UK’s Pensions and Welfare Department Eyes DLT for Faster Payments

In a blog post published late last week, Richard Laycock deputy director at the DWP’s Digital Delivery Shared Platforms, said that improvements are planned across the DWP payments systems to ensure its 20 million customers “receive their payments on time.”

To keep up with the changing face of payments, the U.K.’s pensions and welfare division of government, the Department for Work and Pensions (DWP), says it is investigating distributed ledger technology.

“As we move our Payment Services forward they need to be efficient, modern, fast, scalable, flexible, innovative and available 24/7”, Laycock wrote.

For the updated system, the DWP is investigating various tech trends, including the growing adoption of distributed ledger technology (DLT).

“We are starting to see the first full production DLT implementations, such as Santander’s One Pay FX. The benefits include reducing time, cost and failure rate associated with making transactions whilst data is stored on a secure immutable ledger”, according to Laycock.

The department is also to revamp its payments architecture – to introduce “the biggest set of changes to the way UK payment schemes process payments in years.” With a rollout planned to start  in 2021, the DWP will introduce a common payment message standard and consolidate existing schemes. New “overlay” services will also be added, including “request to pay” and “confirmation of payee.”

Open banking – the use of open APIs to allow third-party developers to build apps and services around a banking institution – also offers a way to improve aspects of the DWP’s payment services.

Laycock said:

“I’m keen for us to consider how we can harness the payment innovations coming out of these trends and how we can influence the New Payment Architecture to help shape future of payments across government.”

UK Fund That Aims to Capitalize on Crypto Volatility Raises $50 Million

U.K.-licensed Nickel Asset Management says it has raised $50 million for a fund aimed to make profits off the volatility of cryptocurrencies.

The firm said Monday it has now “soft closed” its Nickel Arbitrage Fund to new investors, two months after launch. The raise was joined by funds of funds and family offices in the U.K., Europe, North America and Singapore.

Regulated by the Financial Conduct Authority, the firm says the arbitrage fund strategy “harnesses the extreme swings in crypto markets to deliver low-volatility, consistent performance.”

Nickel has built its own automated trading systems. By investing in only those digital assets that have active futures and swap markets, it maintains “an overall market-neutral exposure to volatile crypto-assets”, according to a press release

“As long as digital assets and their derivatives trade on multiple exchanges across the globe, with sufficient speed and execution quality, we can profitably make markets, while improving liquidity for other market participants”, said Alek Kloda, portfolio manager at Nickel.

Nickel also said it offers a solution for managing digital assets on multiple trading platforms.

“Until now, hedge funds have been using a self-custody model for digital assets. Since blockchain transactions are irreversible, the risk of a single point of failure has been the key reason for institutional investors avoiding exposure to the asset class at any significant scale”, Nickel said. The firm is employing multi-signature security to ensure no single party can move funds individually, and restricts movement of funds to a pre-approved white list of addresses.

Anatoly Crachilov, Nickel Asset Management CEO, said:

“Our vision is that it’s simply a matter of time until digital assets become part of institutional portfolio allocation for forward-looking investors around the world, and we aim to build an institutional-quality gateway to this high-octane world of digital assets.”

Nickel said the fund may reopen to investors for a limited period later this year as its service reaches full capacity.

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