The UK Financial Conduct Authority (FCA) will not regulate the blockchain sector at the moment, as it believes the technology will continue growing.
During a speech at the London Fintech Week, Christopher Woolard, the director of strategy and competition at the FCA, noted that in view of the ongoing growth of the bitcoin technology, it’s necessary to address such issues as regulation and data security.
“For example, how individuals gain access to a distributed network and who controls this process, along with what data security exists for users are vital considerations for us as a regulator,” Woolard said. “The FCA continues to monitor the development of this technology but is yet to take a stance until its application is clearer.”
The UK is known for its positive stance towards the digital currency and other developments in the financial sector. The government intends to motivate new startups create innovative ideas that will help to enhance the industry.
“The current development of distributed ledger technology has the potential to revolutionise financial services; whether it is the panacea of all ills in the financial world is yet to be seen,” Woolard noted.
The FCA currently offers support to more than 400 startups through its Innovation Hub, which was opened last year.
In addition to driving competition, the FCA intends to ensure proper consumer protection. “One of the best ways we can promote competition is to foster disruptive innovation,” he said.
The organization is investigating how the distributed ledger can help startups to enhance compliance with anti-money laundering and know your customer requirements. Woolard said the FCA is conducting negotiations with the government and industry players regarding the matter.
He also noted that they will continue collaborating with companies creating blockchain solutions and the FCA is in plans to enlarge its Innovation Hub in the near future.
Many in the financial industry believe the blockchain has the potential to transform the way payments processing and other services are conducted.
The main advantages of the technology is high security and privacy of transactions stored in the distributed ledger. The other reason why it is so appealing to banks and other financial companies is that it doesn’t involve third parties, like central bank.
However, there also other sectors that could leverage the emerging technology. The Sony Global Education has recently introduced a new blockchain-based system that will record educational data. The company has also underlined it will apply the technology in such areas as environmental services and medical care.
A few days ago, US tech giant IBM has introduced Hyper Ledger, the project that will enable companies develop their own applications of the blockchain technology.
Meantime, audit and consulting provider PricewaterhouseCoopers (PwC) has recently formed a team of 15 specialists who will explore the blockchain potential. Besides, it appointed a former UK regulator Patrick Spens to assist in the project.
Among the other applications of the distributed ledger that were launched this month is the blockchain e-voting service allowing investors in Estonian companies to vote in shareholder meetings.