One of the major agencies within the U.S. Treasury Department is moving forward with a blockchain project launched three years ago. The Bureau of the Fiscal Service announced that it will be launching the second phase of its ‘Blockchain for Grants Payments’ project as part of its efforts to adopt emerging technology.
The bureau has been conducting research into how blockchain technology can be used to tokenize, transfer and redeem grant payments. In its statement, it cited some of the benefits of tokenizing grant payments, which include cutting down on costs and labor, increasing transparency and enhancing internal controls.
The bureau will now focus on evaluating the functional and legal implications of using the technology in grant payments over the next six months.
Fiscal Service Supervisory Program Manager Craig Fischer remarked, “By tokenizing relevant grant award information and combining it with grant payment information on the blockchain, we attain a new payment transparency that we couldn’t reach previously without significant and burdensome reporting.”
The blockchain-based platform will be used to tokenize electronic letters of credit which the government sends out to grant recipients, Fischer explained in early 2020. This will allow the government to track these payments and make the transactions more secure.
He told Federal Computer Week, “Instead of an actual cash exchange, the token is a representation of the payment that can be tracked more efficiently, with associated data including recipient identification, grant amount and key dates like when it was awarded.”
Grant recipients will need to have an electronic wallet linked with a bank account to receive the tokenized letter of credit. To enhance security, access to the letter can be role-based.
The bureau has been working on the project with Duke and San Diego State Universities, as well as the National Science Foundation.
‘Blockchain for Grants Payments’ was one of two projects the bureau launched as it seeks to leverage emerging technology to “re-imagine how the federal government performs its business.” The other is ‘Digital End-to-End Efficiency (DEEE),’ a project aimed at digitization and automation of government business processes. DEEE will leverage robotic process automation and artificial intelligence to automate individual tasks, with the bureau projecting that other federal agencies will follow suit.
The bureau, which manages the government’s accounting and public debt, has been involved in blockchain in the past. In 2017, it launched a blockchain platform to track the movement of smart phones, computers and other office assets.
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