Blockchain is proving to be an enabler of secure and transparent government transactions. As with any technology, as it gains traction it also gains scrutiny. Several laws and regulations have been introduced to ensure that risks associated with blockchain are understood and mitigated.
Recently, the Government Accountability Office issued a recommendation that the Securities and Exchange Commission and other federal financial regulators create a formalized coalition to coordinate the identification and addressing of blockchain-related risks. These risks could include security gaps resulting from old software, phishing schemes, speed of networks, and foreign access to sensitive data.
Congress is taking action to address the issue of foreign influence in blockchains. A bill introduced in the House would limit the federal government's ability to purchase or use blockchain technologies from entities with ties to the Chinese Communist Party (CCP) and other foreign adversaries that pose national security risks. The bill aims to "maintain a firewall between CCP-owned blockchain and the federal government and counter the Chinese Communist Party's influence in the global economy." The proposed bill would require federal agencies to ensure that distributed ledger technology or blockchain equipment does not have CCP ties.
While regulation is being debated, there are some exciting new applications of blockchain taking place across government.
Overseeing AI Personas
A legally binding contract must be between two persons. "Persons" is not always directly defined as a singular human. Corporations, nonprofit organizations, and limited liability companies (LLC) are categorized as "artificial persons" that can carry out contract agreements. With the expansion of AI into so many areas of life, there is now a need to regulate when an AI-operated entity can enter into contracts.
For example, an LLC could trade in digital currencies via blockchains. This LLC could utilize AI to conduct these transactions autonomously and in a decentralized manner, making it a Decentralized Autonomous Organization (DAO). DAOs do not have a central authority like a board of directors or C-level executives who are ultimately responsible for decisions. In the spirit of blockchain, power is distributed to individual members of the DAO who own digital tokens to be participants and make decisions and cast votes as a collective. Because each state has different laws governing AI-operated LLCs, operating legally nationwide can be difficult.
Modernizing Records Management
Blockchain holds incredible promise to streamline access to government records. The paper-driven processes that currently dominate the management of records, such as birth certificates, land deeds, vital records, and more, simply do not meet the digital expectations of today's citizens.
Riverside, CA, is looking to use blockchain to track and secure digital vital records and official copies of those documents, as well using it to store electronic documents, eliminating the need for paper storage. Similarly, the Illinois Blockchain Initiative is looking at ways to use blockchain for birth and death certificates, aiming to create a secure and tamper-proof platform for storing and sharing vital records.
At the federal level, U.S. Customs and Border Protection (CBP) is looking at how blockchain could be applied to the portal used to process import and export trade data, including manifest, cargo release, post-release, and partner government agency information. The agency hopes that the use of blockchain can reduce time, cost, and delays for processing cargo transactions and create a more integrated system between CBP offices and partner agencies.
More details on the application and regulation of blockchain can be found on GovEvents and GovWhitepapers.
- Homeland Security Week (January 23-24, 2024; Arlington, VA) - This senior and expert-led summit will highlight the ongoing efforts to empower knowledge sharing and collaboration with those across the Military, Defense, Law Enforcement, Industry, and Academic sectors at the local, state and national level.
- International Women of Blockchain (March 20-22, 2024; Washington, DC) - This event spotlights global women blockchain enthusiasts and experts as well as AI and metaverse leaders, while raising awareness and spearheading adoption.
- Cornell Blockchain Conference (April 26, 2024; New York, NY) - Join industry leaders, top academics, passionate students, investors, and regulators as they discuss how to use blockchain technology in its current form and also how to think about the future potential of blockchain technology.
- DC Blockchain Summit (May 15, 2024; Washington, DC) - Engage with policymakers and top influencers in discussing the most important issues facing the blockchain industry.
- Trend Report: The Future of Blockchain in Government - More Than Crypto (white paper) - This publication discusses how blockchain is used, how it evolves on the dark web, its future with digitizing assets, and how it could be used within the government.
- Blockchain in Finance: Legislative and Regulatory Actions Are Needed to Ensure Comprehensive Oversight of Crypto Assets (white paper) - Blockchain allows users to conduct and record tamper-resistant transactions that multiple parties make without a central authority. Blockchain-related products and services have the potential to produce cost savings, faster transactions, and other benefits. This paper looks at the promise of blockchain as well as the significant risks these products pose.