The UK Treasury has released a report highlighting Ripple's significant involvement in the transition of wholesale markets to blockchain technology. This initiative aims to move tokenized repo, fixed income, and funds from pilot stages to operational markets within the next year.
Authored by Chris Woolard, the report advocates for a hybrid model that combines permissioned institutional networks with permissionless chains. This approach seeks to address the ongoing challenges related to settlement-finality risks in public blockchains, while leveraging the benefits of shared liquidity.
Ripple's recent acquisition of Hidden Road, a prime broker, and its partnership with Santander UK to implement blockchain solutions are underscored as pivotal examples of integrating traditional finance with cryptocurrency technology. Woolard suggests that such collaborations could enhance the UK's economic output by £33 billion ($44 billion) annually and increase tax revenues by £14 billion over the next decade.
Despite the promise of this model, the report warns of potential risks associated with permissionless networks, such as the possibility of transaction reversals due to chain reorganizations. Nevertheless, the report emphasizes a growing trend of collaboration between traditional financial institutions and crypto-native companies.
Looking ahead, Woolard notes that both the UK and the US are targeting similar timelines for stablecoin regulation, aiming for comprehensive frameworks by 2027. The UK is currently ahead in developing wholesale policy, while the US is facing delays with its Clarity Act. The Financial Conduct Authority (FCA) has already begun granting approvals to crypto firms under anti-money laundering regulations, with new frameworks expected to roll out next year.
