New innovations—including those building on blockchain and distributed ledger technology—can move money and provide liquidity quickly, securely, and transparently. Kristin Smith, executive director of the Blockchain Association, says innovators and policymakers can work to use the technologies to speed payment distribution, provide real-time tracking of relief programs, and improve necessary oversight of multi-billion dollar programs, like those implemented under the pandemic.
At the end of the last financial crisis, only 35% of Americans owned a smartphone. Over the last decade, day-to-day life for most Americans has become deeply dependent on smartphone access, with ownership surpassing 81% in 2019.
In addition to changing the way we run our households, travel, and work, smartphones have fundamentally altered the way we handle our money. As financial services adapted to mobile computing, technology moved quickly from providing basic access to information to creating an entire new ecosystem of credit cards, fintech firms, smart bank accounts, and mobile wallets.
Specialized financial services, previously open only to society’s wealthiest, are now available for anyone with access to a smartphone. Financial adviser services like Wealthfront and Betterment provide low cost investment advice; apps like Acorns let users save the spare change from their purchases; and platforms like Vanguard have opened investing to all. Even the smartphone cohort of 10 years ago might be shocked at the proliferation of mobile financial services.
Supporting Government Recovery Programs
Today, we face a new challenge. Congress and the administration have worked diligently to provide Americans with the tools and the economic resources to respond and recover from the current pandemic, and minimize the impact on our economy. As the response to the crisis evolves, we think now is the time to discuss the role innovative American technology companies can play in supporting government programs during this and future emergencies.
Proposals such as the six-year strategy from the IRS to modernize internal operations or the Office of Management and Budget Open Government directive have pushed the federal government forward. And during this current crisis, the Treasury Department has already taken significant steps by approving fintech lenders to participate in the SBA lending program and have leaned on payment companies to support impact payment distribution.
Additionally, Republican leadership of the House Energy and Commerce Committee announced May 12 a new agenda focused on “American leadership in emerging technology to beat China and other challenges to global competitiveness.” But more can be done.
In a recent letter to Treasury, 11 members of Congress observed that new innovations—including those building on blockchain and distributed ledger technology—have emerged in the past decade that are capable of moving money and providing liquidity quickly, securely, and transparently. These technologies can speed impact payment distribution, provide real-time tracking of relief programs, and improve necessary oversight of multi-billion dollar programs.
We urge public entities to leverage the pioneering services being developed by homegrown technologists. A promising first step would be for the government to create a multi-agency review board charged with modernizing stimulus and emergency relief systems by identifying gaps in the infrastructure for government financial services and recommending any needed regulatory updates.
Americans have become accustomed to a faster pace of digital life and these companies can help the government accelerate the implementation of vital services, speeding up payments, clearing transactions faster, and sourcing liquidity more efficiently.
New innovations building on blockchain and DLT have the same revolutionary potential as smartphone technology did to reshape Americans’ everyday lives. The Covid-19 crisis has exposed the gap between the speed of action we have come to expect and the government’s ability to meet that same digital pace.
The problems are clear and we should press ahead testing and implementing novel solutions. Now is the time for policymakers to partner with tech to close the national digital chasm, for the benefit of all working Americans.