Business

US Congressional agency recommends 4 key blockchain policy options

At the request of the United States Congress, the US Government Accountability Office (GAO) has outlined four policy options to help policymakers implement blockchain technologies while increasing benefits and mitigating challenges.

The technology rating GAO recognized the potential of blockchain technology to enhance a variety of financial and non-financial applications, although concerns were raised about introducing new challenges while trying to solve problems associated with traditional systems:

“Blockchain could both increase the speed of a title registration system and reduce the cost of title insurance by making title registration simpler and more trustworthy.”

However, some of the challenges highlighted in the study include uncertain benefits, data reliability and legal compliance.

blank
Flow chart for determining if blockchain can be useful. Source: GAO

With the flowchart above, GAO aims to help policymakers — including Congress, federal, state and local governments, academic and research institutions, and industry — determine the requirements for blockchain implementation.

The GAO assessment also highlighted various non-financial implementations of blockchain technology, as shown below.

blank
Examples of potential use cases of blockchain technology. Source: GAO

While policymakers have the right to maintain the status quo, GAO recommended four policy options to facilitate the decision-making process behind mainstream blockchain implementation – standards, oversight, educational materials, and fair uses.

By setting standards, GAO intends to address challenges related to interoperability and data security. Some considerations include the implementation of consensus mechanisms and the establishment of internationally recognized standards.

According to the GAO, oversight policies “can help address challenges involving legal and regulatory uncertainty and regulatory arbitrage.” In addition, GAO recommends the release of training materials to address challenges related to limited understanding and undefined benefits and costs.

The fourth policy option, fair uses, talks about mitigating challenges related to risks to financial systems and undefined benefits and costs. The assessment highlights the Commodity Futures Trading Commission’s (CFTC) lack of authority to work with NGOs:

“Legal or regulatory uncertainties may prevent some potential users from benefiting from blockchain.”

Related: Virginia US Senate allows state banks to offer crypto custody services

On March 5, the Virginia Senate unanimously approved a legislative amendment that now allows traditional banks in the region to offer virtual currency custody services.

As Cointelegraph reported, the bill was introduced by Delegate Christopher T. Head in January 2022, saying:

“A bank can offer virtual currency custody services to its customers as long as the bank has 26 appropriate protocols in place to effectively manage risk and comply with applicable laws.”

The bill passed the Senate by a 39-0 vote and is awaiting enactment by Virginia Gov. Glenn Youngkin.