UK launches pilot for blockchain-based digital gold plating instrument
The UK government is advancing efforts to integrate blockchain technology into its financial systems. In a recent announcement, Treasury Secretary Rachel Reeves revealed plans to test a digital gold plating instrument in the country. This initiative uses Distributed Ledger Technology (DLT), better known as blockchain. Gilt instruments, a type of government bond commonly used in Britain and other Commonwealth countries, are considered low-risk investment options.
In her first Mansion House speech this week, Chancellor of the Exchequer Rachel Reeves announced that the UK Treasury is developing a “growth and competitiveness strategy for financial services”. As part of this initiative, the government aims to showcase how technologies such as blockchain can improve the country’s fintech ecosystem.
According to a report from British financethe agency has received feedback from financial institutions that a sterling-denominated digital gilt would see wider investor participation.
“We believe this provides the UK capital markets with a way to protect themselves from companies moving elsewhere to invest in new technologies and capital in jurisdictions where the government approach and regulatory environment have historically been more accommodative,” the post said.
The UK leadership is exploring blockchain technology to support this initiative for several reasons, as outlined in the ministry’s statement. For the upcoming gold-plated instrument, Britain plans to use Distributed Ledger Technology (DLT) to enable automation, smart contracts and seamless management of the entire security lifecycle. Additionally, blockchain’s immutable and persistent data storage capabilities can increase transparency within financial systems.
“The goal is likely to have an established digital financial market infrastructure (D-FMI) to run a DLT-based platform for the end-to-end trading lifecycle. The strategy involves the use of an integrated DLT platform for primary issuance, allocation, settlement and custody, with the potential for secondary market trading between pre-approved participants,” the post said.
Britain plans to begin trials of the digital gold-plated instrument within six months, followed by a wider rollout in gradual phases.
In addition to fintech, British companies active in other industries are also finding ways to use blockchain technology. Vodafone, for example, wants to integrate DLT with its activities.
