The finance ministry said on Tuesday that Britain will start live testing of crypto blockchain technology for traditional market activities like trading and settlement of stocks and bonds next year. This is part of a plan to make Britain a global “crypto hub”.
The ministry’s director general for financial services, Gwyneth Nurse, said that using distributed ledger technology (DLT), which is the basis for cryptoassets, is a top priority for making financial market infrastructure more innovative and efficient for users.
Nurse said that next year, Britain will open a “sandbox” for testing DLT projects under the control of regulators. This is a model that UK regulators came up with to help fintech companies grow. A sandbox is a place where projects with real customers can be tested.
When trading stocks, bonds, and other assets on financial markets, there are usually three separate steps: trading, clearing, and settlement. Using DLT could change this and make it possible to issue financial assets like bonds or stocks in hours instead of days or weeks.
Nurse said at the annual IDX derivatives conference in London, “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.”
The sandbox and rules for stablecoins, which are cryptocurrencies that are backed by traditional financial assets, will be put in place this year as part of a new financial services bill that is going through parliament.
Last month, people in the business world told Reuters that a digital currency will be needed to get the most out of DLT in market infrastructure. go to site
Nurse said that the finance ministry and the Bank of England are looking into a digital pound together. There will be another public consultation later this year.
But a digital pound wouldn’t be available until the second half of the next decade, Nurse said, even if a so-called central bank digital currency (CBDC), which is also being looked at by other central banks, goes ahead.
The European Union is putting the finishing touches on its own market sandbox and new rules for crypto markets.