The UK Financial Conduct Authority (FCA) has published a discussion paper on distributed ledger technology (DLT) also commonly called Blockchain.
The document was released today amidst of a flurry of Fintech related news as the Innovate Finance Global Summit kicked off in London. The FCA said that DLT was an “example of rapidly developing technology which offers exciting potential to support the needs of consumers and the market.” The FCA believes that DLT has the “ability to remove the need for certain intermediaries, to increase the speed of reconciliation and reduce costs has made it a popular subject of research for both regulators and the industry.”
Simultaneously, “DLT may also present new challenges and potential risks. For example, how regulated firms allocate responsibilities for systems shared among them.”
The paper seeks to commence a dialogue with the financial regulators to better understand DLT evolution and the possibilities to incorporate its usage in securities markets and other types of transactions. The UK is considered one of the leaders in blockchain regulatory review.
While the FCA said their historical approach has been one of “technology neutral” and not to regulate specific types of technology but only the activities they facilitate, DLT may be a bit different. They may need to reconsider their approach so as to foster “sensible development.”
So who does this document impact? Both users and providers of DLT solutions in the sectors that the FCA supervises. Once the FCA receives feedback from this Discussion Paper, the agency will determine their next steps. They also indicated they are looking forward to hosting and attending events where DLT is a topic of discussion.
The Discussion Paper is embedded below.
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