The trade association UK Finance has said that applying blockchain technology to payments and settlements could boost the UK finance industry. The trade group believes that a distributed ledger will increase transaction efficiency and significantly improve the payments sector, which already processes $14.5 trillion annually.
Blockchain integration is increasingly popular for private use cases across multiple sectors. In addition to payments for goods and services, people enjoy the safety of blockchain technology while playing at online casinos like Mega Dice, where bets, deposits, and withdrawals can be processed using cryptocurrencies. By offering digital asset payments, crypto casinos can provide players with better security and more bonuses, while exposing their gaming ecosystem to players from around the world.
UK Finance highlighted the benefits of blockchain payments after successfully concluding the experimental phase of its blockchain. Called the Regulated Liability Network (RLN), the ledger is designed to support asset tokenization and central bank digital currencies (CBDCs).
The trade group notes RLN’s flexibility and effectiveness across multiple use cases. For instance, the network can handle wholesale CBDCs as well as electronic money, and empower specific entities to oversee transaction records, transfers, and settlements. In addition, the RLN supports other functions, including locking and releasing funds, and payment programming.
Furthermore, multiple institutions can communicate through a common point of access provided on the network. This encourages collaboration between authorities and key players in the private and public sectors. According to the trade group’s managing director of payments, Jana Mackintosh: “The private sector wants to invest in the future of commercial bank money, and a partnership with regulators is the best way of successfully making this happen.”
UK Finance’s support for crypto payments comes shortly after self-regulatory trade association CryptoUK accused the Financial Conduct Authority (FCA) of deterring the growth and development of crypto in the UK. According to CryptoUK, the FCA is stifling crypto growth by putting applicants through a challenging registration process.
“[Our members have] heard stories from organizations that have gone through it, and it’s quite a deterrent. The application is a huge ask in terms of resources, people and finances,” CryptoUK noted.
In the last 12 months, the FCA has only approved 13% of the 35 applications it received. Although 15 (48%) applications were withdrawn, all the rest were rejected. Since January 2020, 14% of the 359 applications received have been successful. While the withdrawal rate of 70% is high, the FCA refused all others.
Despite the FCA’s reluctance to cryptocurrencies like Bitcoin and Ether, financial institutions involved in the RLN’s experimentation phase have applauded the platform. The organizations say potential benefits of RLN include a reduction in fraud, lower costs of failed payments, and a simplified home purchase process. The institutions that took part include Lloyds, Barclays, HSBC, Citi, Nationwide, Virgin Money, Standard Chartered, Santander, Visa, and Mastercard.
Efforts at blockchain adoption in the UK include a recent Barclays proposal for potential use cases of a digital pound. In a report, Barclays highlighted three primary uses of a digital pound. These include merchant payments, personal payments, and improved transaction security. According to Barclays, a digital pound will reduce the likelihood of payment disruptions since it would require digital and commercial banks to perform similar functions.