Jan 26 -- The Federal Government is developing a National Digital Assets Research and Development Agenda. The White House Office of Science and Technology Policy (OSTP)—on behalf of the Fast Track Action Committee (FTAC) on Digital Assets Research and Development of the Subcommittee on Networking and Information Technology Research and Development (NITRD) of the National Science and Technology Council, the National Science Foundation, and the NITRD National Coordination Office—requests public comments to help identify priorities for research and development related to digital assets, including various underlying technologies such as blockchain, distributed ledgers, decentralized finance, smart contracts, and related issues such as cybersecurity and privacy (e.g., cryptographic foundations and quantum resistance), programmability, and sustainability as they relate to digital assets. Interested individuals and organizations are invited to submit comments on or before 5 p.m. ET on March 3, 2023.
Digital assets are enabling new ways to move value through the online world, and their underlying technology is facilitating change across industries. In the private sector, companies are using DLT to synchronize databases with limited trust, enable new types of recordkeeping, build new infrastructures for managing digital identity, and provide novel financial services to consumers. In the public sector, the United States is exploring whether a CBDC could provide a trustworthy infrastructure to facilitate transactions in a highly digitized world. Across the board, applications of digital assets are benefitting from advances in foundational and translational research, spanning topics from cryptography to the social, behavioral, and economic sciences. However, research and development (R&D) in this space has often been conducted in a fragmented manner, with limited consideration for the broader implications, applications, and downside risks for the underlying innovations. This is particularly concerning because there are many examples of how digital assets introduce risks and exacerbate harms to people, communities, institutions, and the planet.
A more comprehensive R&D approach would provide concrete areas of focus towards achieving a holistic vision of a digital assets ecosystem that embodies democratic values and other key priorities. This approach would help ensure that sometimes-overlooked topics like environmentally-friendly consensus mechanisms and fraud-resistant transaction programmability receive appropriate levels of R&D support. This approach would also help ensure that advances in digital assets can also support technological progress in overlapping and adjacent domains, including the traditional financial services industry.
Recognizing the importance of responsible innovation in digital assets, President Biden signed E.O. 14067, which outlined the first whole-of-government approach to digital assets. Pursuant to this E.O., OSTP published Technical Evaluation for a U.S. CBDC System, which highlighted the importance of solving key open questions related to digital assets. OSTP found that there were several important and open questions related to digital assets R&D, which could benefit from increased attention and support. These R&D questions span a wide range of sociotechnical aspects, from technical innovations to social, behavioral, and economic aspects, germane to advancing digital assets while seeking to ensure that people from diverse groups, including underrepresented and marginalized groups, can access and use digital assets in a secure, privacy-preserving, inclusive, and equitable manner.
This report recommended that the U.S. Government develop and periodically update a National Digital Assets R&D Agenda. This recommendation complemented the Multi-Agency R&D Priorities for the FY 2024 Budget, which requested that Federal departments and agencies collaborate on critical and emerging technologies, including financial technologies. To help implement this recommendation, OSTP and the National Science Foundation are now co-chairing an interagency FTAC under the NITRD Subcommittee to develop this R&D Agenda. Through this whole-of-government effort, the Biden-Harris Administration will identify R&D priorities for digital assets, and help direct Federal resources and expertise toward advancing those priorities.
Digital assets have generated interest across a range of use cases that could help grow the economy, provide societal benefits, and advance equity and inclusion. There are a number of potential use cases that support these goals, such as the potential for digital assets to help human rights advocates receive financial support for their work under governments that are trying to curtail their activities. However, while much attention has been given to applications within the financial ecosystem, there are also applications that span a range of other sectors. For example, while some digital assets can consume a lot of energy, their underlying technology may support easier integration and coordination of clean energy resources, such as by providing a better ledger for the authentication, participation, and renumeration of beneficial services from distributed energy resources (e.g., electric vehicles, connected appliances and devices, residential and commercial energy storage systems, solar power systems) on a smart grid. There may be other applications of interest across other sectors, such as healthcare and public health, supply chain management, manufacturing, and internet architecture. The Federal Government should help ensure that the potential of digital assets is realized in sectors where it provides value, while taking steps to ensure that this realization is achieved with the appropriate guardrails needed to ensure responsible innovation in line with American values and a clear understanding and proactive mitigation of the downside risks associated with increasing adoption to digital assets.
A focused R&D effort could provide especially significant benefits for better understanding and designing a particular type of digital asset—the CBDC. While the United States has not made a decision about whether it will pursue a CBDC in the next few years, a focused R&D effort could help illustrate how to design a CBDC system in line with the Biden-Harris Administration's Policy Objectives for a U.S. CBDC System. For example, what cryptographic primitives and PETs could best protect the privacy of individuals using the CBDC system? How can social sciences and behavioral economics help identify and remove barriers for usage of the CBDC system by underserved communities? What security features are needed to ensure consumer trust and strong resilience against criminal actors? A focused R&D agenda that engages academia, industry, and civil society can advance policymakers' understanding of how design choices for a CBDC system can impact national policy objectives such as protecting privacy and advancing equity. In turn, these findings could help support the Federal Reserve, the White House, and the Department of the Treasury in assessing whether the issuance of a U.S. CBDC is in the national interest.
Through this RFI, OSTP seeks responses that could inform the full breadth of Federal R&D priorities related to digital assets, including R&D initiatives that could complement the Federal Reserve's research and experimentation related to CBDCs, consistent with the highest urgency that E.O. 14067 placed on R&D for a U.S. CBDC system. We also encourage respondents to explain how their R&D suggestions could help advance policy priorities or recommendations outlined in reports pursuant to E.O. 14067, such as OSTP's report titled Climate and Energy Implications of Crypto-Assets in the United States.
OSTP invites input from any interested stakeholders. In particular, OSTP is interested in input from parties researching, developing, acquiring, using, or governing digital assets; and stakeholders with relevant expertise, either learned or lived. This scope extends to CBDCs, financial use cases, and any of the other use cases and/or value propositions (across sectors) where digital assets might add value or introduce risks of negative impacts.
Respondents may provide information for one or more of the topics below, as desired. Through this RFI, OSTP seeks information on specific R&D opportunities related to the following topics:
1. Goals, sectors, or applications that could be improved with digital assets and related technologies . . .
2. Goals, sectors, or applications where digital assets introduces risks or harms . . .
3. Federal research opportunities that could be introduced or modified to support efforts to mitigate risks from digital assets . . .
4. R&D that should be prioritized for digital assets . . .
5. Opportunities to advance responsible innovation in the broader digital assets ecosystem . . .
6. Other information that should inform the R&D Agenda . . .