Blockchain technologies face challenges, but a new report from the Government Accountability Office (GAO) offers a range of policy recommendations that could help enhance the benefits and mitigate challenges posed by the use of those technologies.
Cryptocurrency is one of the better-known applications of blockchain, but blockchain can be used for both financial and non-financial applications, including supply chain management and legal records.
“While this emerging technology could help level the playing field for businesses of all sizes or enable greater financial inclusion, it also faces some challenges and poses some risks to the consumers and businesses that hope to use it,” GAO said.
GAO found the technology presents a variety of challenges including a lack of interoperability and common standards, legal and regulatory uncertainty, limited understanding by many, and undefined benefits and costs.
In order to mitigate these challenges and amplify the potential benefits of blockchain, GAO offered four recommendations to policymakers.
The first recommendation is for policymakers to collaborate on a unified set of standards “that focus on the development, implementation, and use of blockchain technologies.” GAO hopes this recommendation can address challenges around interoperability and data security.
The second recommends policymakers “clarify existing oversight mechanisms, including regulations, or create new mechanisms to ensure appropriate oversight of blockchain applications.”
Due to the relative newness of blockchain technologies, GAO said many organizations may not understand how the technology works. This recommendation aims to offer the clarity needed for individuals and organizations to more successfully engage in blockchain-related tech.
Similarly, the third recommendation advises policymakers to support the development of educational materials to help users and regulators better understand blockchain technologies beyond existing financial applications, such as crypto.
GAO’s final recommendation is for policymakers to “support activities designed to determine whether blockchain is appropriate for achieving specific missions and goals or to mitigate specific challenges.” This policy option aims to address challenges around risks to the financial systems and undefined benefits and costs.