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UK’s New Taskforce Means Cryptocurrency is Here to Stay

· March 22, 2018 · 12:30 pm

The United Kingdom is ready to release the hounds on the cryptocurrency market, with a task force set to investigate both the benefits and the risks of digital currencies.


Taking Cryptocurrency to Task

Britain’s department of finance, the Treasury, unveiled its task force readied to weigh the pros and cons of cryptocurrencies.

The United Kingdom’s interest in investigating cryptocurrency stems from the desire to not fall behind their geopolitical and economic rivals. UK Finance Minister Philip Hammond stated:

I am committed to helping the sector grow and flourish, and our ambitious sector strategy sets out how we will ensure the U.K. remains at the cutting edge of the digital revolution.

However, the no-longer-interested-in-being-European country hasn’t been particularly pro-cryptocurrency, and that’s not likely to change. Rather, it’s likely more interested in co-opting blockchain technology for its own traditional financial institutions. Said Hammond:

As part of that, a new task force will help the U.K. to manage the risks around crypto assets, as well as harnessing the potential benefits of the underlying technology.

The task force includes the Bank of England and the Financial Conduct Authority — neither of which has shown support to Bitcoin and cryptocurrencies in the past. Earlier this month, Bank of England Governor Mark Carney — who has a long history of anti-cryptocurrency rhetoric — stated:

The short answer is: [cryptocurrencies are] failing. Cryptocurrencies are poor stores of value. Over the past 5 years, the daily standard deviation of Bitcoin was 10x that of sterling […] This extreme volatility reflects that the cryptocurrencies have neither intrinsic value nor external backing.

Whether the task force’s conclusions match Carney’s sentiment remains to be seen.

Building Bridges

Australia coat of amrs

Britain’s new cryptocurrency task force is but one part of the sovereign state’s financial technology strategy, which also includes penning a deal with Australia. The two countries’ “fintech bridge” will afford British firms the ability to sell their products and services in Australia, while both countries work together on crafting policies and regulation on digital currencies, blockchain technology, and fintech.

After signing the deal, Britain’s Innovate Finance and Australia’s Fintech Australia will advise the governments of both countries in matters relating to financial technology. Innovate Finance’s Charlotte Croswell claimed the “fintech bridge” is an “excellent opportunity” for both countries.

What do you think of the UK’s new cryptocurrency task force? Do you expect more FUD, or perhaps a little bit of FOMO? Let us know in the comments below!


Images courtesy of Wikipedia Commons, Pixabay, Shutterstock

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UK Banks – scared of the regulator… or competition?

· October 25, 2017 · 5:15 pm

It is a fact that UK banks are unwilling to provide their services to distributed ledger technology (DLT) companies. However, the Financial Conduct Authority (FCA) has questioned their official line of reasoning for this in a recent report.


DLT Companies Denied Banking Services

We all know that blockchain is an exciting technology with huge potential, hence many companies are building future development around its possibilities. The UK is positioning itself as a global hub for all things FinTech, with the creation of a digital sandbox. This is designed to promote and support startups in the DLT arena.

The position of the UK banks would seem to be at odds with this remit though, with many such companies finding banking services denied or retracted. This has forced them to look further afield for banking services, to countries such as Gibraltar, Poland, and Bulgaria.

The obvious upshot of this, of course, is that companies will consider locating elsewhere to more favourable jurisdictions.

Dark Web, Criminals, Fraud

Naturally, the banks have fallen back on the same old, disingenuous arguments for their actions, with one unnamed UK bank boss quoted as saying:

When you look on the dark web, everything there is being paid for with cryptocurrencies. You don’t know who is transferring money in and out.

A brilliant point well made… ahem. But don’t think that we can’t see what you did. Everything on the dark web being paid for with crypto does not suggest that all crypto is used on the dark web. The vast majority of digital currency available patently isn’t.

Deliberately using flawed logic in your argument does not validate it. I see no problem with the banks refusing service to dark web companies based on this statement, but denying service to a legitimate DLT company for such reasons is ludicrous.

Anyway, he concludes with the suggestion that cryptocurrency might go to Iran, and if his company is involved, then he could be shut down. I’m not sure if he realizes that sanctions against Iran have been lifted or that UK banks are involved in far worse than cryptocurrency. Arms deals to countries who will eventually use them against UK soldiers, anyone?

So the regulator says…?

The regulator is the aforementioned FCA, who rejects the banks’ arguments of increased money laundering risk, stating that:

…effective money laundering risk management need not result in wholesale de-risking.

And adding that they:

work to ensure that the UK financial system is a hostile environment for money launderers.

The FCA feel that the banking sector’s position is partly motivated by “strategic business decisions” and that their practices “pose [risks] to innovation and competition.”

Banking ‘business as usual’ then?

Pretty much. Traditional financial institutions are running scared of the young FinTech upstarts and trying to hobble them before they can walk.

When will they learn that they can’t beat us and, hence, should join us? Be thankful that these companies still need traditional accounts, because that won’t be the case for ever.

And when the people don’t need you any more… you’re dead!

What do you think about UK banks denying services to DLT companies? Are their concerns legitimate or are they blowing smoke? Let us know in the comments below.


Images courtesy of Wikipedia, Vimeo, and Wikimedia Commons.

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