The U.K.’s Financial Conduct Authority (FCA) is thinking about approving a number of blockchain companies as it actively encourages businesses to utilize bitcoin’s underlying technology.
Despite the fact that some regulators are cautious over the use of blockchain technology, the U.K.’s FCA is known as the most forward-thinking.
It comes as no surprise then, that in an interview with the Financial Times, Chris Woolard, the FCA’s director of strategy and competition, explained that the FCA believes that the blockchain technology has some potentially interesting applications.
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.
In a bid to offer advice to businesses on what regulations they need to adhere to, companies are being looked into as part of the FCA’s Project Innovate. Launched in October, 2014, the first year saw 177 companies assessed with 40 of them approved.
As London is one of the most prominent cities in the world, the FCA is keen become one of the first to provide advice to blockchain companies. Not only that, but with the growth of the blockchain technology within financial markets, London will want to remain ahead of competitions as the FinTech centre for innovations.
To further reinforce this, Woolard confirmed that the FCA is already considering a stamp of approval to a ‘small but significant number of firms’ who are utilizing blockchain technology that are part of Project Innovate.
Payment Services Need FCA Approval
In order for a company to lend money or provide a payment service in the U.K., the FCA first needs to grant approval. According to the Financial Times, if the FCA granted approval to the blockchain companies, they would be among the first to gain support worldwide.
Ripple, the San Francisco-based blockchain payments company is one of the first companies to combine its platform with banks. In the summer Ripple and Accenture released a white paper claiming that the time is ripe for banks to work together to initiate a network for more efficient inter-bank and cross-border payments. Ripple also teamed up with Santander in the U.K. this year to pilot an app for international payments utilizing Ripple Labs blockchain technology.
The U.K. Is the Most FinTech-Friendly Regime
According to a report by EY [PDF], since 2008, the U.K. has grown in stature to become the global FinTech capital. It is estimated that the U.K. FinTech sector represented around £6.6 billion in revenue in 2015, attracting £524 million in investment.
With around 61,000 people employed in the sector, more people work in U.K. FinTech compared to New York’s FinTech, or in a combined FinTech workforce of Singapore, Hong Kong, and Australia.
The report stated that the U.K. has the strongest FinTech policy environment, with the most supportive regulatory regime.
It added that the strength of the U.K. policy environment is due to the supportiveness and accessibility of the FCA, effective tax incentives and numerous government programmes designed to promote competition and innovation which indirectly support FinTechs.
This news will also reinforce the U.K’s position as a FinTech leader despite the Brexit vote to leave the European Union earlier this year.
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