Blockchain Government Proposals (Jan 2024)

Through the spirit of transparency, decentralization, and openness of Web 3.0, coupled with blockchain and smart contract technology, we believe government governance can be made more transparent and efficient, empowering people with more open and free rights, thus ensuring social justice and safety.

The ruling Liberal Democratic Party of Japan published a Web3 White Paper in April 2023, stating:

Excerpted from: Blockcast "Letting 'everyone use digital assets'! Japan's ruling party publishes Web3 White Paper" https://blockcast.it/2023/04/07/japans-ruling-party-published-web3-white-paper-to-promote-industry-growth/ (opens in a new tab)

"Japan should demonstrate leadership at the G7 summit to be held in May this year, where cryptocurrency issues will be discussed. It indicates that Japan should look forward to the future potential of Web3, clarifying its leading position in technology neutrality and responsible innovation. The white paper also suggests further amendments to tax regulations, noting that the Liberal Democratic Party's tax committee has approved tax exemptions for token issuers, including tax exemption for companies holding tokens issued by other companies not traded short term. It suggests allowing investors to carry out self-assessments, carrying losses forward for up to three years, stating that cryptocurrencies should only be taxed when assets are converted into legal currency.

The white paper considers the lack of accounting standards in the cryptocurrency industry as an urgent issue, with Web3 companies often struggling to find auditors. Therefore, government departments and institutions should support the development of guidelines by the Japanese Association of Certified Public Accountants. Furthermore, the white paper suggests setting regulations for decentralized autonomous organizations (DAOs) based on Japan's "Godo Kaisha" (similar to a limited liability company) and amending regulations according to the "Companies Act" and the "Financial Instruments and Exchange Act".

While Japan has relaxed the screening process for exchanges to list new tokens, the white paper points out that reviewing new tokens issued by foreign companies still requires a long waiting process. Therefore, it recommends making the process more transparent so that issuers can provide the necessary information for review.

Japan passed a framework regulating stablecoins last year, emphasizing the importance of creating a stablecoin registration process and establishing a self-regulatory organization, also mentioning the proposal to develop a yen stablecoin. Although many large Japanese companies have shown interest in the Web3 industry. However, the white paper states that there has still not been a green light regarding whether banks and insurance companies can venture into this field, thus calling on the government to quickly establish guidelines.”

The United States also introduced the "21st Century Financial Innovation and Technology Act"

Excerpted from: LINE Today "The US House of Representatives passes the '21st Century Financial Innovation and Technology Act'! Understanding four main points in one minute" https://today.line.me/tw/v2/article/1DqmXNz (opens in a new tab)

" Its main aim is to establish a comprehensive regulatory framework to protect investors in the cryptocurrency industry.

Glenn Thompson, chairman of the U.S. House Agriculture Committee and a Republican congressman emphasized that the bill would not only prevent cryptocurrency exchanges from stealing customer funds but also establish strong and clear consumer protections and norms for market participants.

Empower CFTC with jurisdiction over digital commodities

The '21st Century Financial Innovation and Technology Act' grants the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities, also clarifying the U.S. Securities and Exchange Commission's (SEC) jurisdiction over cryptocurrencies, mainly regarding the issuance of tokens and digital assets, and formulating processes for digital assets initially considered as securities to be sold as commodities.

Digital assets not classified as securities

In the definition of 'digital assets,' the '21st Century Financial Innovation and Technology Act' excludes a series of traditional securities such as stocks, bonds, securities futures, letters of credit, transferable shares, and so forth from the digital asset category.”

