The U.S. Treasury Department and the National Science Foundation (NSF) have developed a blockchain-enabled system that allows the payments and terms of grants to be better monitored, while using a blockchain-powered Letter of Credit (LC) to facilitate peer-to-peer fund transfers.
According to GCN, the U.S. Treasury Department and the NSF have been conducting tests on the use of blockchain-enabled LC that will help improve the process of grant management.
Craig Fischer, Innovation Program Manager at the Treasury Department, revealed that instead of relying on reports from the prime and sub-grantee recipients, the NSF will be able to use blockchain technology to monitor grant payments as well as whether the terms of the grants are observed by grant recipients.
Meanwhile, grant recipients will be required to submit fewer documents to the NSF.
Fischer added that the Letter of Credit will also allow peer-to-peer fund transfers, while grant recipients will need to set up an e-wallet to receive the tokenized LC.
Additionally, Fischer revealed that the Treasury Department’s innovation group has been jointly developing the project with San Diego State University, Duke University, and the NSF since September 2019. The project is expected to be finalized within January 2020.
Meanwhile, the department has been seeking blockchain-based solutions to improve the management of grants and properties for the past few years.
In 2018, a pilot project was established to develop a blockchain system to improve the management of the department’s physical assets, as the agency has deemed that the technology possesses “great potential for streamlining burdensome reconciliation operations that are involved in many financial transactions.”
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