Proshare - Facebook Proshare - Twitter Proshare - Google+ Proshare - Linked In Proshare - RSS Feed

Bank of England Explores Centralized DLT System Open To Regulatory Oversight, Releases PoC

Proshare

Wednesday, April 11, 2018    03:48 PM / Cointelegraph

The Bank of England has released a Proof-of-Concept paper (PoC), together with Blockchain startup Chain, that examines how to configure a distributed ledger system which would maintain privacy between participants, keep data shared across the network, and also enable a regulatory body to oversee all transactions, as outlined April 11. 

The paper investigates a scenario in which the DLT system includes a central authority (such as a central bank), a regulator, and several participants involved in the transfer of a hypothetical asset.

The central authority would have the power to issue and retire new units of assets and grant access permissions to all participants, and the regulatory authority would maintain oversight of all assets in the system. No party other than the regulator would be able to infer details about transactions they are not party to. 

An attacker would have to obtain the private keys for each transaction in order to decrypt data, such as asset identifiers and transaction amounts. 

The paper is for now academic, rather than practical. It raises the concern that although current cryptographic techniques are “theoretically” able to secure privacy between participants, whilst also keeping the data fully distributed, future cryptographic breakthroughs could retroactively compromise this and render the scheme vulnerable to attack. 

In responding to the “trade-offs” between privacy, performance, and resilience, this PoC is different from alternative schemes which privilege privacy to the extent that data is only shared between those participants directly involved in a transaction. The paper nonetheless concludes by admitting that the cryptographic solutions which could offer an “ideal” balance between factors such as scalability, speed of transaction processing, and security risks, still require significant testing. 

The paper comes days after the UK bank announced renewed plans to pursue its PoC for a DLT-compatible real-time gross settlement system (RTGS), which was first proposed in 2017. The statement struck a similarly reserved note, emphasising that DLT tech was not yet “sufficiently mature to provide the core for the next generation of RTGS,” but that it placed a high priority on expanding RTGS functionality to be capable of interfacing with DLT in the future. 

A recent report released by SWIFT and 34 global transaction banks likewise emphasized the need for more DLT tech development to meet “industry-level governance, security and data privacy requirements,” yet struck an overall positive tone, urging the banking community to complement their platforms with DLT capabilities. 

Proshare Nigeria Pvt. Ltd.

Related News

  1. Central Bank of Kenya Starts Implementation of Interoperability of Mobile Phone Financial Services
  2. South Africa’s Central Bank To Establish Self-Regulatory Body To Oversee Crypto Industry
  3. US SEC Breaks Silence On Certain Cryptocurrency Exchanges
  4. MAS And Financial Industry To Develop Guidance On Responsible Use Of Data Analytics
  5. Japan Exchange Regulation: Introduction Of Artificial Intelligence To Market Surveillance Operations
  6. Fair Dealing in Advertising: Guidance For Crowdfunding And Peer- to-Peer Lending Published (NZ)
  7. SEC Publishes New Guidance On Cybersecurity Disclosures And Compliance Practice
  8. Establishment of the Euro Cyber Resilience Board for Pan-European Financial Infrastructures
  9. Technology and Innovation Support Centre Inaugurated
  10. UK's FCA and US Commodity Futures Trading Commission Sign Pact To Collaborate On FinTech Innovation
  11. Saudi Arabia Capital Market Authority Warns Investors Against Digital Currency Investment
READ MORE:
Related News