On May 4, the administration of President Joe Biden of the United States released a national standards strategy for critical and emergent technologies.
The strategy stated that the United States would prioritize the development of standards in eight areas.
Among the prioritized areas are “digital identity infrastructure and distributed ledger technologies, which are increasingly affecting a broad range of key economic sectors.”
“Distributed ledger” and “blockchain” are synonyms. A document being reviewed by the National Institute of Standards and Technology (NIST) defines digital identity as “the unique representation of a subject engaged in an online transaction.”
Digital identity is “unique in the context of a digital service but does not necessarily need to identify the subject uniquely in all contexts,” according to the document.
NIST is the federal agency responsible for coordinating government standardization efforts.
An apparent application of digital identity in economic sectors is Know Your Customer (KYC) and Anti-Money Laundering (AML), where blockchain solutions are being actively developed as regulators and enforcement agencies demand greater AML compliance in the U.S. and globally in the cryptocurrency industry.
On the basis of the blockchain’s consensus mechanism, innovations such as zero-knowledge KYC verification have been proposed to conduct AML verification, credit scoring, and comparable data.
Off-chain identity is now accessible through the use of passporting techniques with soulbound nonfungible tokens (NFTs).
Digital identity and privacy issues are intricately intertwined, and the government and crypto industry have yet to reach consensus in these areas.
According to the White House, the objective of the strategy is to safeguard U.S. consumers and the country’s role in developing international standards.
The strategy will increase funding for “pre-standardization research” in the identified critical areas, encourage private-sector and academic participation in that research, invest in training, and ensure the research’s integrity and inclusiveness.
The Treasury Department’s Office of Financial Research directs federal and international agencies’ work on digital identity, digital assets, and distributed ledger technology.
