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On March 25, 2022, the Bank of England announced that in February 2022 it had agreed to a twelve-month collaboration with the Massachusetts Institute of Technology Media Lab's Digital Currency Initiative on central bank digital currency (CBDC) research. They will explore potential technical challenges, trade-offs, opportunities and risks involved in designing a CBDC system.

The U.K. Treasury is canceling its plans to release a government-backed non-fungible token (NFT). The Royal Mint was tasked with releasing the token by the summer of 2022 but faced delays. The U.K.'s economic secretary Andrew Griffith said that the plans were not moving forward "at this time" but that the proposal would remain under review. Chair of the Treasury Select Committee Harriet Baldwin said that the government's chief financial minister would be asked if issuing an NFT "remains the policy of his department."

The Bank of England has put out a request for proposal (RFP) for proof of concept work on a sample central bank digital currency (CBDC) wallet, to help make a potential CBDC product more tangible for internal and external stakeholders, eg. as a prototype for future user testing. It will also support the Bank's work towards the BIS Innovation Hub's 'Project Rosalind', by testing integration of a front-end with the Rosalind API. Key deliverables will be (1) a mobile wallet app (built on both android as well as iOS); (2) wallet website; and, (3) an example merchant website, and (4) back-end server to serve mobile app and website, including calling the core ledger API and stored user data and transaction history.

The Bank of England published its supervision of financial market infrastructures 2022 Annual Report. It reports that the Financial Services & Markets Bill, published in July 2022 and scheduled to complete in 2023 seeks to bring systemic stablecoins into the Bank's regulatory remit, and bring the UK regime in line with standards discussed. The Bank is now working on a regulatory framework for systemic stablecoins and plans to consult on this in due course. Alongside regulation, another key component of a stablecoin regime is the potential application of the FMI Special Administrative Regime to systemic stablecoin firms. The Bank, working with His Majesty's Treasury, will continue to develop this regime to ensure it reflects international CPMI-IOSCO guidance.

"Twenty companies have submitted applications to create a digital wallet for the Bank of England's CBDC project. The bank underlined its desire to pursue a central bank digital currency by putting a contract for a sample wallet out to tender only three weeks ago, setting a deadline to complete applications by December 23. Despite the remarkably tight turnaround for the £200,000 five-month project, 28 applications were made, although eight didn't pursue the contract bid beyond the deadline for questions on December 16. The completed applications are made up of nine SMEs and 11 'large' companies." https://www.digitalmarketplace.service.gov.uk/digital-outcomes-and-specialists/opportunities/18948

The Bank of England (BoE) has engaged Consult Hyperion, on a pair of £100,000+ CBDC assignments. The contract award notices for Point-of-sale [PoS] proof-of-concept [PoC] consultancy services and Feasibility study service on the e-commerce of CBDC were published on the UK government's Contracts Finder service. The website also shows that the BoE is currently working with Oliver Wyman to provide support on paper for research on digital currency and the MIT Digital Currency Initiative. Interestingly, all were awarded under nontransparent procurement processes that allow the BoE to avoid open tenders.

Bank of England Deputy Governor Jon Cunliffe spoke about four areas where the tokenization of money is now being explored, stablecoins used for payments, the tokenization of commercial bank deposits, the next stage of the Bank of England's Digital Pound work and the Bank's work to ensure to ensure these new forms of money are robust and uniform. https://www.linkedin.com/feed/update/urn:li:activity:7054323252151599104/

The Bank of England (BOE) published the minutes of the October 2023 retail CBDC Technology Forum meeting. The four subgroups presented their objectives, expected outputs and timelines. Subgroup 1 will look at privacy-enhancing technologies and aliases. Subgroup 2 will focus on alternative models of interaction between payment infrastructure providers (PIPs). Subgroup 3 will explore options for the core ledger design in general terms, rather than the technology or solutions provided by specific vendors. Subgroup 4 will assess what a platform for innovation might look like and explore the possible technology requirements for one.

The U.K.-based Royal United Services Institute (RUSI) published a paper on the potential adverse international security effects of the development of foreign central bank digital currencies (CBDCs). Concerns center on (1) the possibility of China dominating the CBDC market, (2) implications of first-mover advantage (and conversely the implications of the Bank of England delaying domestic development of a CBDC), (3) he role of CBDCs in international sanctions, and (4) the impact of foreign CBDCs on the United Kingdom as a financial center.

The U.K. Financial Conduct Authority (FCA) will not object to requests from Recognized Investment Exchanges (RIEs) to create a UK listed market segment for crypto-asset-backed Exchange Traded Notes (cETNs). These products will be available for professional investors, such as investment firms and credit institutions authorized or regulated to operate in financial markets only. However, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place. On the same day as the FCA announcement (March 11, 2024) the London Stock Exchange confirmed it will accept applications for the admission of Bitcoin and Ethereum cETNs in Q2 2024. https://www.lse.co.uk/rns/n0224-admission-of-bitcoin-and-ethereum-etns-66tuep2iac04hnc.html

The Bank of England (BoE) and U.K. Financial Conduct Authority published a consultation paper proposing to implement and operate a Digital Securities Sandbox (DSS). The DSS will allow firms to use developing technology, such as distributed ledger technology (DLT), in the issuance, trading and settlement of securities such as shares and bonds. Firms that successfully apply for the DSS will be able to operate under a set of rules and regulations that has been modified to facilitate this. The DSS lasts for five years and will help regulators design a permanent technology friendly regime for the securities market.

