- The four policy options address matters concerning standards, oversight, educational materials, and appropriate uses of blockchain.
- It also speaks about mitigating challenges and risks associated with the use of blockchain tech.
The United States government agencies seem to have started working on the blockchain and crypto policies as President Joe Biden signed the executive order earlier this year. As requested by the U.S. Congress, the U.S. Government Accountability Office (GAO) has presented four policy options to help policymakers implement blockchain technologies.
These four policy options look at mitigating challenges and hurdles while simultaneously enhancing the benefits of blockchain. GAO shared the technology assessment acknowledging the potential of blockchain technology in improving several financial and non-financial applications. It adds that of course there shall be new challenges but notes that blockchain can help resolve key issues with the traditional systems. The assessment from U.S. DAO notes:
A blockchain might both increase the speed of a title registry system and lower the cost of title insurance by making title registration simpler and more trustworthy. It may also simplify access to the myriad of documents and information needed to register title and transfer ownership.
However, it also cites some of the challenges such as data reliability, uncertain benefits, and legal compliance. GAO has also presented a unique flow chart that can help determine the use and requirement of blockchain implementation concerning different federal and state agencies.
The non-financial implementations of blockchain
To ease the decision-making process with the use of blockchain, the GAO has recommended four policy options. This goes beyond the mainstream implementation and includes standards, oversight, educational materials, and appropriate uses.
When it comes to setting standards, GAO talks about tackling challenges around interoperability and data security. Other considerations include the implementation of a consensus mechanism and establishing globally recognized standards.
GAO notes that an oversight policy can “help address challenges with legal and regulatory uncertainty and regulatory arbitrage”. To address the challenges with the limited understanding of blockchain, GAO recommends providing educational material.
The fourth policy option of “appropriate uses” talks about alleviating challenges concerning the risks to financial systems. It also talks about challenges associated with undefined benefits and costs. GAO also highlights the lack of authority of the Commodity Futures Trading Commission (CFTC) to collaborate with non-governmental entities. “Legal or regulatory uncertainty may hinder some potential users from benefitting from blockchain,” it notes.
However, state governments in the U.S. are now introducing bills to allow traditional banks for offering crypto custodial services to their clients. The State of Virginia is a recent example behind it. The state Senate passed a bill stating “A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws”.
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