U.S. federal agencies are exploring use cases for blockchain technology and cryptocurrency, and a few projects are moving forward. For example, the General Services Administration is applying blockchain to fast-track contract approvals for innovative information technology providers.
At the same time, questions continue to arise about the possibility of regulation of the currently freewheeling crypto investment and applications markets. A regulatory regime for digital coins likely would create a shakeout in the rapidly-expanding global cryptocurrency markets, potentially increasing barriers to entry for new coin tokens and blockchains, and presumably would lead to more assurance for investors.
Global Public Sector Activity
The technological possibilities of blockchain and the soaring popularity of Bitcoin and other digital currencies are driving government agencies to experiment with various use cases and to consider regulation. Sweden and Estonia are among the countries developing their own cryptocurrencies, while many other governments are trying out various applications of distributed ledger technology.
According to the Global Blockchain Benchmarking Study released in September 2017 by Garrick Hileman, research director at Mosaic, there is significant Distributed Ledger Technology activity happening in the public sector at the local, regional, national and multilateral levels, with governments accounting for 13% of publicly reported blockchain use cases. In addition, he found that 58% of public sector institutions were planning advanced blockchain trials this year.
The GSA is tracking blockchain projects across the board on its Emerging Technologies Atlas website. The agency’s Emerging Citizen Technology program has set up a Blockchain listserv to connect researchers and managers.
The GSA’s highest-profile blockchain project to date has been using distributed ledger technology to automate the fast-tracking process for IT multiple-award contracts. The goal is to have quicker access to cutting edge IT technology, and with the distributed ledger technology the goal is to reduce turnaround time for contract modifications to 48 hours, and to process new offers in 45 days. The prototype developers say the blockchain will allow tracking of vendor performance data over disparate systems, speeding contract reviews.
Other blockchain programs in federal agencies include:
- The Centers for Disease Control’s Center for Surveillance, Epidemiology, and Laboratory Services has developed several proofs of concept to apply blockchain in public health surveillance;
- The Defense Dept.’s Joint Staff, J4 Logistics Directorate and the Deputy Assistant Secretary of Defense for Maintenance, Policy and Programs are developing a secure digital supply chain enabled by 3-D printing and blockchain;
- U.S. Food and Drug Administration is experimenting with open-access platforms and blockchain to enable secure exchange of digital health data.
- The White House’s Office of Personnel Management put out a Request for Information in September 2017, stating a preference for using blockchain for a new Federal Employee Digital Record System.
- The Treasury Dept. is creating a prototype blockchain to manage all its physical assets, including employees’ computers and cell phones.
To date, the SEC has not registered any Initial Coin Offerings or approved any exchange-traded products holding cryptocurrencies, or other assets related to cryptocurrencies, for listing or trading. Recently, the SEC chairman issued a warning to investors to carefully consider the lack of regulation in the crypto market.
Meanwhile, the U.S. Commodities Futures Trading Commission has declared that bitcoin and several other cryptocurrencies are commodities, and futures trading of bitcoin those coins is under its jurisdiction.
Analysts have suggested that some type of self-regulation and government regulation is likely as the crypto markets continue to grow. But the mantra for now is “buyer beware.”
With the U.S. government pursuing blockchain projects, it is an exciting time for entrepreneurs and investors in this emerging market. At the same time, U.S. regulatory agencies are mulling ways to police the crypto markets, and controls are likely to be increased in the coming months.