BoE, LSE and FCA – Financial Agencies in the UK

/BoE, LSE and FCA – Financial Agencies in the UK
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Blog Post by: Amie Parnaby

Amie Parnaby is a professional writer and her experience spans a broad range of industries, from I.T. to training and optics to banking. Currently, Amie is the content writer for Terrexa – your entry point for crypto.

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Leverate Technological Trading Ltd.

While the world’s financial authorities range in their approaches to crypto assets (currency and distributed ledger tech, DLT), the UK industries and institutions are taking the long view and incorporating both into their development schemes and processes. It’s a nod to the future progress of the technology and the currencies.

This tacit seal of acceptance, if not approval, is a significant move when you consider the prevailing opinion among global policymakers is that crypto assets are at best poor stores of value with low utility and in the worst case, dangerously disruptive.

The UK Financial Conduct Authority (FCA) has had a Sandbox running for the past few years – an environment where new products can be tested in a ‘live’ state with a temporary FCA authorisation – and for the first time has granted access to fintech start-ups investigating crypto asset usage.

The Sandbox is part of the FCA’s Project Innovate, which is an attempt to shake-up the old systems in the financial sector that have been proven wanting by the financial crisis.  The latest group of admissions to the Sandbox is the largest yet, 29 out of 69 applications have been accepted, and 40% of the organisations admitted are experimenting with DLT, the underlying technology behind cryptocurrencies.

Not all of the DLT experimenters are start-ups, there are household names such as RBS NatWest attempting to create digital mutual funds on the blockchain.

Additionally, a spokesperson for the FCA had admitted that they aren’t just welcoming DLT tech to their environment, they are actively investigating the technology for their own fintech developments for regulatory reporting.

At the same time as the FCA is admitting DLT to its Sandbox, the London Stock Exchange (LSE) has partnered with 20|30 to create a blockchain-based platform to allow primary issuance of equity tokens using Ethereum. Unlike the plethora of ICOs that have saturated the cryptocurrency space, these equity token are regulated and represent stock in a company. The next step would be to facilitate secondary transfers too.

In the midst of the new tech being investigated and tested the Bank of England (BoE) isn’t going to be left behind. The BoE is looking to completely upgrade the system that underpins all banking and trading in London by 2020, to improve defence against cyber-crimes and broaden its business reach to those outside its current sphere or accessibility.

BoE governor, Mark Carney wants the system to be more accessible for smaller firms rather than having to work through third-party banks, improving the scope for competition and innovation.

The Real-Time Gross Settlement (RTGS) system currently handles transactions of approximately £500 billion – almost a third of British economic output. In March the BoE announced a “proof of concept” with various firms to explore what would be needed to include DLT settlement compatibility with the new and improved system.

Three significant figures in the UK financial structure have shown a positive if restrained, acceptance of the future of disruptive blockchain tech and cryptocurrencies. It is a quiet shift in attitude and given the heated Brexit debates that dominate the UK news; it’s not a coincidence. The UK is determined to stay ahead of the fintech industry in the wake of leaving the EU, while Berlin and Paris (among several other EU cities) attempt to coax or cajole fintech companies, worried about future access to the single market, away from the UK.

 

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2018-09-12T09:20:22+00:00