Just days after Bank of Ireland reported a successful proof-of-concept using cryptocurrency method blockchain for transparent transactions, it has emerged that UK bank Barclays has entered into a venture with virtual currency player Circle for an e-money licence.
Earlier this week, we reported how Bank of Ireland and Deloitte engaged in a successful proof-of-concept to show how blockchain technology can sit on top of banks’ legacy systems and enable transparent transactions, in keeping with the upcoming EU MiFID II regulations.
Blockchain technology, which underpins emerging digital, virtual, or cryptocurrencies, consists of blocks that hold timestamped batches of recent valid transactions, which form a chain, with each block reinforcing those preceding it.
It emerged last night that Barclays has become the first UK bank to engage with a virtual currency company, Boston-based Circle, after the UK financial regulator, the Financial Conduct Authority, granted an electronic money licence to Circle.
Blockchain a key to UK fintech ambitions?
The UK’s regulator sees the move as underpinning its ambitions to make London a hub for fintech.
The licence makes it possible for Circle to establish a banking relationship with Barclays in a move that will enable customers to send money as easily as sending a message on social media or an SMS on a mobile device.
Circle is utilising blockchain technology to build a model for money without borders.
“A critical element of Circle’s ‘money without borders’ open-value proposition is blockchain technology,” explained Circle founder Jeremy Allaire.
“Distributed ledgers and the protocols that support them are to payments what HTTP is to information sharing and media,” he said.
“Rather than creating more proprietary, closed, centralised networks, we’ve embraced the ideas that have fueled the digital age – open networks, open intellectual property and open source software, distributed and decentralised information and computing architectures, and a fundamental respect for privacy and security.”
He explained that Circle allows UK and US consumers to transmit sterling and dollars over the blockchain without incurring fees.
“If you live in the UK and want to send pounds to someone, or receive value from someone in Japan, Korea, The Philippines, China, the US, Europe, Africa, etc, there are blockchain products and services in those markets that allow consumers to receive your payment instantly, and they can instantly convert it into their local currency and transfer it in and out of their existing bank accounts.
“We’re in the early stages of blockchain technology. Bitcoin, ethereum, private chains, and new distributed ledger protocols will evolve, and a free and open experience with money will emerge,” Allaire said.
Barclays image via Shutterstock