The administration under the current US President Joe Biden issued a national standards plan for emerging and crucial technologies on the 4th of May. The strategy mentioned that the country could pay more attention to the standards development across 8 zones. Among the most prominent areas, distributed ledger technologies (used in the crypto sector) and digital identity-related infrastructure are included and they significantly affect several chief economic sectors.
White House’s Latest Standards Plan Could Influence the KYC Implications in the Crypto Industry
In the respective strategy, blockchain technology has been referred to as a “distributed ledger.” Digital identity is known as the exclusive representation of a topic involved in an online transfer, as per a National Institute of Standards and Technology (NIST) document that is currently under review. In line with a digital service, digital identity counts as unique nonetheless does not essentially require exclusively detecting the subject in diverse contexts, as per the document.
NIST is considered to be the federal organization that manages government standards operations. An obvious utilization of digital identity within the financial sectors deals with Anti-Money Laundering (AML) and Know Your Customer (KYC). In this respect, blockchain solutions are getting developed actively as the enforcement agencies and the regulators demand enhanced AML compliance within and outside the US jurisdictions.
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Innovations like zero-knowledge KYC validation, based on the consensus mechanism of the blockchain ecosystem, have been suggested to implement credit scoring, AML validation, as well as similar information. Passporting techniques with the use of soulbound NFTs have been organized to make accessible the off-chain identity. Moreover, privacy problems and digital identity are extremely knotted.
The Plan Targets Consumer Protection within the US
These are the zones where the crypto industry and the government have not yet reached a consensus. The strategy’s objective is to shield the consumers within the United States and the role of the country in establishing international standards, as stated by the White House. The strategy will boost investment in the case of pre-standardization research concerning the chief identified areas. Along with this, it also encourages academic and private-sector participation in the respective research.