Industry regulations are necessary to keep consumers safe and companies accountable, but the costs to comply are often very high.
Operational inefficiencies increase as businesses try to get products to consumers.
To combat this, compliance-focused regulatory technologies are on the rise. Deloitte has even compiled a list of the new “RegTech” companies set to disrupt the regulatory landscape.
So, where does blockchain fit into this?
The convergence of blockchain, AI, and big data analytics are opening doors to more powerful and innovative solutions that manage compliance costs and reduce operational risks.
And businesses don’t want to spend time and money complying with regulations in a haphazard manner when there’s a better, faster solution available.
This is what those solutions look like, and how blockchain-based RegTech is set to impact both businesses and consumers.
A major concern in the food and beverage industry is being able to track where food came from.
When a listeria or E. coli outbreak happens, there’s a rush to track the bacteria back to its source to prevent more people from ingesting tainted food.
Blockchain and IoT devices can give large companies a unique way to track produce, from the field to the grocery store. A head of lettuce that’s harvested and placed in a bin can be tracked if the bin uses an IoT device to register it on the blockchain. From there, the produce moves to a facility where it’s processed and packaged — events that can also be registered and tracked.
Once it’s made its way to the consumer, there’s a verifiable chain of custody that goes all the way back to its roots.
If a problem does arise, the tracking data is available to intervene faster.
The pharmaceutical industry is where our team at Chronicled has had the most success.
In the US, there’s a regulation called DSCSA. In the EU, there’s the Falsified Medicines Directive. Both regulations require all drugs to be uniquely identified with a serial number to prevent counterfeiting and promote greater transparency in the supply chain.
To meet these regulations, we at Chronicled proposed an interoperable blockchain-based solution called the MediLedger project. It allows pharma companies to easily register unique serial numbers on blockchain — and to track drugs as they move through the supply chain.
The cosmetics industry hasn’t been heavily regulated, but there’s growing pressure to impose regulations.
Senators Dianne Feinstein (CA) and Susan Collins (ME) recently introduced a bill that requires cosmetics companies to ensure their products are created, tested, packaged, and shipped safely. It gives the FDA the same power over this industry as it has over food and drugs.
But it’s not just pressure from the government that’s pushing for more transparency — there’s also pressure from the consumers. People are demanding for high-quality, safe ingredients in the products they use.
Think about this: How many products in your kitchen right now mention something about being fair trade, GMO-free, certified organic? And how many of them do you know (for a fact) actually are what they claim?
People like to believe these companies are being honest, but they like knowing it much more. And any industry that hasn’t been heavily regulated is coming under fire.
Companies like BetterKinds are using blockchain to foster everyday practices of conscious consumption and responsible production by empowering people to make better micro decisions that lead to better macro results.
You’ve probably heard about “blood diamonds.”
But plenty of other minerals and metals are extracted in conflict zones — and then sold to feed further conflict and suffering.
Surprisingly, the SEC requires companies to report if they’re using conflict minerals. But the government isn’t stopping their business for doing so.
On the other hand, plenty of companies that don’t use conflict minerals or metals would be happy to prove their authenticity by tracking and tracing their production. This process is simple to implement with blockchain-based supply chain systems like we built at Chronicled.
From lettuce to makeup, the new era of RegTech is presenting companies with a seamless way to adhere to the law, cutting costs and minimizing some operational inefficiencies.
Thanks to blockchain, we’ll soon have safer products, more transparent supply chains, and smoother regulatory compliance.