The California Department of Motor Vehicles (DMV) tokenization project is just one example of how companies, state and federal agencies are using blockchain-based solutions to increase efficiency and reduce costs. Bank of America said in a March 23 research report.
By tokenizing the more than 14 million vehicles registered in the state, the agency aims to revolutionize vehicle ownership and transfer management systems. It plans to issue ownership of vehicles as NFTs (Non-Fungible Tokens) recorded on a private version of the Tezos blockchain. NFTs are crypto assets that represent ownership of virtual or physical items that can be sold or traded.
“Vehicle ownership tokenization will enable fragmented vehicle ownership, allowing holders to pledge their vehicle ownership NFTs as collateral in the real world and within decentralized finance (DeFi) protocols, among others, to help drive the automotive market forward. It can also increase liquidity,” analysts Alkesh Shah and Andrew Moss said.
Bank of America believes the project will reduce the process of issuing and transferring ownership of a vehicle from weeks to minutes, enable more secure ownership transfers through smart contract-enabled escrow accounts, and reduce fraud. He said there would be less action and automation could cut costs.
The project is a first step, and more features may be added in the future, the report said. By joining the platform, government agencies in other states will also be able to enjoy the same benefits, as well as increase the efficiency of cross-state vehicle sales.
The bank notes that other federal and state agencies are also eyeing blockchain-based solutions. These include the Federal Emergency Management Agency (FEMA), the Department of Homeland Security (DHS), and the California Department of Food and Agriculture.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: California Leads the Way as US Federal, State Agencies Consider Blockchain’s Applications: Bank of America