{"id":35578,"date":"2016-02-25T00:00:00","date_gmt":"2016-02-24T11:00:00","guid":{"rendered":"https:\/\/bravenewcoin.com\/insights\/uk-financial-conduct-authority-gives-blockchain-technology-breathing-space-to-develop-while-monitoring-progress\/"},"modified":"2023-11-27T22:34:56","modified_gmt":"2023-11-27T09:34:56","slug":"uk-financial-conduct-authority-gives-blockchain-technology-breathing-space-to-develop-while-monitoring-progress","status":"publish","type":"post","link":"https:\/\/bravenewcoin.com\/insights\/uk-financial-conduct-authority-gives-blockchain-technology-breathing-space-to-develop-while-monitoring-progress","title":{"rendered":"UK Financial Conduct Authority gives blockchain technology breathing space to develop while monitoring progress"},"content":{"rendered":"<p>In 2013, the government of United Kingdom identified a need to replace the <a href=\"http:\/\/www.fsa.gov.uk\/\" target=\"_blank\" rel=\"noopener\">Financial Service Authority<\/a> (FSA). This was due to the regulatory failure of the banks during the financial crisis which took place from 2007 through until 2008. The restructure consisted of a two pronged approach,<a href=\"http:\/\/www.bankofengland.co.uk\/pra\/pages\/default.aspx\" target=\"_blank\" rel=\"noopener\">\u00a0Prudential Regulation Authority<\/a> (PRA) and the\u00a0<a href=\"http:\/\/www.fca.org.uk\/\" target=\"_blank\" rel=\"noopener\">Financial Conduct Authority<\/a> (FCA).<\/p>\n<p>The PRA is a limited company owned by the Bank of England. The company\u2019s required objectives can be defined by two terms. To promote the safety and soundness of 1,700 banks, building societies, credit unions, insurers and investment firms,\u00a0while contributing to securing protection for policyholders.<\/p>\n<p>Working alongside the PRA, the FCA operates independently from\u00a0the UK government, and receives financing by charging fees to members of the financial services industry. The responsibility of the FCA is to regulate financial firms which are providing services to consumers.<\/p>\n<p><img class=\"lazyload\" decoding=\"async\" src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27150%27%20height%3D%27150%27%20viewBox%3D%270%200%20150%20150%27%3E%3Crect%20width%3D%27150%27%20height%3D%27150%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-orig-src=\"https:\/\/bravenewcoin.com\/wp-content\/uploads\/2023\/11\/ResizedImage150150-Financial-Conduct-Authority-FCA.png\" alt=\"Financial Conduct Authority FCA\" \/><\/p>\n<h5>.<\/h5>\n<h5>\u201cWe aim to make sure that financial markets work well so that consumers get a fair deal.\u201d<\/h5>\n<hr \/>\n<ul>\n<li>Financial Conduct Authority (FCA)<\/li>\n<\/ul>\n<p>The FCA has the power to regulate conduct related to the marketing of financial products, with the capacity to ban them indefinitely. The authority is also able to\u00a0investigate organisations and individuals, specify minimum standards, and place requirements on products.<\/p>\n<p>In 2014, <a href=\"https:\/\/en.wikipedia.org\/wiki\/Martin_Wheatley\" target=\"_blank\" rel=\"noopener\">Martin Wheatley<\/a>, former Chief Executive of the FCA, spoke at the London Financial News Conference. During his<a href=\"https:\/\/www.fca.org.uk\/news\/innovation-the-regulatory-opportunity\" target=\"_blank\" rel=\"noopener\"> speech<\/a>, Wheatley announced an additional focus to the FCA,\u00a0called Project Innovate. Quoting the author Frank Herbert\u2019s Dune saga, the former Chief Executive said \u201c\u2019there is little that bureaucrats hate more than innovation.\u2019 Well, I\u2019ve never fancied myself as a bureaucrat. But innovation isn\u2019t easy,\u201d.<\/p>\n<p>Wheatley further elaborated Herbert\u2019s explanation in saying \u201cthat bureaucrats especially hate innovation that produces better results. Why? Because \u2018improvements always make those at the top of the heap look inept. And who enjoys appearing inept?\u2019 I don\u2019t. But I do think we are better served embracing, rather than restricting innovation.\u201d<\/p>\n<p><img class=\"lazyload\" decoding=\"async\" src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27150%27%20height%3D%27150%27%20viewBox%3D%270%200%20150%20150%27%3E%3Crect%20width%3D%27150%27%20height%3D%27150%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-orig-src=\"https:\/\/bravenewcoin.com\/wp-content\/uploads\/2023\/11\/ResizedImage150150-chris-woolard-LinkedIn.jpg\" alt=\"chris woolard LinkedIn\" \/><\/p>\n<h5>\u201cOne of the best ways we can promote competition is to foster disruptive innovation.\u201d<\/h5>\n<hr \/>\n<ul>\n<li>Christopher Woolard, FCA<\/li>\n<\/ul>\n<p>Project Innovate is designed to help non-authorised firms, with an emphasis on innovative start-ups, to understand the authorisation process. This includes the licensing of new challenger banks and providing budding entrants with an understanding of the regulatory framework and how it applies.<\/p>\n<p>Wheatley, described the project as \u201c&#8230; one of the most important pieces of work currently emerging at the FCA\u201d and said that \u201cit\u2019s an imperative for regulators to be standing on the right side of progress.\u201d<\/p>\n<p>In a speech on Tuesday this week, at the FCA\u2019s event on UK FinTech: Regulating for innovation, the FCA Director of Strategy and Competition, Christopher Woolard, explained that \u201cSome tech start-ups are completely unfamiliar with financial regulation which can be daunting; larger firms are more familiar with regulation but often have complex questions about their new propositions.