Crypto for Advisors: How Blockchain is Shaping Government

Exploring Blockchain’s Role in Government Transparency

In this edition, Michael Carbonara, a candidate for the U.S. House of Representatives, discusses how blockchain technology can enhance openness in government processes.

Additionally, Alec Beckman addresses questions about governmental blockchain applications in our Ask an Expert segment.

By Sarah Morton

Opinion: The CLARITY Act and Its Impact on U.S. Blockchain Regulation

When people refer to transparency in government finances, they often focus on improved reporting standards for accuracy, speed, and security. However, a deeper issue persists in the U.S.: there is still no definitive guidance on which federal agencies oversee digital assets. The ongoing uncertainty between the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) has left the country in regulatory limbo. The CLARITY Act aims to address this gap.

The CLARITY Act is a federal initiative designed to clarify which agency is responsible for regulating different categories of digital assets. Rather than introducing new state-level rules or changing how states supervise digital asset businesses, the Act defines asset types—such as digital commodities or securities—and assigns regulatory authority accordingly. The CFTC would oversee digital commodities and trading platforms, while the SEC would handle restricted digital assets and securities-like offerings. Existing state regulations, like money-transmitter laws and crypto-specific frameworks, remain unaffected. While state and federal jurisdictional issues are important, they are secondary to resolving the SEC/CFTC classification dilemma.

Understanding Market Maturity

Many equate crypto market maturity with price stability, but true advancement is measured by the ability of technology and market structures to support institutional involvement, regulatory compliance, and dependable financial reporting. Clearer regulations have encouraged more institutions to participate, unlocking innovations that boost efficiency and transparency.

The Power of Real-Time Transparency

Currently, politicians report campaign finances to the Federal Election Commission (FEC) on a quarterly basis—a system that experienced incumbents know how to navigate.

A practical demonstration of blockchain’s potential is in campaign fundraising. For example, I have contributed to a campaign by transferring funds into a bitcoin wallet that can be monitored in real time, rather than waiting for quarterly disclosures. Immediate transparency not only exposes wrongdoing sooner but also acts as a deterrent.

Expanding Blockchain’s Use Beyond Campaigns

The benefits of blockchain extend well past political campaigns. When governments use public ledgers to manage payments or distribute program funds, accountability increases. By utilizing wallets with identifiable addresses for entities already subject to public reporting, agencies can conduct transactions with instant delivery and visible counterparties. This allows taxpayers to observe how their money is spent, who receives payments, and when—all while protecting individual privacy. Such transparency curbs fraud and inefficiency by fostering both accountability and operational effectiveness.

Wallets provide real-time insight and auditability, which is the essence of distributed ledger technology. If citizens advocate for the adoption of these tools, it becomes possible to track public funds and identify waste or abuse as it occurs. Greater integrity in government spending translates to increased freedom and improved quality of life, as resources are preserved from misuse.

Clarifying Regulation

Regulation in the digital asset space is often misunderstood as simply allowing or banning activities. With over 52 million Americans already using cryptocurrencies, the real purpose of regulation is to provide clarity, close knowledge gaps, and prevent exploitation—not to hinder progress.

If the U.S. does not embrace blockchain-based transparency as digital finance expands globally, it risks falling behind. The shift to Web3 infrastructure is inevitable; countries that fail to adapt will miss out on the next wave of the digital economy.

Implementing the CLARITY framework responsibly involves clear outcomes and strict safeguards: using blockchain where it reduces fraud, costs, and delays; working through licensed intermediaries; enforcing compliance with anti-money laundering and sanctions laws; ensuring transparency and secure custody; and avoiding a retail Central Bank Digital Currency (CBDC). Done correctly, blockchain can boost transparency, safeguard privacy, and reinforce America’s leadership in the digital era.

- Michael Carbonara, U.S. House candidate (R) FL-25, founder and former CEO of Ibanera

Ask an Expert

Q1: How can blockchain significantly enhance government transparency?

Blockchain technology creates a permanent, time-stamped record that is extremely difficult to alter, making it valuable for areas like public spending, procurement, grants, and land records—where trust and auditability are crucial. Instead of relying on delayed reports or single-party databases, blockchain enables near real-time verification. Importantly, transparency doesn’t require making all data public; permissioned blockchains and privacy tools like zero-knowledge proofs can confirm compliance without exposing sensitive information. Properly implemented, blockchain shifts trust from institutions to verifiable systems.

Q2: What are the most common misunderstandings about blockchain in government?

A frequent misconception is that transparency means publishing all government data on a public blockchain. In reality, most applications require a careful balance between openness, privacy, and security. Another myth is that blockchain alone can resolve governance challenges. While it is a powerful tool for oversight, its effectiveness depends on clear policies, strong incentives, and accountability in its use.

Q3: Where is blockchain adoption in government most likely to begin?

Initial adoption will likely focus on targeted use cases where the advantages are clear and risks are manageable. Examples include tracking the distribution of public funds, monitoring supply chains linked to government spending, or verifying credentials and records. These applications offer improved audit trails without requiring a complete overhaul of existing systems. If these pilot projects succeed, broader adoption may follow as standards and confidence grow.

- Alec Beckman, Vice President of Growth, Psalion

Further Reading

• The SEC chair predicts that all U.S. markets could be operating on-chain within two years.

• Bitcoin exceeds $97,000 as spot ETFs experience record inflows since October.

• U.S. senators introduce proposed legislation to clarify crypto regulations for financial authorities.