Watchdog in waiting game over fintech
REGULATORS TRYING to police innovations in financial technology are waiting to see whether start- ups develop open systems or ones that allow only limited access for users, a Bank of England conference heard.
Regulators are looking into new rules for so- called fintech, which includes peer- to- peer lending, and the use of blockchain or the distributed ledger technology underpinning the bitcoin virtual currency.
The sector is still tiny but regulators worry it could grow quickly and pose risks to the financial system.
“We need to understand what the model is,” Bank of England Chief Cashier, Victoria Cleland said.
The BoE is trying to “join the dots” between the potential benefits and risks from digital currencies, blockchain and other innovations, she said. “With all these things going on, we need to be ready to respond to what would regulation mean.”
Banks are examining blockchain uses to avoid being caught out like the taxi sector has been by online cab finder Uber or hoteliers by online accommodation company Airbnb, the conference heard.
But there is fierce debate over what sort of business model is best, and whether it should be an open system that can be accessed by the general public via the internet.