The UK’s Financial Conduct Authority (FCA) will possibly approve blockchain businesses within the region. This will give UK-based distributed ledger businesses an edge when it comes to grasping a broader reach towards consumers.
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The FCA Is Researching Blockchain Startups for Economic Growth
According to the Financial Times (FT), the UK’s FCA is considering the approval of a “small but significant number of firms” that use blockchain technology within the fintech industry. The FCA is researching and monitoring projects involved with the organization’s “Project Innovate” program.
The group assesses companies through a regulatory sandbox and so far has evaluated 177 startups, with 40 of them being approved for further consideration.
Blockchain technology startups are just beginning to grow in number, but according to FT, some regulators are concerned with fraudulent activity and volatility of certain projects.
Chris Woolard, the FCA’s director of strategy and competition, tells FT:
We do think blockchain has got some potentially interesting applications and we are talking to firms thinking about how to apply that to financial services and how it could benefit consumers or indeed make the business of compliance easier.— There may be areas where we might want to encourage it a bit.
Woolard details that there are a group of firms that are part of the project working with distributed ledger technology. He explains the FCA will officially announce more information concerning the R&D later this year. Companies that seek to encompass lending or payment processing within the region will require FCA approval.
The startups in question would be the first of their kind to receive approval from the FCA . Nick Williamson, CEO of the London-based blockchain company, Credits tells FT the approval rating currently is “close to zero.”
Furthermore, consultancy agencies and financial management services, such as Greenwich Associates, EY, Accenture, and PwC believe legacy financial institutions will spend another $1 billion USD towards distributed ledger technology in 2016.
Jeremy Millar, founder of Ledger Partners details to FT:
Reports have claimed up to $100bn could be saved on the post-trade settlement process by using blockchain. Another estimate by Goldman Sachs said there could be $50bn of savings in the US repo market alone. The numbers are huge.
The technology that underpins Bitcoin is continuing to make waves throughout the finance industry. Financial institutions and government entities are watching it carefully, as it is said to have the ability to save the economy billions in costs. The FCA’s approval will represent yet another national authority to officially recognize the potential of this emerging technology — clearing it to provide more efficiency in worldwide markets.
What do you think about the FCA looking at distributed ledger startups for approval? Let us know in the comments below.
Images courtesy of the FCA website, Bitcoinist.net.