Earlier this year, the UK Financial Conduct Authority (FCA) published a discussion paper and sought out stakeholder views on distributed ledger technology (DLT) and its future development potential for the markets that it currently regulates.
The results are in
The FCA has now published that feedback. The regulator received a total of 47 responses from local and international trade associations, consultants, regulated firms, and law firms.
According to reports, the stakeholders welcomed the FCA’s technology-neutral approach to regulation, but they also voiced support for the Sandbox initiatives, meant to test out DLT innovations prior to public deployment. Respondents mentioned that DLT solutions could help provide and deliver on regulatory requirements considerably better than current systems can, while reducing costs for both regulators and firms operating in the DLT market.
However, concerns were also raised regarding the computability of the FCA’s current regulatory regime and permissionless networks. It seems the FCA is open to all forms of DLT deployment, regardless of whether the networks are permissioned or permissionless, as long as the potential operational risks are quickly identified and resolved by the service providers.
In a recent press statement, the FCA’s Director of Strategy and Competition, Christopher Woolard, said the following:
The original paper opened a discussion about DLT and the volume and breadth of responses we received from the industry demonstrate the significance of this issue. DLT has the potential to transform practices across a number of markets, sharpening competition and improving risk management. At the same time, we have to be alive to the risks of certain applications of it. We will continue to work with a range of agencies and firms to ensure a co-ordinated approach to the use of DLT in financial services.
In regards to initial coin offerings, the regulator says it will soon begin closely examining the market, and then determine whether further regulatory action is needed.