Considering the above references and the current situation in Taiwan, the following blockchain government policies are proposed as a reference for action plans after the political party rotation, with the help of ChatGPT for modifications into clearer text:

Entrepreneurial Fraud Prevention Accountability: Allow businesses to use blockchain records when communicating with customers to prevent fraud. For example, e-commerce platforms use encrypted signatures when sending messages, providing smart identification for subsequent identification and fraud exclusion to enhance user and societal safety.
Industry Chain Subsidization: Support startups that use blockchain or make public data chainable, providing funding and exposure opportunities, like giving these emerging businesses a big stage and startup capital.
Educational Credentials on the Blockchain: Store diplomas and learning paths on the blockchain, ensuring their security and immutability. Imagine universities uploading their graduates' diplomas to the blockchain, allowing them to easily prove their qualifications at any time in the future.
Pre-sale Product Certification: Allow consumers who support crowdfunding to freely refund or exchange products on third-party platforms (e.g., akaSwap, OpenSea), providing more guarantees, just like having more rights to returns and exchanges when shopping.
Health Insurance Smart Contracts: Use smart contracts to automatically verify and process insurance claims, speeding up the process. For example, a mountain biking accident victim's medical insurance claims could be processed automatically without cumbersome paperwork.
Rental Verification Automation: Ensure rights in the rental process through smart contracts, such as a student tenant using this platform to ensure automatic execution of rental agreements and the authenticity of the relationship between landlords and properties.
Token Tax Regulation Individualization: Develop different tax rules based on the type, purpose, and behavior of digital tokens and virtual currencies, just like imposing different types of taxes on different types of goods.
Royalty Sharing Fairness: Allow musicians, actors, and artists to receive their deserved income. With blockchain technology, each time their work is played or used, they automatically receive payment, just like every time you play a song, the singer directly receives a tip.
Main Chain Open-Source Internationalization: Lead the development or collation of blockchain open-source solutions audited and verified jointly by academic institutions, expert groups, environmental units, and international open-source organizations by government-related units, serving as the government-recommended "Taiwan Chain" or "Taiwan Cluster Chain".
Tangible Asset Transparency: Utilize RWA technology standards to make property registration and trading more transparent, reducing corruption and fraud. For example, Sweden, uses blockchain to record real estate transactions, thus clearly tracking the history of each property.
Diversified Democratic Voting: Implement secure online voting using blockchain, prioritizing the participation of the elderly, minority groups, and youth living away from home or abroad, just like securely applying for various banking services with a smartphone at home or overseas.
Social Responsibility Certification: Obtain government-certified blockchain certificates for participating in public welfare activities, enabling both companies and individuals to receive tax reductions, and also allow companies investing in ESG to purchase in bulk for subsequent value recognition and exchange.
Government Procurement Efficiency: Improve government procurement processes using blockchain to ensure transparency and fairness. For example, jurors use digital identities and smart contracts to automatically ensure the calculation of scores, anonymity during evaluation meetings, and fairness and transparency in subsequent resource distribution and verification management.
Environmental Monitoring Trust: Companies demonstrate their environmental, social, and governance (ESG) performance through blockchain. For example, a company records its efforts to reduce carbon emissions on the blockchain, enhancing public trust.
Data Labor Value: Protect and highlight the value of personal data using blockchain technology, allowing necessary information to be securely shared through personal digital signatures. Imagine a patient's health data being used for medical research while protecting privacy, or a video creator contributing data for AI model training in exchange for points or tokens.

These ideas originate from the internal brainstorming of the team led by Dr. Ge Ruikun, with modifications and simplifications by ChatGPT. Criticism and advice are welcome in the comments.

This document is open-sourced under CC BY-NC-ND

Below is the original ChatGPT modification instruction (in Chinese) and text

Prompt: 你是一位區塊鏈與數位政府治理專家，同時也善於將複雜的事物簡單化。請提出區塊鏈政府相關政策，要讓民眾有感，尤其要爭取不同年齡世代選民的支持。請試著讓以下政策更加淺顯易懂。用更明快簡單的說詞，讓人一目了然，並且在沒有例子的部份加入例子。

Royalty Sharing Equity: Encourage relevant industries to verify and automatically transact through blockchain verification and smart contracts, improving the long-term traceable and verifiable income rights of music lyricists, actors, and performing artists.

Tangible Asset Transparency: Implement an open and transparent property registration system through RWA international principles and technology, reducing corruption and unfair property transactions; and also allowing related financial and verification services to be automatically filled and checked through personal digital signatures. Case example: Sweden is using blockchain to record real estate transactions.

