machine learning and AI. As SGAE President José Miguel Fernández Sastrón stated:
“The main lines of research will focus on disruptive technologies that address the challenges posed by the volume, diversity and dynamics of change in the use of content in the contemporary digital environment.”
The latest move came from the Spanish Ministry of Agriculture, Fisheries and Food, which shared its plans to apply blockchain technology in the forestry industry. The aim of the operating group, entitled ChainWood, is to improve the traceability and efficiency of the wood supply in Spain by implementing blockchain technology in industry logistics.
At the moment, the group consists of eight partners from different Spanish regions, including Galicia, the Community of Madrid, Andalusia, Castilla y León and Asturias. The first task is to develop a cloud-based software “that will improve the transparency” of forestry processes — like the creation of solid wood, disintegration, cellulose paste and biomass — by applying blockchain, big data and machine learning.