Bank-Led Digital Cash Settlement Project Delayed By Regulatory Concerns

An ambitious initiative to implement digital versions of worldwide currencies is unlikely to get off the ground this year, officials said, as reported by Reuters.

The project, previously known as the Utility Settlement Coin initiative, involves 13 of the world’s largest banks and would entail making digital versions of the U.S. dollar, the yen, euro, pound and the Canadian dollar. It was initially run by UBS Group and has been in the works for over five years.

But Fnality International, which runs the project now and is comprised of banks including Barclays, Banco Santander and Credit Suisse, said the initiative is unlikely to get going in 2020 as it is still tied up in regulatory approval processes. According to CEO Rhomaios Ram, the hope is to get it off the ground by early 2021, Reuters reported.

Fnality was formed in June 2019 to helm the project, with the banks funneling 50 million pounds ($65 million) into the new company and hoping to get the initiative done by this year. The idea behind the project is to make more efficient ways for banks to settle transactions, replacing the often time-consuming paperwork and processes with a blockchain system.

Similar projects have been attempted, such as Facebook‘s proposed Libra digital currency, which has also been delayed amid regulatory concerns.

Many have found that the regulatory hurdles are harder to clear than the technological questions, Reuters reported.

The European Union has signaled that it has concerns about private companies making digital coins because it could be difficult to get them regulated by the normal sets of laws. Valdis Dombrovskis, the EU’s executive vice president of the European Commission, said the EU would be implementing a regulatory watchdog to make streamlined standards for digital coins across Europe.

And Bank of France Governor Francois Villeroy de Galhau has said that he doesn’t think a digital coin should be controlled by someone other than a state power.