US Treasury tests blockchain for grant payments

The US Department of the Treasury is in the process of completing an experiment with blockchain in the field of federal grants. The Treasury has thus tokenized letters of credit to measure the operational efficiency enabled by the blockchain.

The United States Department of the Treasury continues its experiments around the blockchain technology. Already in 2018, he launched a pilot to supervise the management of his equipment on the blockchain, including computers and mobile phones.

At a conference devoted to the modernization of federal financial systems, the head of innovation at the US Treasury, Craig Fischer, presented a new blockchain pilot program.

Monitoring of grants from Treasury funds to beneficiaries

According to his testimony, reported by FCW, the ministry is in the process of finalizing a PoC (Proof-of-concept) based on a private blockchain applied to installments of federal grants. Letters of credit issued by the Treasury to grant recipients have thus been dematerialized or tokenized.

The digitization of these assets not only makes the monitoring of federal subsidy payments more transparent, but also makes transactions more secure, stresses Craig Fischer. The payment traceability is thus insured from the state coffers to the beneficiaries.

In this use of the blockchain, the token is a digital representation of the payment that can be more effectively tracked. Various data are associated with the tokenized letter of credit, such as the identity of the beneficiary, the amount of the grant and the key dates, including that of award.

In this blockchain system under experimentation, the beneficiaries of grants must have a electronic wallet, associated with a bank account. Security roles are defined for each letter of credit, based on identity, to guarantee payment to the right beneficiary and secure access to data.

"It's not the Bitcoin network, where everything is visible," said the head of innovation.

This new pilot is due to end at the end of January. The goal for the Treasury Department is to test the potential of the blockchain for its operations and measure its contribution to improving its operational efficiency.