Yet the financial system continues to be arranged around a series of hubs and spokes like banks and payments, clearing and settlement systems. Crypto-assets are an attempt to create the financial architecture for peer-to-peer transactions. Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems. These must now evolve to meet the demands of fully reliable, real-time, distributed transactions. Second, the technologies underlying crypto-assets, particularly distributed ledger, can:  -  Increase the efficiency of managing data;  -  Improve resilience by eliminating central points of failure, as multiple parties will share replicated data and functionality;  -  Enhance transparency (and auditability) through the creation of instant, permanent and immutable records of transactions; and  -  Expand the use of straight-through processes, including with “smart contracts” that on receipt of new information, automatically update and if appropriate, pay. These properties mean distributed ledger technology could transform everything from how people manage of their interactions with public agencies, including their tax and medical records, through to how businesses manage their supply chains. Third, crypto-assets raise the obvious question about whether their infrastructure could be combined with the trust inherent in existing fiat currencies to create a central bank digital currency (CBDC). Currently only banks can hold central bank money electronically in the form of a settlement account at the Bank of England. To be truly transformative a general purpose CBDC would open access to individuals and firms.

Pointing to the Future I trust you have gathered by now that for many reasons the crypto-assets in your digital wallets are unlikely to be the future of money. But that is not meant to dismiss them. Their core technology is already having an impact. Bringing cryptoassets into the regulatory tent could potentially catalyse innovations to serve the public better. Indeed, crypto-assets help point the way to the future of money in three respects:  -  By suggesting how money and payments will need to adjust to meet societies’ changing preferences, particularly for decentralised peer-to-peer interactions;  -  Through the possibilities their underlying technologies offer to transform the efficiency, reliability and flexibility of payments; and  -  By the questions they raise about whether central banks should provide a central bank digital currency (CBDC) accessible to all. 27  In the EU, the revision of the 4th AML Directive will bring exchanges and wallet providers in the scope of the anti-money laundering and combatting the financing of terrorism rules. In the US, virtual currency exchanges are regulated as money transmitters and required to abide by Bank Secrecy Act obligations. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Let me take these in turn. First, crypto-assets are part of a broader reorganisation of the economy and society into a series of distributed peer-to-peer connections across powerful networks. 28  People are increasingly forming  connections directly, instantaneously and openly, and this is revolutionising how they consume, work, and communicate.