LCH SA has received the required regulatory approval from the French national competent authorities (ACPR, Banque de France and AMF) and European supervisory authorities (EMIR College, ESMA) to clear cash-settled Bitcoin index futures and options contracts. LCH SA will provide clearing services through its new dedicated service, LCH DigitalAssetClear, for these contracts traded on the UK FCA regulated digital asset derivatives trading venue, GFO-X. LCH DigitalAssetClear is underpinned by a segregated default fund, tailored risk management model and dedicated set of clearing rules. LCH SA plans to launch the clearing service later in 2024.

UK Finance announced work on a new UK Regulated Liability Network (RLN) experimentation phase with eleven of its members. The UK RLN is envisaged as a common "platform for innovation" across multiple forms of money, including existing commercial bank deposits and a shared ledger for tokenized commercial bank deposits. It will focus on three use cases; payment-upon-delivery for a physical product, the process of buying a home, and digital bond settlement. The experimentation phase will run until summer 2024 and will cover customer and business benefits, technical feasibility via proofs of concept in a technology sandbox, and the legal framework.

The Bank of England (BOE) and HM Treasury (HMT) published a summary of the responses to their February 2023 digital pound consultation paper. The Bank and HMT received over 50,000 responses, with many respondents raising concerns about access to cash, users' privacy, and control of their money. In the summary paper, the BOE and HMT said that the they would not have access to personal data. Private-sector payment interface providers (PIPs) would anonymize personal data before transactions are processed and settled by the BOE. Also the BOE and HMT would not pursue government or central bank-initiated programmable functions. However, PIPs could program digital pound payments but only with user consent, and be subject to robust regulatory requirements in this regard .Although commercial bank respondents called for individual holding limits of £3,000 to £5,000, the BOE and HMT are sticking with a £10,000 to £20,000 range for now.

The BOE and HMT also published the responses to the digital pound technology working paper also published in February 2023. There was broad support for the six technology design considerations - privacy, security, resilience, performance, extensibility and energy usage. Respondents also suggested additional considerations, such as interoperability, usability, accessibility and scalability. A few respondents suggested models that the BOE judges to not be compatible with the stated policy objectives or design principles, for example models based on anonymous bearer instruments, which will not be taken forward. Most respondents agreed that government or central bank-initiated programmable money should not be pursued, but that user-initiated programmable payments and smart contract functionality would be important for a digital pound system.

The Bank of England (BOE) and HM Treasury published a digital pound request for information on privacy, meaning the protection of users' personal and transaction data, and ensuring they have control and visibility over who can process their data and for what purposes. However, the digital pound would not be anonymous because the ability to identify and verify users is needed to prevent financial crime, but the BOE and government will not access users' personal data in a digital pound ecosystem. In that regard, the BOE is exploring technological solutions to prevent it from being able to access personal data via the core ledger. The deadline for responding is March 12, 2024. https://www.bankofengland.co.uk/the-digital-pound/digital-pound-working-groups

The Bank of England (BOE) has assessed the technical feasibility of using existing point-of-sale (POS) hardware, as currently used in the UK, to initiate digital pound payments. This involved a proof of concept (POC) that used EMV standards to send payment instructions from smart cards to POS devices, and then to an application programming interface (API). It demonstrated that, while existing POS terminals may not need to be modified to make online digital pound payments, they might need to be modified for offline payments.

Fnality and HQLAᵡ have completed end-to-end testing to enable intraday sterling repo settlement on the Eurex Repo F7 platform via their two blockchain networks. They plan to go live in Q4 2024 subject to UK regulatory approvals. Fnality is a UK-regulated systemic payment system and HQLAᵡ operates a digital collateral registry to enable intraday collateral movement. Fnality's settlement instrument is effectively a "synthetic" wholesale central bank digital currency (CBDC) - i..e., a sterling-denominated stablecoin backed by deposits in a Bank of England omnibus account. In conventional repo transactions, the collateral settlement takes two days, but on the Fnality/HQLAᵡ platform, trades can be settled on a atomically intra-day delivery-versus-payment (DvP) basis. https://www.linkedin.com/posts/eurex_eurex-repo-dlt-activity-7208755407740137472-g29d/

Under new rules from the U.K. Financial Conduct Authority (FCA), banks and building societies will need to weigh up if local communities lack access to cash services, like branches and ATMs, and plug significant gaps. Under the new rules banks will need to respond to local residents and community organizations when closing branches and ATMs and provide an assessment of whether there are gaps in local cash access. Where significant gaps are found, banks will be obliged to retain branches and ATMs until alternative solutions are found.

The Bank of England (BOE) published a discussion paper on innovation in money and payments. While it covers payments across the board, it aims to gather feedback for planned wholesale central bank digital currency (CBDC) trials. These will include a synchronization (or "trigger") solution that settles transactions involving assets that are tokenized on distributed ledger technology (DLT) platforms using the real time gross settlement (RTGS) system. The BOE also wants to trial a digital securities transaction in which an end user makes a tokenized deposit payment. Finally, it will test interoperability with global initiatives like the Bank for International Settlements (BIS) Project Agorá for cross-border payments. Comments are due by October 31, 2024. https://www.bankofengland.co.uk/paper/2024/dp/the-boes-approach-to-innovation-in-money-and-payments