. recent events, such as thefts from accounts on distributed ledger platforms, highlight the challenge that distributed ledgers may have when adverse scenarios occur and there is uncertainty around what an appropriate response would be. such uncertainty around management and governance can raise doubts about the integrity of a system employing distributed ledgers. traditionally, financial regulators in the united states have been given licensing authority as a key way of ensuring that responsibility for managing risks is transparently assigned with appropriate oversight. the development of new business models associated with evolving financial technologies has raised questions about the applicability of existing licenses and their adequacy to new business models. for instance, the monetary authority of singapore recently issued a consultation paper that proposes an activity - based payments framework as a way to address the introduction of non - traditional payment providers. 2 the united states has seen several noteworthy recent developments, including the new york state department of financial services ’ bitlicense, a distributed ledger company, securing federal reserve bank of new york approval for participation in the national settlement service, and, most recently, discussion by the occ of a limited - purpose charter. ongoing engagement because of the notable potential of distributed ledger technology, financial authorities, both domestic and international, will follow these developments with keen interest. at the federal reserve, we expect to publish a research paper later this year that summarizes some of the key findings from our industry engagement so far. going forward, we will continue to deepen our engagement with a range of financial institutions, technologists, multi - stakeholder consortia, and academic experts to refine our understanding of the new technologies, along with their possibilities and limitations, with a particular focus on our responsibilities for the payments system, as well as our oversight of financial market intermediaries. we will also continue to discuss these issues with other central banks and authorities around the world. we will work together to foster socially beneficial innovation, while insisting that risks are thoroughly understood, managed, and controlled. 1 se e www. federalreserve. gov / newsevents / speech / brainard20160414a. htm. also, see the forthcoming feds working paper, “ staff study on distributed ledger technology in payments, clearing, and settlement, ” 2016. see www. mas. gov. sg / ~ / media / resource / publications / consult _ papers / 2016 / proposed % 20activity % 20based % 20payments % 20f 4 / 4 bis central bankers '

, combined with the fact that many connected participants can update the shared ledger, means that end - point security is another critical component of any successful implementation of the technology. adverse actors that can take over a participant ’ s access to the ledger remains a key security concern, as thefts of cryptographic keys in bitcoin continue to demonstrate. thus, advances in cryptography will remain a key priority to enable widespread adoption of distributed ledger technologies, along with systems for securing private keys, the management of access to private keys, and differentiated permissions for participants in the system to read and write to the ledger. recent episodes have illustrated the importance of having protocols agreed at the outset to determine whether and under what circumstances to reverse transactions once they have been recorded in a distributed master ledger. finally, it will be important that users and administrators of distributed ledger technologies can meet their responsibilities to combat money laundering, terrorist financing, and other key law enforcement concerns. some of the new technologies would potentially allow authorized access to certain data records in a much more efficient manner than has previously been possible. for example, distributed ledgers could be developed to collect personally identifiable information and 3 / 4 bis central bankers'speeches country identifiers that enable banks to identify and report on suspicious activity. it will be important that these new technological developments and their implementation perform in a safe and sound manner that is transparent and satisfies regulatory requirements. while prevention will remain the preferred approach, realistically, resiliency and recovery will also need to be high - priorities. indeed, many firms have suggested that the distributed data storage concept has the potential to increase the level of resiliency and data integrity. the basic idea is it should be harder to corrupt multiple copies of the same data simultaneously such that digital ledgers could reduce the vulnerability associated with a single point of failure. we must press firms and experts to identify the strengths and vulnerabilities of this concept, even as we all look for ways to make databases more secure and resilient. in an interesting development, some financial institutions have also begun to consider using distributed ledgers to back up critical databases and enable quick recovery from potentially virulent cyberattacks. we will be interested in whether such techniques can make new contributions to cybersecurity. overall, the public needs to have confidence that any system employing distributed ledgers will operate properly, particularly in stressed conditions, and know that when adverse scenarios do occur, there will be robust management and governance to respond effectively