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A blockchain-based platform like the Regulated Liability Network (RLN) could transform the UK’s $14.5 trillion finance sector by improving payment systems and reducing fraud.
A blockchain-based ledger for payments and settlements could transform the United Kingdom’s $14.5 trillion finance sector, according to UK Finance, the country’s leading finance trade body.
The Regulated Liability Network (RLN), a blockchain-powered platform designed for central bank digital currencies (CBDCs) and tokenized assets, was praised by UK Finance for its potential to drive innovation after a successful experimental phase.
The RLN aims to improve the payment infrastructure by offering a secure, efficient system for recording, transferring, and settling payments, primarily for use by commercial banks. Its ability to facilitate programmable payments, reduce fraud, and lower the cost of failed transactions highlights its potential impact on the financial landscape.
The RLN’s distributed ledger technology (DLT) is viewed as a key innovation platform, with the trade body noting that the UK’s legal and regulatory framework is flexible enough to support the implementation of this system. However, UK Finance emphasized the need for further collaboration with regulators to fully unlock the network’s potential.
Jana Mackintosh, managing director of payments at UK Finance, stated, “The private sector wants to invest in the future of commercial bank money, and a partnership with regulators is the best way of successfully making this happen.”
The experimental phase of the RLN involved 11 major financial institutions, including Barclays, HSBC, Citi, and Mastercard. The findings from the trial phase were positive, showing that the RLN could offer new firms a “common point of access” to established financial institutions and enhanced payment systems. The results here are in line with the Bank of England’s ambitions that the institution recently set out for the purpose of safeguarding the integrity of money and augmenting innovation in the UK payments industry. UK Finance GM estimates that the RLN can be used in banking and crypto.
Beyond the RLN, the UK government has introduced new legislation to clarify the status of digital assets under property law. This new bill aims to define digital assets like non-fungible tokens (NFTs), cryptocurrencies, and carbon credits as “things” and “personal property.” The move follows a period of intensified regulatory efforts after several high-profile bankruptcies in the crypto industry last year.
The Financial Conduct Authority (FCA), which is the UK’s body responsible for regulating crypto activities, has been engaged in the adoption of anti-money laundering control and consumer protection. The FCA enforced strict policies last year that required all cryptocurrency companies to enlist with the regulator as well as secure their marketing materials’ approval. Inadequate compliance with these restrictions may result in the filing of criminal charges that include severe penalties such as the payment of uncapped fines and imprisonment for a maximum of two years, regardless of whether the exchanges are in the country or from abroad.
The combination of the RLN’s blockchain technology and the evolving regulatory framework for digital assets could position the UK as a leader in financial innovation while safeguarding consumer interests and market integrity.