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The U.S. Treasury Department is about to complete testing a blockchain-based payment capability for federal grants, FCW reported.
Craig Fisher, Supervisory Program Manager in the Office of Financial Innovation and Transformation (FIT), shared that they are finishing up a proof of concept program for a blockchain-based letter of credit for the recipients of federal grants. The new program will tokenize the electronic federal letters of credit that will be sent out to the grant recipients to track payments. This guarantees a safe and secure transaction compared to actual cash exchange.
Fisher explained that the token is a digital representation of the payment and it includes the recipient’s identification, grant amount and key dates like the time it was awarded. The blockchain-based letter of credit provides a peer-to-peer transfer to prime and sub-grantees. Grant recipients need an electronic wallet associated with a bank account to receive their tokenized letter.
The department has been looking into blockchain potential for the past couple of years. In 2019, Fischer also discussed blockchain at a conference hosted by Booz Allen Hamilton and the Data Foundation on the report “Bringing Blockchain into Government.” At the time, he revealed that they were still far from completing their blockchain tests.
“If you look at this from a government-wide perspective, data standardization is critical,” Fischer said. “So what we learned is ‘can it improve this?' Yes, but not right now because there would need to be a massive standardization effort that would have to take place across the government for blockchain to be an effective tool for managing and tracking software licenses.”
Fischer added that if blockchain doesn’t improve life for the user it will have a slower uptick, otherwise, it will have a faster uptick. Apparently, the case is true for the latter.
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