Nuggets is collaborating with the Bank of England on a privacy layer for the digital pound.

Payments platform Nuggets is collaborating with the Bank of England to develop a privacy and identity layer for a potential digital pound, as stated in a press release on Wednesday.

The platform, which enables decentralized identity, intends to create a private and secure system to prevent the tracking and correlation of transactions, as well as to combat fraud and money laundering.

The Bank of England (BoE) initiated a consultation on a central bank digital currency in February, expressing the likelihood of a digital pound being necessary. However, the BoE stated that a decision on issuing a digital pound would not be made until at least 2025. Privacy concerns regarding the digital pound have been previously raised by lawmakers.

Nuggets has disclosed plans to incorporate zero-knowledge proofs into its privacy layer, enabling individuals to verify their identity without sharing their data.

Alastair Johnson, the founder and CEO of Nuggets, established the company in 2016 alongside co-founder Seema Khinda Johnson. Initially, Nuggets collaborated with the Bank of International Settlements (BIS) and the BoE on a project called Project Rosalind, which aimed to connect monetary authorities and the private sector to facilitate retail digital currency payments. As a result of this work, the BoE approached Nuggets to investigate and design the privacy layer for the digital pound, according to a company spokesperson.

Read more: UK Will Need New Laws to Accommodate Future Digital Pound, Lawyers Say

Update(July 5 15:20 UTC): Adds Nuggets background in the last paragraph.