The UK will start testing and utilizing crypto blockchain technology for its traditional market activities. The activities for which the technology will be utilized include settlement and trading of stocks. On Tuesday, the Finance minister addressed that this is an initiative for a much bigger picture of driving the country to become a global crypto hub.
UK ministry believes that blockchain technology can improve efficiency for users
The Director-General, Gwyneth Nurse, of the UK’s Financial Services said that crypto’s underlying distributed ledger technology would make the financial market far more innovative. It will also aid in improving the efficiency of the users.
“Britain will launch a financial market infrastructure “sandbox” next year for testing DLT projects under the control of regulators.”
Gwyneth Nurse
The UK regulators framed the model to nurture and let fintech firms grow. A sandbox is generally a testing bubble for evolving projects that involve testing with real customers.
The trading of stocks and bonds in the financial market involves maybe days or weeks of trading, clearing, and settlement of the agreement. Distributed ledger technology will allow for cutting short the process of settlement to a few hours.
“The government may also want to test how trading and settlement might be brought together.” “A sandbox will allow to test new regulatory best practices and make permanent changes to ensure market users benefit.”
Gwyneth Nurse
A new financial services bill will be presented before parliament that will include the sandbox, as well as regulation for stablecoins, which are cryptocurrencies backed by traditional financial assets. The UK government is in potential talks to deploy a digital pound later this year with consultation from different authorities.
Nurse also added that for the government to deploy a digital pound, it would at least take time till the second half of the next decade, unlike a Central Bank Digital Currency.