\u201d<\/p>\n<p>The FCA\u2019s Innovative Project hub is designed to tackle this issue, providing an opportunity for businesses in the FinTech industry with room to flourish. So far, the hub has received 413 requests, of which 52 percent of these firms are being supported by the FCA.<\/p>\n<p>Of the 48 percent that were not successful, Woolard advised that this was due to ideas that had already been established, therefore, a standard route to authorization already existed. Secondly, and Woolard advises this was rare, some proposals did not have the potential to be of interest to consumers.<\/p>\n<p>So far 18 firms have been authorised and 21 are currently being processed. \u201cThat is about a 30% conversion rate,\u201d said Woolard. The firms that have been authorised so far include investment firms, consumer credit firms and insurance intermediaries.<\/p>\n<p>Similar initiatives to promote innovation in financial services exist around the globe. These include, but are not limited to, the Japanese Financial Services Authority which launched a FinTech Support Desk last year, Singapore\u2019s Monetary Authority formed a FinTech and Innovation Group and in the United States, the Consumer Financial Protection Bureau has introduced Project Catalyst. \u201cSo we are not the only ones in this space and we can stand to benefit from learning from each other along the way,\u201d Woolard said.<\/p>\n<p>The FSA are now looking to have international cooperation agreements in place with these other key regulators. Woolard will be travelling to Australia next month to exchange views and ideas with the Australian Securities and Investments Commission (ASIC), which launched its own Innovation Hub in March last year.<\/p>\n<blockquote>\n<p>\u201cWhile we have made great progress to date with Project Innovate, it\u2019s essential we don\u2019t stand still. \u00a0Our coming area of focus will look at policy and process improvement.\u201d<br \/>\n&#8212; &#8211;\u00a0Woolard<\/p>\n<\/blockquote>\n<p>In addition to the Innovation Project by the FCA, a live environment will be launched in the coming months called the Sandbox. \u201cThe Sandbox will allow businesses to test out new, innovative financial services without incurring all the normal regulatory consequences of engaging in those activities. It is safe to say that we have been inundated with interest about the sandbox,\u201d stated Woolard.<\/p>\n<p>Woolard also spoke about what people are referring to as RegTech, \u201c&#8230; thinking about solutions to issues that already sit squarely within the sphere of regulation.\u201d He sees some key opportunities, \u201c&#8230;which include managing regulatory requirements more efficiently, and, an opportunity for us to understand how we can best support developments and potentially adopt some RegTech solutions ourselves.\u201d<\/p>\n<p>Woolard points out that one solution could be provided by blockchain technology. \u201cThe 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,\u201d.<\/p>\n<blockquote>\n<p>\u201cWe are particularly interested in exploring whether block chain technology can help firms meet know your customer or anti-money laundering requirements more efficiently and effectively. We are engaged in discussions with government and industry on this issue.\u201d<br \/>\n&#8212;  &#8211; Woolard<\/p>\n<\/blockquote>\n<p>According to the FCA there are regulatory and consumer issues to be overcome as blockchain technology evolves. \u201cFor 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,\u201d said Woolard.<\/p>\n<blockquote>\n<p>\u201cInnovation can be an iterative process and the development of a digital solution is therefore unlikely to be perfect first time round.\u201d<br \/>\n&#8212; &#8211; Woolard<\/p>\n<\/blockquote>\n<p>During the development phase of this technology, Woolard said that it is crucial that space is given to innovators in order to develop their solutions. At this time, the FCA will continue to monitor the progress and evolution of blockchain, but will not take a stance until its application becomes clear.<\/p>\n<h5>.<\/h5>\n<h5>FCA is looking at ways to encourage firms to innovate with technology, including distributed ledgers.<\/h5>\n","protected":false},"excerpt":{"rendered":"<p>Britain&#8217;s financial watchdog has announced that it will not directly regulate blockchain, as it could hamper innovation.<\/p>\n","protected":false},"author":1208,"featured_media":35582,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[139,2722,3957],"_links":{"self":[{"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/posts\/35578"}],"collection":[{"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/users\/1208"}],"replies":[{"embeddable":true,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/comments?post=35578"}],"version-history":[{"count":0,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/posts\/35578\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/media\/35582"}],"wp:attachment":[{"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/media?parent=35578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/categories?post=35578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bravenewcoin.com\/wp-json\/wp\/v2\/tags?post=35578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}