The British Government’s dalliance with Bitcoin and other crypto-currency related technologies shows no signs of ebbing. Despite a traditionally conservative stance, Her Majesty’s Government has shown considerable interest towards innovative digital crypto-currency technologies like Bitcoins’ block chain system. Tramonex, a recent startup working on a blockchain prototype using the crypto-currency Ethereum, was the latest beneficiary of the government’s largesse with a £248k award from InnovateUK.
2016 has seen several such instances where the UK government has shown clear cut interest in blockchain technologies. The Boston-based Bitcoin startup Circle was granted an electronic money license at the beginning of April to start its operations in UK and start banking relations with major banks like Barclays, a first for any bitcoin company anywhere. Such encouragement of startups can be seen as part of an overall initiative to promote innovation in financial technology and to cement London’s position as the FinTech capital of the world.
The Bitcoin project has garnered an unfavorable and unsavory public perception over the years, mainly due to its predilection for attracting drug trafficking related transactions and its susceptibility to well publicized hacker attacks. Though the project itself has been in limbo due to deep schisms between its lead developers, the blockchain technology it pioneered has attracted considerable interest from leading banks and FIs, FinTech startups and tech giants.
UBS, Barclays, IBM, the NASDAQ, Microsoft, Citibank, Santander are just a few of the firms currently involved in blockchain technology. Numerous startups similar to Circle and Tramonex, like Coinometrics, BTCJam, Chain, BlockCypher and Bitpay are all building their businesses around this technology.
The technology has been garnering this level of attention and interest due to its transparency, security, affordability and ease of use. Thus it is no wonder that governments and even politicians are showing interest in blockchain and crypto-currency technologies, despite the kind of stigma associated with Bitcoin in general.
The Treasury has been exploring the potential of digital currency in recent years, having spent £10 million in 2015 alone to fund think tanks to examine the technology. The Cabinet has gone a bit further in 2016, mulling the possibility of using bitcoins or similar crypto-currency technologies to disburse government research grants. The Cabinet Office minister and Paymaster General Matt Hancock has been quite vocal in his support for the technology, stressing that it could significantly simplify the ponderous task of handling government data while making the whole process a lot more transparent.
Even the Bank of England has joined the fray and has developed a digital crypto-currency with the help of a team of researchers at University College. Such initiatives from the Government and the establishment in general bode well for the future of FinTech in the UK. As a result, London is currently well positioned to maintain a leadership role in the sector, along with New York and Silicon Valley.