Industry Chain Incentivization: Provide a support platform for blockchain entrepreneurship and data open-source services, simplifying the related startup process, and helping increase exposure to reward and subsidize Web3 innovation and young entrepreneurs.

Educational Credential Chain Integration: Upload important credentials, like degrees, to the blockchain to ensure encryption, security, decentralized storage, and immutability, preventing the problem of lost or backup failure of educational credentials. Example: A graduate uploads her university diploma to the blockchain, ensuring she can easily prove her qualifications through open API integration with third-party platforms at any time in the future.

Individualized Token Taxation: Classify homogenous tokens and non-fungible tokens, and separate them by behavior, purpose, and applicable taxation. Example: Digital collectibles could be differentiated by chain-based functionality, physical service membership cards, artistic creation value, concert tickets, etc., with users' usage or holding time and purpose also varying, establishing separate tax standards based on distinct characteristics.

Pre-sale Product Certification: Promote crowdfunding platforms to provide opportunities for backers to freely refund, exchange, or purchase products on third-party chain platforms, realizing a free-market mechanism where sponsors can have more comprehensive and rapid care and protection before receiving the product or in the event of disputes.

Health Insurance Smart Contracts: Cooperate with life insurance associations and insurance service providers to promote the "Insurance Alliance Chain 3.0", expanding the use of smart contracts for checking insurance content, medical service content , and results, and accelerating the insurance verification and compensation payment process. For example: A 32-year-old motorcyclist who underwent surgery after a mountain road accident had his medical insurance compensation process automatically triggered and rapidly completed.

Rental Verification Automation: Establish a platform certified by the government and credible third parties for intelligent rental contracts, protecting the rights of elderly and young tenants. For example , Mr. Wang, 70 years old, rents an apartment through the platform, enjoying automatically executed rental terms and automatic verification of the landlord's property ownership, without worrying about fraud or unfair terms.

Diversified Democratic Voting: Implement a blockchain-based online voting system, prioritizing at-home voting for the elderly, voting for young people away from their registered address, more secure and private voting for minority groups, and attracting young people living abroad to participate in elections from afar. For example: Elderly people at home and young voters studying abroad can both use their smartphones or computers with blockchain digital identities to vote securely; with smart contracts counting votes, fraud prevention is also enhanced.

Social Responsibility Beyond Certification: Public welfare activities can receive government-certified blockchain participation certificates, which could be purchased in bulk by companies or used for year-end tax deductions as rewards. For example: Green commuting (using public transport), blue environmental initiatives (beach cleaning), students’ public welfare programs, etc., can receive chain-based reward certificates verified via (such as transport cards, LBS QR code scans) allowing future corporate purchases to exchange for chain points, tokens, or year-end tax deductions.

Government Procurement Efficiency: Use blockchain smart contracts to improve efficiency, transparency, and corruption prevention in government procurement and contract management. Example: When the government is purchasing new social welfare facilities, jury members use digital identity signatures and smart contracts to automatically ensure the calculation of scores, anonymity during evaluation meetings, and fairness and transparency in the subsequent distribution of resources and verification management.

Main Chain Open-Source Internationalization: Government-related units lead or compile blockchain open-source solutions audited and verified by academic institutions, expert groups, environmental units, and international open-source organizations as the government-recommended "Taiwan Chain" and "Taiwan Group Chain".

Business Fraud Prevention Accountability: Brand owners or businesses use online or telecommunication methods to communicate with customers, promoting cooperation among the three parties for chain signatures and recording their company number, time, etc., for future identification and fraud exclusion. Example: E-commerce brands verify SMS messages or customer communications by initiating contact (such as by a caller) with encryption signatures and registering de-identified data on the chain for future verification and elimination of disputes.

Environmental Monitoring Trust: Companies prove their environmental, social, and governance (ESG) performance through blockchain. Example: A company records its efforts to reduce carbon emissions on the blockchain, enhancing public trust.

Health Data Valuation: Use Zero-Knowledge Proof (ZK Proof) technology to protect health data while allowing necessary information to be conditionally and securely shared. Example: A patient's health data is used for medical research without revealing specific details.

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