New White House standards strategy could have implications for crypto industry KYC
The administration of United States President Joe Biden released a national standards strategy for critical and emerging technologies on May 4. The strategy stated that the United States would prioritize standards development in eight areas. Among the prioritized areas are “digital identity infrastructure and distributed ledger technologies, which increasingly affect a range of key economic sectors.”
“Distributed ledger” is a synonym for blockchain. Digital identity is “the unique representation of a subject engaged in an online transaction,” according to a National Institute of Standards and Technology (NIST) document now under review. Digital identity is “unique in the context of a digital service, but does not necessarily need to uniquely identify the subject in all contexts,” the document added.
NIST is the federal agency that coordinates government standards activity.
One obvious use of digital identity in economic sectors is Know Your Customer and Anti-Money Laundering (KYC/AML), where blockchain solutions are being actively developed as regulators and enforcement agencies demand greater AML compliance in the United States and around the world in the crypto industry.
Related: Europe’s digital ID wallet — Easy for users or a data privacy nightmare?
Innovations such as zero-knowledge KYC verification, based on the blockchain’s consensus mechanism, have been proposed to carry AML verification, credit scoring and similar information. Passporting techniques using soulbound nonfungible tokens (NFTs) have been deployed to make off-chain identity accessible.
The White House has released an updated list of Critical and Emerging Technologies (“CET List”), which will serve to inform a forthcoming strategy on U.S.
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