The President of the United States Joe Biden directed that the Office of Science and Technology Policy (OSTP), submit a report analyzing design options for 18 central bank digital currencies (CBDC) systems, for possible implementation in the US.
Six broad categories were used to analyze the technical aspects of the 18 CBDC design options. These included participants, governance and security, transactions, data, adjustments, and security. The OSTP anticipates technical complexities as well as practical limitations in building a permissionless system governed solely by a central bank.
“It is possible for the technology that underpins a permissionless approach to improve over time. This might make it more appropriate to be used in a CBDC program.”
The analysis assumes that there is a central authority, and a CBDC system with permissions.
The OSTP report helped policymakers to decide the best US CBDC system. It highlighted the implications for including third parties in two design options under the ‘participants” category — interoperability and transport layer. The report considered governance factors such as access tiering and identity privacy, remediation, and permissioning.
Other important considerations OSTP asks policymakers to think about include cryptography (for security), transaction privacy and transaction programmability offline (for transactions), data model history and data fungibility (for data), holding limits and adjustments on balances and transactions (for transactions).
Technical evaluations for the US CBDC system revealed that the report favors an off-ledger, hardware protected system. The report will highlight the trade-offs made by policymakers when finalizing design decisions for the US CBDC.
Related: White House releases a comprehensive framework for cryptography
The OSTP recommended regulation and monitoring of crypto assets in the US on Sept. 8.
The OSTP report related to crypto assets highlighted that they consume approximately 50 billion kilowatt hours of energy per annum in the U.S.A, which is 38% of global total.
“Noting that direct comparisons can be complicated, Visa MasterCard and American Express combined […] used less than 1% electricity than Bitcoin and Ethereum that same year despite processing many more on-chain transactions and supporting larger corporate operations.”
Further, the report noted that crypto assets staking requires high amounts of energy.