What started as an early experiment by the state of Illinois to offer insurance services on a blockchain has expanded into a formal state-wide initiative.

Announced today at Blockchain Conference Chicago, the Illinois Blockchain Initiative, a first-of-its-kind consortium comprised not just of companies – but of five government agencies, is a far-reaching measure aimed at not only making it easier for startups to innovate but removing barriers for the government to build with blockchain.

In conversation with CoinDesk, Secretary of the Illinois Department of Financial and Professional Regulation, Bryan Schneider, expanded on his remarks made during the formal announcement today.

Schneider stated:

“The fact that we’ve got all these agencies willing to come together and share best practices, share ideas, at some point share what they’re hearing, I think is an incredibly powerful engine and shows the degree to which Illinois government is doing its best to break down those barriers.”

In addition to Schneider’s department, founding members of the Illinois Blockchain Initiative are the State Department of Commerce and Economic Opportunity (DCEO), the Department of Insurance (DOI), Cook County’s Recorders of Deeds and the the newly formed Department of Innovation & Technology (DoIT).

The moves by the Illinois government to create a more welcoming environment for blockchain companies follows other state efforts that have been met with mixed results. While New York’s Bitlicense (unveiled last year) removed uncertainty, it is also widely blamed for pushing out startups that lacked the resources to stay compliant.

In response, New Jersey and Delaware announced their own initiatives to attract industry business, though only the latter has grown in scope since it was revealed.

Since introducing its work in May, Delaware has gone on to push for the legal classification of blockchain shares, culminating most recently in calls by officials to move proxy voting to a blockchain.

Areas of focus

During Schneider’s full remarks, he broke down the initiative into three more specific areas of focus.

The inter-agency consortium’s first goal, he said, is to create a welcoming regulatory environment for digital currency and blockchain businesses looking to do business; the second is to invite blockchain companies to open up offices in the state; and the third is to develop specific blockchain prototypes for use by the Illinois government.

As part of a coordinated effort to accelerate the process of integrating blockchain technology, the Department of Innovation and Technology today also released a request for information (RFI) soliciting input and feedback from the blockchain community.

Though the state is hoping to leverage the influence of incumbents such as CME Group (based in Chicago), its chief technology officer, Mike Wons said he hopes the initiative will jump-start a flow of startups — and jobs — to the region.

Wons told CoinDesk:

“When you look at it it is goin to require a lot of the entrepreneurial startups to come into the environment and help solve the problems. The bigger vendors are the platform providers, but they aren’t necessarily the enablers.”

Early stirrings

Though still in its earliest phases, the multiple agencies involved in the consortium have already reported making progress in identifying a broad range of use cases in which a shared, immutable distributed ledger could simultaneously save tax-payer resources while increasing tax-payer access to services.

Last month, Illinois director of the Department of Insurance, Melissa Dowling, revealed the formation of a working group tasked to develop a blockchain strategy.

At the time, Dowling cited concerns that a lack of unity might slow progress, even as her own department was exploring how blockchain could speed the process by which actuaries determine the financial consequences of an event.

Schneider reiterated her concern, adding that the cross-industry initiative was designed to make sure that didn’t happen.

His own Department of Financial and Professional Regulation is currently looking into building blockchain applications that could streamline the transaction of mortgages by giving counterparties access to the same ledger of account.

Schneider said:

“We don’t have to promulgate a subpoena on a company and say ‘Give me all your records,’ because we’ve created a blockchain ledger where everyone agrees that’s what’s happened.”

Jobs capital

While cryptocurrency and blockchain companies have largely settled into either California or New York, today’s news is part of a concerted push by the highest level of the state’s government to push that momentum from the coasts to the US heartland.

Building on Chicago’s history as a financial center, the state’s entrepreneurial-minded governor and founder of the GTCR private equities firm, Bruce Rauner, earlier this year launched the Department of Innovation and Technology (DOIT).

Led by CIO Hardik Bhatt, the department was in part established to help consolidate the state’s 420 separate financial reporting systems, according to a State Journal Register report.

But as a founding member of the Illinois blockchain initiative, DOIT is also part of the blockchain consortium’s larger push to bring financial technology jobs to the state.

“Governor Rauner is committed to making Illinois the jobs capital of the Midwest and an important component of that is technological innovation,” said Schneider.

“I think to some extent this is about communicating to the world that this is a state and a state government that takes technological innovation seriously.”

Removing business uncertainty

Also announced today, the acting director of the Department of Commerce and Economic Opportunity, Sean McCarthy, has appointed assistant deputy director of entrepreneurship, innovation and technology, Jennifer O’Rourke as the first blockchain business liaison.

O’Rourke describes her role as a “facilitator of resources” for blockchain entrepreneurs, which currently include grants or tax incentives.

O’Rourke says the program could evolve to include other support.

As part of IBI’s push to make Illinois more hospitable to blockchain startups, Schneider today is expected to unveil the state’s “Digital Currency Regulatory Guidance”, intended to make clear how the IDFPR will treat digital currencies in relation to the Illinois’ Transmitters of Money Law.

At the time of publication this guidance had not yet been made public, though the public is expected to be invited to comment on the guidance prior to its formalization.

Schneider concluded:

“Regulation is a dangerous thing if not done carefully. It can stifle innovation, stifle job creation. So we want to make sure we don’t’ do that. But we also don’t want to leave the regulated community in a constant state of uncertainty.”

Image of Illinois state capitol building via Shutterstock