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Fintech businesses in the United Kingdom should prepare for more intense regulation, the Bank of England says sharing its vision of post-Brexit London.
UK fintech businesses should prepare for a more “intense regulatory focus” in the future, the Bank of England has said sharing its vision of post-Brexit London.
The Bank’s governor, Mark Carney, also stated in a speech Wednesday that despite Brexit negotiations, London was to become the “world’s leading fintech center.”
The somewhat contradictory remarks from Carney were made in his capacity as chairman of the Financial Stability Board, a Swiss-based group which makes recommendations to G20 countries.
He said that fintech companies en masse could potentially pose risks to traditional banking models, the Financial Times reports, and as a result, regulations would likely become more stringent in the next few years.
“... Authorities can be expected to pursue a more intense focus on the regulatory perimeter, more dynamic settings of prudential requirements, a broader commitment to resolution regimes and a more disciplined management of operational and cyber risks,” he continued.
On the topic of fintech businesses’ potential to disrupt banking and bring services to more sections of the population, Carney added that they could also “exacerbate financial volatility.”
London is by no means a stranger to financial innovation and the Bank of England itself is fostering Blockchain innovation as well through both research and pilot projects.
The UK currency issuer the Royal Mint even announced a partnership in November to facilitate Blockchain-based gold trading. Already a year in the making, the move is designed to make London a more attractive environment for investors to trade gold.
“We didn’t set out with Blockchain in mind but we wanted to address the problem that it costs money to vault gold,” David Janczewski, director of new business at the Royal Mint, told the Telegraph newspaper. “This is a digital solution to physical gold trading.”
The risks and uncertainty facing the British economy meanwhile have become notorious causes for volatility in the pound sterling since the Brexit vote was announced last June. 90 percent of banks said preparing for leaving the European Union was now their top priority.
Bitcoin businesses have faced a mixed ride in recent times, with several reports over 2016 of banks unexpectedly cutting off services without warning only to reinstate them later. Local Bitcoins users have also complained of service denials, in particular from Barclays, which in October also blocked an account linked to UK news portal CoinJournal.
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