House Energy and Commerce Greenlights Bill to Explore AI, Blockchain Use for Consumer Safety 

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The proposed studies could pave the way for new legislation regulating the tech. 

Bipartisan legislation introduced last week that would direct a government-led look into using blockchain technology to better secure transactions and protect consumers from fraud gained a new path forward in Congress.

The Blockchain Innovation Act was put forth Wednesday by its original co-sponsor Rep. Darren Soto, D-Fla., as part of an amendment to the Artificial Intelligence for Consumer Product Safety Act, during a markup held by the House Committee on Energy and Commerce. Collectively, the new full legislation would direct officials from several consumer protection agencies to explore and educate Congress on how AI and blockchain can elevate consumer safety.

Hours into the markup, the committee agreed to favorably report the AI bill, as amended with the added blockchain focus, passing it on to be considered by the full House.

“Ultimately, I'd like to see a Blockchain Center of Excellence in the U.S. Department of Commerce to coordinate the U.S. development and policy objectives for this technology to ensure that we are best positioned to be leaders in this space,” Soto told Nextgov via email Wednesday. “The study is a starting point and is meant to give government agencies a chance to make recommendations before any bills are passed with regulatory effect.”

Blockchain refers to a digital and decentralized, public ledger that authenticates and permanently records transactions and other information about them. Though it has not yet become a universal, ubiquitous payment verifying mechanism for the nation or government, it’s growing in use and federal agencies are considering its potential to support their pursuits. 

Specifically Soto’s proposed bill-turned-amendment would require the Secretary of Commerce and Federal Trade Commission to “conduct a study on current and potential use of blockchain technology in commerce and the potential benefits of blockchain technology for limiting fraud and other unfair and deceptive acts and practices,” within a year of its passage. The probe will explore trends in commercial investments for and use of the technology, risks and gains that could accompany leveraging it for consumer protection, suggestions on facilitating blockchain-centered public-private partnerships, areas in federal regulation of the tech that require more clarity—and more. Officials steering the study would need to offer the public an opportunity to weigh in and report the findings to Congress and the public within 6 months of its completion. 

“These recommendations will perform an educational function to Members of Congress and will pave the way for more actionable blockchain-focused legislation,” Soto said.

The blockchain-focused amendment from Soto now included in the proposed bill would also require the Federal Trade Commission to craft a report for Congress on actions it’s taken to date regarding “unfair or deceptive acts or practices in transactions relating to digital tokens.” A co-chair of the Congressional Blockchain Caucus, Soto recently joined multiple other lawmakers last week in penning a letter urging President Trump and others to create a coordinated approach for the federal government to turn to blockchain technology for COVID-19 relief and response. 

“Blockchain technology has an incredible amount of potential for innovation and economic growth,” he told Nextgov. “I believe our U.S. government needs to support that growth, establish light-touch regulations to ensure certainty, protect innovation and stop fraud, and enable its appropriate use for government, business and consumers.”

More broadly, the AI for Consumer Product Safety Act—which was amended to include the new blockchain language and passed during the hours-long markup—would also mandate the Consumer Product Safety Commission to produce a pilot program leveraging AI to advance some element of consumer product safety. 

“For example, the CPSC could use AI to more quickly and efficiently identify consumer product hazards, which will in-turn enable the agency to recall a product more quickly and possibly save lives,” Rep. Jerry McNerney said during the markup, adding that “it's critical that we help federal agencies to increase AI adoption in a smart and responsible way.”

During the virtual event, House Energy and Commerce lawmakers also approved the COMPETE Act, which would direct other new studies into confronting “online harms,” and advancing AI, blockchain, quantum computing and other fields of on-the-rise emerging technologies.