A blockchain-based ledger for payments and settlements could revolutionize the UK’s finance sector, which processes an astonishing $14.5 trillion in payments each year.
The Regulated Liability Network (RLN) has the potential to drive innovation in the finance sector, as praised by UK Finance, the country’s primary finance trade body, following a successful experimental phase.
A report published on September 17 by UK Finance indicates that the RLN, a blockchain-powered platform intended for central bank digital currencies (CBDCs) and tokenized assets, has demonstrated substantial potential.
RLN Could Facilitate Programmable Payments
According to the trade group, the RLN could enable programmable payments, lowering fraud and failed transaction costs.
The RLN’s capacity to provide a secure and efficient system for recording, transferring, and resolving payments is critical to its promise.
It is predominantly designed for commercial banks and can accommodate a variety of digital currencies, such as wholesale CBDCs and electronic money.
UK Finance underscored the necessity of additional collaboration with regulators and other public entities to realize the network’s potential fully.
Jana Mackintosh, the managing director of payments at UK Finance, stated, “The private sector is interested in investing in the future of commercial bank money, and the most effective approach to achieve this is through a partnership with regulators.”.
UK Finance asserts that the distributed ledger technology (DLT) of the RLN serves as a foundation for innovation.
The trade body observed that the UK’s legal and regulatory framework is sufficiently adaptable to accommodate the platform; however, it is necessary to take further measures to implement it and resolve any emerging regulatory concerns.
UK Finance discovered that the RLN could offer new firms a “common point of access” to established financial institutions and improved payment systems, which was one of the positive outcomes of the experimental phase.
The results are consistent with the objectives of the Bank of England, which underscored the necessity of promoting innovation and preserving the integrity of money in the United Kingdom’s payments industry.
“The Bank of England recently released a Discussion Paper outlining several objectives for the UK’s payments sector, including promoting sustained innovation and preserving the singleness of money.
The RLN has the potential to assist the industry in achieving these objectives,” the trade body stated.
Barclays, HSBC, Citi, and Mastercard were among the eleven prominent banks participating in the RLN experiment.
UK Introduces Crypto Legislation
A new bill was introduced by the UK government last week to define digital assets, such as non-fungible tokens (NFTs), cryptocurrencies, and carbon credits, as “personal property” and “things” under the nation’s property laws.
Following several high-profile bankruptcies last year, the United Kingdom has been among the countries that have intensified their regulatory efforts.
The FCA is responsible for regulating crypto activities, with a particular emphasis on consumer protection and anti-money laundering measures.
Last year, the FCA implemented new regulations that mandate the registration of crypto firms with the financial regulator and the approval of their marketing materials by an FCA-authorized firm.
The watchdog has warned that domestic and overseas exchanges operating in the UK may be subject to criminal penalties, including unlimited fines and up to two years imprisonment if they fail to comply.
