IN Brief:
- Counterfeit products create commercial, regulatory, and safety risks across global supply chains.
- Distributed ledgers can create cryptographically verifiable audit trails across successive product handoffs.
- EU Digital Product Passport requirements are increasing pressure on operators to establish verifiable product records before mandatory deadlines.
By Stefan Deiss, Co-Founder and CEO, The Hashgraph Group
Counterfeit goods now account for $467 billion in global trade annually, representing 2.3% of total world imports. What the numbers obscure is the human cost. In sub-Saharan Africa, falsified antimalarial and antibiotic medicines are linked to nearly half a million deaths every year. In the US, Customs and Border Protection seized more than 211,000 counterfeit automotive parts in 2024, including airbag units that the National Highway Traffic Safety Administration says “consistently malfunction” in use.
These are not isolated incidents. They are symptoms of supply chains that were designed to move goods quickly, not to verify them reliably. It is why verifiable, tamper-proof supply chain records have moved from a technical ambition to an operational necessity.
The verification gap
Most supply chain visibility today relies on centralised databases, shared dashboards or API integrations between trading partners. These systems work well for internal coordination. They do not hold up when a regulator, customs authority or auditor needs to verify that a record has not been altered after the fact.
A shared spreadsheet tells you what someone reported. A tamper-proof audit trail tells you what actually happened, and when. When data is written to a distributed ledger, it generates a unique cryptographic fingerprint. Any alteration to the original record, even a single character, produces an entirely different hash. Tampering becomes immediately detectable.
This is what makes distributed ledger technology structurally different from conventional supply chain software. A counterfeit product entering a tracked supply chain would need to bypass cryptographic verification at every handoff point. Both sender and receiver must sign each transfer. A gap in the signature chain is visible to every participant on the network. The cost of maintaining a deception across that many verification points exceeds the profit from the counterfeit itself.
Already operating at scale
De Beers has registered nearly three million diamonds on its Tracr platform since 2022, and since January 2025 every rough diamond of one carat or above receives a digital record at the point of extraction. In March 2026, De Beers invested $20 million to expand the platform, and in June the Gemological Institute of America acquired a 30% stake – a signal that the wider industry sees DLT-based provenance as essential infrastructure. Walmart was among the first to prove this was possible at scale, demonstrating the same principle for food safety, reducing trace times from seven days to 2.2 seconds.
The regulatory tailwind
The EU’s Digital Product Passport registry went live on 20 July. Battery passports become mandatory from February 2027, with aluminium, tyres and further product categories following through to 2030. Every product sold in the EU will soon require a verifiable digital record covering materials, manufacturing processes and environmental impact. For operators already dealing with counterfeiting risk, this regulatory framework adds urgency to a problem they cannot afford to ignore.
Preparing now
Operators who wait for mandatory compliance dates risk more than compressed timelines. Non-compliant products will be excluded from EU markets. In sectors where counterfeits cause physical harm, liability exposure extends far beyond regulatory penalties.
Getting from current systems to verified supply chains starts with identifying which product categories carry the highest counterfeiting risk. From there, map existing data capture points to understand where verification gaps exist. Then pilot distributed ledger integration on a single product line before scaling.
The goal is building audit trails that regulators can verify independently and supply chains that prove compliance rather than simply claiming it.
This article originally appeared in the Summer 2026 edition of IN Supply. Read the full issue here.
