The UK and Blockchain technology: A balanced approach

Abstract

In March 2015 the UK Government set out its approach to digital crypto-currencies. London has thereby taken a lead in this area, adopting a friendlier regulatory stance than its counterparts in New York or Frankfurt. The UK Chancellor, George Osborne, announced UK Government plans to regulate digital crypto-currencies and invest money not only into the ‘opportunities and challenges’ of digital crypto-currencies such as Bitcoin, but also into the potential future of leveraging ‘Blockchain technology’ to fundamentally change the financial world. Blockchain technology has now also attracted interest from Central Banks, financial institutions and technology firms, who are currently discussing and investigating the opportunities and challenges in using Blockchain technology. The financial industry is realising that Blockchain technology has enormous potential. This Blockchain technology could fundamentally change the way the whole financial industry operates and delivers the opportunity to completely reinvent the banking industry. In this paper the various initiatives and potential use cases of the Blockchain technology will be discussed. This technology could have serious consequences especially for the payments industry. The possibilities of the Blockchain technology will not only be limited to digital cash and payments systems. They also enable the issuance and trading shares on decentralised digital exchanges, allow new ways of communication without third-party providers, and enable users to draft and enforce digital contracts known as ‘smart contracts’.