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In pursuit of becoming a global crypto hub, the United Kingdom seeks to revamp the traditional financial market using distributed ledger technology (DLT), according to the finance ministry, as reported by Reuters.
By live testing crypto blockchain technology in activities like settlement and trading of bonds and stocks, the UK intends to make the financial market more efficient and innovative for users.
Per the report:
“In financial markets, the trading of stocks, bonds, and other assets traditionally involves three distinct activities of trading, clearing, and settlement. Using DLT could change this and allow financial assets such as bonds or stocks to be issued in hours rather than days or weeks.”
DLT projects will be tested using a financial market infrastructure dubbed “sandbox” from next year, according to the ministry’s director-general for financial services, Gwyneth Nurse. “A sandbox will allow testing new regulatory best practices and making permanent changes to ensure market users benefit,” Nurse added.
Nurse also pointed out that the Bank of England and the finance ministry were delving deeper into the digital pound as a public consultation was expected later this year.
The sandbox is expected to be rolled out simultaneously with the stablecoin regulation.
It seems a race against time for global governments to put up guardrails in the stablecoin arena following the shocking collapse of the algorithmic TerraUSD (UST) stablecoin, which triggered the loss of approximately $60 billion.
Meanwhile, In Asia, Japan recently passed a law stipulating that stablecoins would only be issued by licensed banks, trust companies, and registered money transfer agents to protect investors.
Image source: Shutterstock
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