The UK has unveiled a new fintech strategy to help companies find more customers and strengthen its regulatory environment for bitcoin and other cryptocurrencies.
UK chancellor Philip Hammond said he wants the UK to become a base for fintech businesses to expand and thrive.
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As part of the strategy the UK will set up a new crypto-assets task force to help businesses make use of the blockchain technology that underpins bitcoin and other cryptocurrencies.
It will also help to safeguard firms against the risks of cryptocurrencies.
A new task force will help the UK to manage the risks around crypto-assets, as well as harnessing the potential benefits of the underlying technology.
The new task force will be formed of representatives from the Treasury, the Bank of England and the UK finance regulator, the Financial Conduct Authority (FCA).
The government also announced the launch of pilot schemes for so-called robo-regulations described as software encoded with financial regulations to help financial services comply with the rules automatically, saving them time and money.
Hammond said the new measures help to position the UK at the heart of the fintech revolution and will lay the regulatory groundwork for the fintech sector.
I am committed to helping the sector grow and flourish, and our ambitious sector strategy sets out how we will ensure the UK remains at the cutting edge of the digital revolution.
Building fintech bridges
Hammond also revealed details of a so-called fintech bridge agreement for UK fintech companies to access Australia’s 24 million people.
The agreement opens up a new market for UK fintech firms wanting to expand internationally by selling their products and services in Australia.
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Luke Davis, chief executive and founder of fintech investor IW Capital, said:
The partnership with Australia, underpinned by the most advanced regulatory partnership that the FCA has ever signed, will connect the UK to a new market of 24 million people. Coming in the same week as the UK-China fintech alliance announcement, it is clear that the government is taking the views of the industry seriously.
Why it matters:
The new regulations come as the London Stock Exchange pitched the UK as a top destination for fintech companies wishing to expand, offering funding and regulatory protections to budding firms thrive.
A report released by the LSE yesterday named the UK as one of the top three global markets for fintech companies considering raising funds and expanding internationally.
It also found that 72% of global fintech companies plan to expand internationally — 33% of them want to expand into the US, 30% into China, and 24% have their sights set on the UK.
The LSE’s head of primary markets Robert Barnes said:
The cross-border ambitions of innovative fintechs are transforming the global financial services sector. But in order to thrive, these innovators need access to long term growth capital and a supportive global regulatory environment. The UK offers both.
UK-based fintechs overwhelmingly see the process of raising public market funding as most straightforward compared to peers.
Sitting at the heart of UK’s financial ecosystem, London Stock Exchange Group is the natural funding partner to a sector that is reshaping the global financial services landscape. We are proud to support these businesses throughout their growth journeys, offering them access to deep liquid pools of international investor capital for the long-term.
Fintech contributes £6.6 billion to the UK economy each year and employs more than 60,000 people, according to the report.
City minister John Glen said:
As this report shows, we’re a global leader in fintech not by accident, but by design – our outstanding expertise, robust regulation and fair taxation gives us an edge above the rest, and we’re committed to ensuring that it stays this way.
The new regulations come as countries around the world launch a crackdown on the global cryptocurrency market, and try to get a grip on the threats crypto-assets pose to global financial stability.
The strategy also follows calls by the Bank of England governor Mark Carney for tighter regulations on cryptocurrencies.
The US Securities Exchange Commission also triggered a long-awaited crackdown on the cryptocurrency market earlier this month.
SEC regulators issued dozens of subpoenas and requests for information on sales and pre-sales of the initial coin offerings (ICOs), according to a report in the Wall Street Journal.