Can Blockchain Transform the State?

It’s always encouraging to see governments catching up with innovation driven by the private sector. In many ways, it acts as a seal of approval - a recognition that the work of entrepreneurs and inno

Governments have a lot of spending power and have the ability to shape markets through procurement and technology adoption, beyond their more obvious powers to regulate and legislate. But Governments are naturally risk averse in how they deploy new tech. They either miss the chance to support emerging technologies at their formative stages, or they are too cautious to embrace the potentially transformative change for fear of disrupting existing systems.

There are regions, however, starting to buck this trend as demonstrated by the UAE’s recent announcement that cryptocurrencies can now be used to pay for government services.

From service deeds to utility bills — even parking fees — citizens will now be able to pay through a single digital wallet. That’s a promising step forward.

The UAE is also heavily investing in AI, giving room for a framework where AI and blockchain converge to underpin smart governance. The recent launch of AE Coin underpins their commitment to this advancement.

AE Coin Secures License from the Central Bank of the UAE

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We’ve seen other similar examples in the Gulf region too. Take Bahrain where platforms like CoinMENA is helping normalise access to digital assets through licenced and compliant infrastructure. The Saudis, while more cautious, are steadily advancing their own blockchain strategy, integrating distributed ledger technology into areas like trade finance.

This has got me thinking: a single platform where citizens can manage utilities, pay taxes through traditional or defi, and access public services securely and transparently would eliminate the time-consuming bureaucratic processes that often burden individuals simply trying to get things done. It could genuinely improve the relationship between citizen and state.

It’s refreshing to see a government removing friction points. It’s even more refreshing to see one embracing technology out of need for positive change rather than fear of the changes it may bring.

Isn’t it mutually beneficial for public services to be easy to use? Isn’t it sensible for them to be accessible through a unified digital interface?

Integrating blockchain infrastructure could enable all of this. Blockchain is already transforming private enterprise — from financial services to gaming — and it can, and likely will, do the same for government.

Take Colombia for instance. The Colombian government has transformed its land registry processes, using XRPL to allow citizens to register assets on the blockchain, speeding up property transactions and improving accountability.

Look at Estonia’s digital identification system – powered by cryptography and blockchain. As one of Europe’s fintech capitals, Estonia has embraced digital innovation at a national scale. The digitalisation has allowed its citizens to establish online businesses, access a wide range of public services, receive medical care, and even participate in E-Voting.

All this real-life utility is being provided by simply being brave enough to disrupt traditional industries by embracing new technologies.

The West’s response is, unsurprisingly, very mixed. However there have been some outliers. Switzerland has enriched crypto-friendly policies into its law, allowing companies to create digital shares that can be listed and traded on the blockchain. The UK, despite its traditional caution, is making strides with its Property Assets Bill, which finally establishes that digital assets can be recognised as personal property.

I’ve said many times before that we stand on the edge of a truly transformational digital revolution, with crypto and blockchain technology at its core. If governments are willing to embrace this innovation, that future will come even sooner.

Of course, there’s a vital caveat: for governments to truly benefit from private-sector innovation, they must be brave enough to let entrepreneurs, developers, and disruptors continue pushing boundaries — free from suffocating red tape.

The reality is that the transition to a digital economy is being driven by decentralised innovation. Whether governments act or not, the private sector will keep moving.

But that doesn’t mean public services can’t benefit. Wherever new technologies reduce friction, improve efficiency, or expand access, they should be adopted.

This isn’t just about regulation and enforcement – it’s more about having a vision.

If governments recognise the use cases, support responsible innovation, and integrate proven technologies, friction points are reduced or removed entirely.

Trusting fintech start-ups to push the boundaries of blockchain, while ensuring a regulatory environment that protects without stifling, will only accelerate the region’s shift towards a digital future.