Request for Information; Digital Assets Research and Development, 5043-5046 [2023-01534]

Agencies

• Office of Science and Technology Policy

[Federal Register Volume 88, Number 17 (Thursday, January 26, 2023)]
[Notices]
[Pages 5043-5046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01534]


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OFFICE OF SCIENCE AND TECHNOLOGY POLICY


Request for Information; Digital Assets Research and Development

AGENCY: Office of Science and Technology Policy (OSTP).

ACTION: Notice of Request for Information (RFI).

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SUMMARY: The Federal Government is developing a National Digital Assets 
Research and Development Agenda. The White House Office of Science and 
Technology Policy (OSTP)--on behalf of the Fast Track Action Committee 
(FTAC) on Digital Assets Research and Development of the Subcommittee 
on Networking and Information Technology Research and Development 
(NITRD) of the National Science and Technology Council, the National 
Science Foundation, and the NITRD National Coordination Office--
requests public comments to help identify priorities for research and 
development related to digital assets, including various underlying 
technologies such as blockchain, distributed ledgers, decentralized 
finance, smart contracts, and related issues such as cybersecurity and 
privacy (e.g., cryptographic foundations and quantum resistance), 
programmability, and sustainability as they relate to digital assets.

DATES: Interested individuals and organizations are invited to submit 
comments on or before 5 p.m. ET on March 3, 2023.

ADDRESSES: Interested individuals and organizations should submit 
comments electronically to [email protected] and include < RFI 
Response: Digital Assets R&D Agenda > in the subject line of the email. 
Due to time constraints, mailed paper submissions will not be accepted, 
and electronic submissions received after the deadline cannot be 
ensured to be incorporated or taken into consideration.
    Instructions: Response to this RFI is voluntary. Each responding 
entity (individual or organization) is requested to submit only one 
response, in English.
    Responses may address one or more topics, as desired, from the 
enumerated list provided in this RFI, noting the corresponding number 
of the topic(s) to which the response pertains. Submissions must not 
exceed 10 pages (exclusive of cover page and references) in 11-point or 
larger font. Responses should include the name of the person(s) or 
organization(s) filing the comment, as well as the respondent type 
(e.g., academic institution, advocacy group, professional society, 
community-based organization, industry, member of the public, 
government, other). Comments referencing materials that are not widely 
published should include copies or electronic links of the referenced 
materials. No business proprietary information, copyrighted 
information, or personally identifiable information (aside from that 
requested above) should be submitted in response to this RFI. Comments 
submitted in response to this notice are subject to the Freedom of 
Information Act. Comments submitted in response to this RFI may be 
posted online or otherwise released publicly.
    In accordance with Federal Acquisitions Regulations Systems 
15.202(3), responses to this notice are not offers and cannot be 
accepted by the Federal Government to form a binding contract. 
Additionally, those submitting responses are solely responsible for all 
expenses associated with response preparation.

[[Page 5044]]


FOR FURTHER INFORMATION CONTACT: For additional information, please 
direct questions to Nik Marda, Anna Brady-Estevez, and James Joshi at 
[email protected] or 202-459-9688.

SUPPLEMENTARY INFORMATION: Responsible innovation in digital assets 
could provide significant benefits for the American people. This RFI 
seeks input to shape a whole-of-government effort on research and 
development related to digital assets and distributed ledger 
technology.

    Terminology: As defined in Executive Order (E.O.) 14067, Ensuring 
Responsible Development of Digital Assets and 87 FR 35250 (Request for 
Information on Advancing Privacy-Enhancing Technologies), this RFI uses 
the following definitions:
--Central bank digital currency: The term ``central bank digital 
currency'' or ``CBDC'' refers to a form of digital money or monetary 
value, denominated in the national unit of account, that is a direct 
liability of the central bank.
--Cryptocurrencies: The term ``cryptocurrencies'' refers to a digital 
asset, which may be a medium of exchange, for which generation or 
ownership records are supported through a distributed ledger technology 
(DLT) that relies on cryptography, such as a blockchain.
--Privacy-enhancing technologies: Privacy-enhancing technologies (PETs) 
refer to a broad set of technologies that protect privacy, which are 
within the scope for this RFI. We are particularly interested in 
privacy-preserving data sharing and analytics technologies, which 
describes the set of techniques and approaches that enable data sharing 
and analysis among participating parties while maintaining 
disassociability and confidentiality. Such technologies include, but 
are not limited to, secure multiparty computation, homomorphic 
encryption, zero-knowledge proofs, federated learning, secure enclaves, 
differential privacy, and synthetic data generation tools.
--Digital assets: The term ``digital assets'' refers to all CBDCs, 
regardless of the technology used, and to other representations of 
value, financial assets and instruments, or claims that are used to 
make payments or investments, or to transmit or exchange funds or the 
equivalent thereof, that are issued or represented in digital form 
through the use of DLT. For example, digital assets include 
cryptocurrencies, stablecoins, and CBDCs. Regardless of the label used, 
a digital asset may be, among other things, a security, a commodity, a 
derivative, or other financial product. Digital assets may be exchanged 
across digital asset trading platforms, including centralized and 
decentralized finance platforms, or through peer-to-peer technologies. 
For the purposes of this RFI, ``digital assets'' is also inclusive of 
its underlying technologies (e.g., DLT).

