The UK Government Actuary’s Department, in its monthly bulletin for the month of October, has said that blockchain technology has the potential to revolutionize the current administrative systems used in financial services.

It said that organizations currently keep a record of all the information relating to a contract on a central, private database. The implementation of a blockchain-based system would offer a way to do this that is accessible to a wider group of parties, securely, all in one place, tracking every step along the way.

In particular, the GAD noted that in financial securities trades, it is claimed that the transactions would be orders of magnitude quicker and cheaper if the system is underpinned by blockchain-like technology.

The Actuary Department also emphasized that there are several challenges that need to be overcome for widespread use of the technology. It said that the “anonymity” feature offered by blockchain could help support illegal activity such as money laundering. Also, regulation is not sufficiently developed at this point to facilitate widespread use.

“It would be necessary for a robust system of regulation to be in place before government bodies back blockchain and before corporations and individuals are willing to trust the system and adopt it fully”, it added.

The UK government has been exploring the concept of blockchain technology for quite some time. Earlier in January, UK Government Chief Scientific Adviser Sir Mark Walport in a report recommended that the government should provide ministerial leadership to ensure that government provides the vision, leadership and the platform for distributed ledger technology within government. More recently, it was reported that the Financial Conduct Authority (FCA) is considering approving firms using bitcoin’s underlying blockchain technology.

“Should such approval be granted this would be a first for blockchain getting the regulator green light”, the GAD said.