The Treasury Department of The United States of America is now close to rounding off testing for a blockchain-based grants payment capability as a means of discovering blockchain’s increased efficiency in data operations. According to reports by Business of Federal Technology on 10 January, Craig Fischer, program manager at The Treasury Department stated that the department is in its final stages of completing a proof of concept program for a blockchain-based letter of credit for recipients of federal grants.
The program is a joint collaboration with the San Diego State University, Duke University, and the National Science Foundation. The group has been working since September of 2019 and is estimated to finish by the end of January.
The program functions by tokenizing electronic federal letters of credit that have been sent out to recipients of the federal grant. This tokenization helps keep in track the payment of grants made to the recipients as well as increase the security of transactions.
The tokenization also allows the government to keep up with the tracking of grant money from state-federal agents to recipients.
The blockchain-backed payment system would provide for the peer-to-peer transfer of grant money to prime and subgrantees. To avail and use the system, recipients are required to have a digital wallet connected with a bank account. Unlike the Bitcoin network, access would be granted only to the user.
The Treasury Department and Blockchain
This isn’t the first tryst with blockchain for the treasury department. The agency has been a firm advocate of blockchain and its varying uses for a couple of years. In 2018, the agency worked on a project for the development of a prototype blockchain application to aid in the management of physical assets like computers and cell phones to name a few. Blockchain was then established as a technology with enormous potential to streamline heavy reconciliation operations dealing with various financial and data transactions.