How to Responsibly Progress Digital Currency and Assets in the Emerging Crypto Economy

The nascent digital asset and blockchain industries are not perfect, but they should not be feared. To ensure the responsible development of digital assets – including cryptocurrency – President Biden signed an executive order on the topic earlier this year. Specifically, the order directs federal agencies to research and recommend with the “highest urgency” the development of, and address the risks presented by, digital assets and a central bank digital currency.

To that end, IBM has assembled a guide to and recommendations for this rapidly evolving area based on our recent experiences and portfolio of client successes in this space. IBM recommends government and industry:

• • Systems be built using non-proprietary technology
  • Networks use distributed ledger technology and permissioned blockchain
  • Put the user at the center of design via a decentralized identity
  • Establish a clear, standardized data structure and interoperability standards
  • Define a governance model that can provide clear guidance and conflict resolution
  • Avoid creating energy intensive and user biased consensus solutions and instead used permission-
    based consensus algorithms with off-chain interactions
  • Create risk, compliance, and supervisory framework; a digital assets bank consortium; and an
    examination team to build awareness among state and national regulators