USAID to be Restructured with Blockchain for Enhanced Transparency
2min read The administration is considering a significant restructuring of the United States Agency for International Development (USAID) by leveraging blockchain technology. This initiative aims to enhance transparency and efficiency in the agency's operations. The proposed changes include renaming USAID to the U.S. International Humanitarian Assistance Agency (IHA) and placing it under the direct oversight of the Secretary of State. A memo circulating among State Department staff highlights the use of blockchain technology to protect and track all allocations, thereby significantly enhancing security, transparency, and traceability. This approach is expected to encourage innovation and efficiency among implementation partners, allowing for more flexible and responsive project designs focused on real impacts rather than just completing activities and inputs.
The emphasis on dollar-backed stablecoins suggests a strategic move intended to reinforce the U.S. dollar's global dominance through digital finance innovations. This initiative is part of a broader effort to position the USA as a leader in cryptocurrencies and next-generation financial technologies. The administration has stated that the USA is already ahead in the realm of cryptocurrencies and next-generation financial technology, and the administration is bringing an end to the regulatory war on cryptocurrencies and Bitcoin from the previous administration. This shift is seen as a way to maintain the autonomy of the monetary system and ensure that the U.S. dollar remains a dominant global currency.
The use of stablecoins, which are cryptocurrencies designed to maintain a stable value often pegged to fiat currencies like the U.S. dollar, has become increasingly important. These stablecoins make it easier for households to acquire low-risk dollar assets, which is particularly relevant for European households who may find it challenging to open dollar bank accounts. The strategic move to harness stablecoins is aimed at future-proofing the dollar by leveraging digital finance innovations to maintain its global dominance.
The Office of the Comptroller of the Currency (OCC) has stopped reputation risk reviews of national banks and other financial institutions following strong condemnation from the crypto industry for being excluded from the financial system. The OCC's review process has focused on appropriate risk management processes rather than making subjective judgments about certain activities. This move is seen as a step towards improving risk management and transparency within the industry, which could reduce de-banking activities by major financial institutions.
The Depository Trust & Clearing Corporation (DTCC), the main clearing institution for securities trading in the USA, has pledged to promote the ERC-3643 standard on Ethereum for licensed security tokens. This support highlights the positive attitude towards tokenization from USA regulators following the administration's vow to make the USA a leader in cryptocurrencies. The ERC-3643 standard, also known as the T-REX protocol, is a set of open-source smart contracts that supports the issuance, management, and transfer of licensed tokens, even on permissionless blockchains. This move indicates that the Ethereum blockchain network may play an important role in the licensed security token ecosystem in the USA.
The USA is also taking steps to address the issue of de-banking in the crypto industry. The OCC has stated that it will remove reputation risk-related content from its manuals and guidelines, although this will not change its expectations of how banks manage risks. This move is seen as a way to improve risk management and transparency within the industry, which could reduce de-banking activities by major financial institutions.
In summary, the administration's focus on leveraging blockchain technology and stablecoins is a strategic move to enhance the U.S. dollar's global dominance. By promoting transparency, efficiency, and innovation in financial operations, the USA aims to maintain its leadership in the realm of cryptocurrencies and next-generation financial technologies. The OCC's changes in risk management processes and the DTCC's support for the ERC-3643 standard further underscore the administration's commitment to fostering a more inclusive and transparent financial ecosystem.
