The Office of Science and Technology Policy (OSTP) submitted a report, as directed by the White House, analyzing the design choices for 18 central banks’ digital currency (CBDC) systems for possible implementation in the United States.
The technical analysis was made across six broad categories – participants, governance, security, transactions, data, and adjustments. The OSTP said it is possible that the technology underpinning a permissionless approach will improve significantly over time, which might make it more suitable to be used in a CBDC system. The report says there is a central authority and a permissionless CBDC system. To help policymakers decide on the ideal US CBDC system, the report outlined the implications of including third parties in the two design choices under the participant category, transport layer, and interoperability. It weighed various factors, for governance, related to permissions, access tiering, identity privacy, and remediation.
The OSTP urges policymakers to consider including cryptography and secure hardware for security, signatures, transaction privacy, offline transactions and transaction programmability for transactions, data model, ledger history for data, fungibility, holding limits, and adjustments on transactions and balances for transactions.
The report is inclined toward an off-ledger, hardware-protected system. It will also highlight the various trade-offs policymakers decided to make when finalizing the design choices. The OSTP pointed out that crypto assets use about 50 billion kilowatt-hours of energy per year in the US – 38% of the global total. It said that Visa, MasterCard, and American Express combined, consumed less than 1% of the electricity that Bitcoin and Ethereum used that same year, despite processing many times the number of on-chain transactions and endorsing their broader corporate operations.