    Background: Digital assets are enabling new ways to move value 
through the online world, and their underlying technology is 
facilitating change across industries. In the private sector, companies 
are using DLT to synchronize databases with limited trust, enable new 
types of recordkeeping, build new infrastructures for managing digital 
identity, and provide novel financial services to consumers. In the 
public sector, the United States is exploring whether a CBDC could 
provide a trustworthy infrastructure to facilitate transactions in a 
highly digitized world. Across the board, applications of digital 
assets are benefitting from advances in foundational and translational 
research, spanning topics from cryptography to the social, behavioral, 
and economic sciences. However, research and development (R&D) in this 
space has often been conducted in a fragmented manner, with limited 
consideration for the broader implications, applications, and downside 
risks for the underlying innovations. This is particularly concerning 
because there are many examples of how digital assets introduce risks 
and exacerbate harms to people, communities, institutions, and the 
planet.
    A more comprehensive R&D approach would provide concrete areas of 
focus towards achieving a holistic vision of a digital assets ecosystem 
that embodies democratic values and other key priorities. This approach 
would help ensure that sometimes-overlooked topics like 
environmentally-friendly consensus mechanisms and fraud-resistant 
transaction programmability receive appropriate levels of R&D support. 
This approach would also help ensure that advances in digital assets 
can also support technological progress in overlapping and adjacent 
domains, including the traditional financial services industry.
    Recognizing the importance of responsible innovation in digital 
assets, President Biden signed E.O. 14067, which outlined the first 
whole-of-government approach to digital assets. Pursuant to this E.O., 
OSTP published Technical Evaluation for a U.S. CBDC System, which 
highlighted the importance of solving key open questions related to 
digital assets. OSTP found that there were several important and open 
questions related to digital assets R&D, which could benefit from 
increased attention and support. These R&D questions span a wide range 
of sociotechnical aspects, from technical innovations to social, 
behavioral, and economic aspects, germane to advancing digital assets 
while seeking to ensure that people from diverse groups, including 
underrepresented and marginalized groups, can access and use digital 
assets in a secure, privacy-preserving, inclusive, and equitable 
manner.
    This report recommended that the U.S. Government develop and 
periodically update a National Digital Assets R&D Agenda. This 
recommendation complemented the Multi-Agency R&D Priorities for the FY 
2024 Budget, which requested that Federal departments and agencies 
collaborate on critical and emerging technologies, including financial 
technologies. To help implement this recommendation, OSTP and the 
National Science Foundation are now co-chairing an interagency FTAC 
under the NITRD Subcommittee to develop this R&D Agenda. Through this 
whole-of-government effort, the Biden-Harris Administration will 
identify R&D priorities for digital assets, and help direct Federal 
resources and expertise toward advancing those priorities.
    Digital assets have generated interest across a range of use cases 
that could help grow the economy, provide societal benefits, and 
advance equity and inclusion. There are a number of potential use cases 
that support these goals, such as the potential for digital assets to 
help human rights advocates receive financial support for their work 
under governments that are trying to curtail their activities. However, 
while much attention has been given to applications within the 
financial ecosystem, there are also applications that span a range of 
other sectors. For example, while some digital assets can consume a lot 
of energy, their underlying technology may support easier integration 
and coordination of clean energy resources, such as by providing a 
better ledger for the authentication, participation, and renumeration 
of beneficial services from distributed energy resources (e.g., 
electric vehicles, connected appliances and devices, residential and 
commercial energy storage systems, solar power systems) on a smart 
grid. There may be other applications of interest across other sectors, 
such as healthcare and

