The UK will start live testing crypto blockchain technology in financial markets activities such as trading and settlement as part of the drive to become a global “crypto hub,” the finance ministry said on Tuesday (June 7) in an event in London.
The UK is taking different steps to promote the use of blockchain technology and crypto assets in the country and it is designing a friendly regulatory environment to attract investments.
Gwyneth Nurse, the ministry’s director general for financial services, said that the use of distributed ledger technology (DLT), which is the underlying technology used by crypto assets, is a key priority for making financial markets more innovative. To this end, the U.K. will launch a regulatory sandbox next year for testing DLT projects under the supervision of regulators, Nurse said. A regulatory sandbox is a safe testing environment where companies can implement new projects minimizing the risks for consumers. Sandboxes have been very successful in nurturing FinTech firms in the U.K.
One of the purposes of this new sandbox would be to try DLT projects involving activities such as trading, clearing and settlement, to be able, for example, to issue bonds or stock in hours rather than days or weeks.
This project resembles a European Union initiative to create a pilot regime that aims at developing the trading and settlement of “tokenized” securities. The EU project has received political and regulatory support from the EU institutions and companies may be able to start testing the DLT pilot at the beginning of 2023.