Bank of England teams up with wallet maker for CBDC privacy

Quick Take

  • The Bank of England is working with payment platform Nuggets to investigate CBDC monitoring and privacy risks.

The Bank of England is working with payment platform Nuggets to investigate the design of a privacy layer for the UK's proposed retail CBDC.

The feature would use untraceable connections to privately swap and check credentials without revealing identities.

"Nuggets initially worked with the Bank of International Settlements on Project Rosalind, in conjunction with the Bank of England and off the back of that work, Nuggets was then asked by the Bank of England to investigate and design the identity and privacy layer as part of its efforts to ensure privacy and security for the proposed digital pound," Nuggets co-founder Alastair Johnson told The Block.

Critics have pointed out monitoring and privacy-related risks surrounding retail central bank digital currencies. On Tuesday, UK financial services minister Andrew Griffith spoke about CBDC privacy, monitoring risks and the need to "proceed cautiously" with designs for the digital pound.

Digital pound privacy layer 

Nuggets claims that its identity layer infrastructure will let CBDC users control and keep their data private by using Zero-Knowledge proofs. This will prevent tracking of transactions and meet strict anti-fraud and anti-money laundering standards. 

Central banks worldwide are pushing forward with CBDC projects, stressing that the technology will widen financial inclusion and simplify cheaper cross-border transactions. Both the UK Treasury and Bank of England suggest a late decade launch for their CBDC. 

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