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public health, supply chain management, manufacturing, and internet 
architecture. The Federal Government should help ensure that the 
potential of digital assets is realized in sectors where it provides 
value, while taking steps to ensure that this realization is achieved 
with the appropriate guardrails needed to ensure responsible innovation 
in line with American values and a clear understanding and proactive 
mitigation of the downside risks associated with increasing adoption to 
digital assets.
    A focused R&D effort could provide especially significant benefits 
for better understanding and designing a particular type of digital 
asset--the CBDC. While the United States has not made a decision about 
whether it will pursue a CBDC in the next few years, a focused R&D 
effort could help illustrate how to design a CBDC system in line with 
the Biden-Harris Administration's Policy Objectives for a U.S. CBDC 
System. For example, what cryptographic primitives and PETs could best 
protect the privacy of individuals using the CBDC system? How can 
social sciences and behavioral economics help identify and remove 
barriers for usage of the CBDC system by underserved communities? What 
security features are needed to ensure consumer trust and strong 
resilience against criminal actors? A focused R&D agenda that engages 
academia, industry, and civil society can advance policymakers' 
understanding of how design choices for a CBDC system can impact 
national policy objectives such as protecting privacy and advancing 
equity. In turn, these findings could help support the Federal Reserve, 
the White House, and the Department of the Treasury in assessing 
whether the issuance of a U.S. CBDC is in the national interest.
    Through this RFI, OSTP seeks responses that could inform the full 
breadth of Federal R&D priorities related to digital assets, including 
R&D initiatives that could complement the Federal Reserve's research 
and experimentation related to CBDCs, consistent with the highest 
urgency that E.O. 14067 placed on R&D for a U.S. CBDC system. We also 
encourage respondents to explain how their R&D suggestions could help 
advance policy priorities or recommendations outlined in reports 
pursuant to E.O. 14067, such as OSTP's report titled Climate and Energy 
Implications of Crypto-Assets in the United States.
    Scope: OSTP invites input from any interested stakeholders. In 
particular, OSTP is interested in input from parties researching, 
developing, acquiring, using, or governing digital assets; and 
stakeholders with relevant expertise, either learned or lived. This 
scope extends to CBDCs, financial use cases, and any of the other use 
cases and/or value propositions (across sectors) where digital assets 
might add value or introduce risks of negative impacts.
    Information Requested: Respondents may provide information for one 
or more of the topics below, as desired. Through this RFI, OSTP seeks 
information on specific R&D opportunities related to the following 
topics:
    1. Goals, sectors, or applications that could be improved with 
digital assets and related technologies: Information about goals, 
sectors, or applications where digital assets could provide significant 
value to the public, and examples of where benefits are already being 
delivered. This includes explanations of the current limitations in how 
those goals, sectors, and applications are currently advanced with 
limited use of digital assets and related technologies, and how 
increased or better use of digital assets could provide a specific 
advantage over existing approaches in advancing these objectives. Where 
relevant, respondents are encouraged to justify how digital assets 
provide unique value for advancing that goal, sector, or application 
compared to the use of traditional databases or other technologies 
(e.g., as outlined in National Institute of Standards and Technology 
Internal Report 8202, Figure 6).
    2. Goals, sectors, or applications where digital assets introduces 
risks or harms: Information about goals, sectors, or applications where 
digital assets might introduce risks or harms, and examples of where 
risks or harms are already being manifested. This includes explanations 
of direct or indirect impacts on users of digital assets, communities 
or sectors in which digital assets might circulate or be integrated 
into services, and non-users (e.g., communities, environment) that may 
be exposed to risks or harms of digital assets (e.g., ransomware 
attacks, higher electricity costs, pollution). Where relevant, 
respondents are encouraged to justify how digital assets are 
introducing new risks or harms in advancing the underlying goal, 
sector, or application compared to the use of traditional databases or 
other technologies.
    3. Federal research opportunities that could be introduced or 
modified to support efforts to mitigate risks from digital assets: This 
might include information about R&D that helps companies build more 
environmentally-sustainable digital assets, assist law enforcement in 
countering illicit financial activity using digital assets, and enable 
regulators to protect consumers from fraud. This includes opportunities 
to innovate for equity and privacy with R&D that could help underserved 
communities harness the benefits of digital assets while being 
protected from their risks, such as via improvements to digital assets 
to allow them to better remain accessible, reliable, and secure even 
when connectivity and end-user device quality are limited.
    4. R&D that should be prioritized for digital assets: Information 
about Federal research opportunities that could be introduced or 
modified to (a) advance the development of digital assets and/or (b) 
protect communities and U.S. national interests from risks or harms 
that digital assets might present. This includes topics for technical 
research, topics for research in the social sciences and across 
disciplinary boundaries, and opportunities for hardware and software 
development. This also includes information about emerging areas that 
could enable new opportunities to leverage digital assets, as well as 
information about technical limitations of digital assets and the 
associated business models and governance arrangements they often rely 
upon. Respondents are encouraged to, where relevant, describe how the 
discussed R&D topic could be useful in helping a potential U.S. CBDC 
system align with the Policy Objectives for a U.S. CBDC System. 
Respondents are also encouraged to share how the discussed R&D topic 
could help advance U.S. competitiveness and leadership in the world.
    5. Opportunities to advance responsible innovation in the broader 
digital assets ecosystem: Information about opportunities for the 
United States to advance responsible innovation in the broader digital 
assets ecosystem, in areas that are adjacent to R&D. This may include 
programs that could support increased education and workforce training 
related to digital assets, standards setting efforts that could help 
advance democratic values in the use and governance of digital assets, 
and supply chain opportunities to maintain access to the necessary 
hardware for emerging digital assets.
    6. Other information that should inform the R&D Agenda: Information 
about any other topic, not covered above, that respondents believe is 
important to inform the development of the National Digital Assets R&D 
Agenda. This may include ideas for collaborations between the Federal

[[Page 5046]]

Government and other entities, as well as proposals that may not yet be 
feasible with the current state of technology but might become feasible 
in the next decade.

    Dated: January 22, 2023.
Rachel Wallace,
Deputy General Counsel.
[FR Doc. 2023-01534 Filed 1-25-23; 8:45 am]
BILLING CODE 3270-F1-P