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Saturday, 21 March 2015

UK Plans For #VirtualCurrencies and #Blockchain Technologies

The Treasury has published its response to the recent call for evidence on virtual currencies. The plan is to apply anti-money laundering regulation to virtual currency exchanges and ensure effective enforcement related to the criminal use of the currencies themselves, including seizure. It will also foster the development of standards for consumer protection in conjunction with the British Standards Institute. The government will also invest £10m to address 'research opportunities and challenges'.

In addition to addressing the risks, the report also explores the benefits of digital currencies as methods of payment, including uses beyond the retail scenarios, as well as other applications of blockchain technology; as well as barriers to suppliers setting up in the UK and how the government can help clear the way.

Alternative uses for the “distributed ledger” technology (i.e. beyond retail payment services) that the Treasury identified were:
  • transfer of title to digital assets, with inherent authentication, digital ‘signing’ and time-stamping and record-keeping e.g. recording and transferring the ownership of bonds, shares, securities and other financial instruments; passports, driving licences, criminal records, land registry and digital voting; 
  • ‘smart contracts’ and smart payments, whereby users encode requirements into a payment instruction or other message in order to achieve autonomous, self-executing payments and contracts that adjust for specific conditions. 
  • decentralised data storage solutions (using blockchain technology to store files securely and efficiently);
  • encrypted peer-to-peer messaging networks; and 
  • links with ‘smart property’ and the Internet of Things, whereby devices (including autonomous vehicles) communicate with each other and maintain and update themselves semi-autonomously.
Great news for the everyone that the government is positively engaging with this technology.