UK regulator declares ‘a beautiful friendship’ with Bitcoin and Ethereum

Christopher Woolard, director of strategy and competition at the Financial Conduct Authority (FCA), announced the development of a regulatory sandbox for fintech companies, a first for the industry. Harriet Baldwin, economic secretary at the Treasury, called Bitcoin and Ethereum “electronic money” and announced the beginning of a “beautiful friendship.”

Both were speakers at the Innovate Finance Global Summit in London. As Christopher Woolard said in a seminal speech, the purpose of the sandbox is to “test our innovative ideas without immediately incurring all the normal regulatory consequences”.

FCA may lift its rules

Companies and startups participating in the sandbox program will be issued individual guidance notes on how the FCA will interpret its regulations in order to understand whether these companies will fully comply with their charters. The FCA may further lift or amend its rules, and in rare cases, may issue a "no enforcement action" order, in effect throwing out the FCA's rulebook during the sandbox phase, with normal legal limitations on civil and criminal liability still applying. In terms of interpretation, Woolard said:

"These documents are designed to reassure these companies that as long as they are open and honest with us, agree to test parameters and treat customers fairly, we accept that there will be unexpected circumstances and will not take restrictive action."

Similar to accelerator

In order to come up with a highly innovative and open approach, Woolard pointed out that the sandbox will be run for one year by two teams in a “similar operation to an accelerator.” In addition, the FAC went a step further and announced an “industry working group to explore decisions on industry-led sandboxes.”

In a speech further down the line at the same summit, Harriet Baldwin, the Treasury’s economic secretary, indicated that the UK was open and welcoming to innovation from fintech companies not only in the announcement of new measures, but also in the choice of words. Baldwin described currencies like Bitcoin and Ethereum as “digital currencies” and assured attendees that this was just the beginning of a “beautiful friendship”.

Baldwin further emphasized that the establishment of an industry-led fintech group was announced, and a "digital expert" function was added to the visa program, and an information hub was added to promote "practical and cost-effective" professional services and a "fintech bridge" to help British companies expand into international markets. It was the first agreement of this type to be signed with the Australian Foreign Minister to simplify regulations in order to adapt to each other's markets.

The United States leads the reform

US regulators have taken notice, and many are now loudly calling for reforms to the complex and outdated US regulatory system for innovation in the 21st century, including the elimination of the IRS’s onerous double taxation and failed bitlicense.

A Commodity Futures Trading Commission (CFTC) commissioner has claimed that blockchain technology could have prevented the collapse of Lehman Brothers, adding to growing calls for a more welcoming regulatory environment, with the white paper ostensibly suggesting that the Office of the Comptroller of the Currency (OCC) is the appropriate agency to pave the way for new, more welcoming approaches to regulating financial technologies.

However, the regulatory environment in the United States is more complex, with numerous regulators with overlapping responsibilities and different states with different requirements. It is unclear whether US regulators will be able to act quickly, but given that the UK has just made the transition, there is no doubt that the world will be watching the UK's innovative approach and its embrace of financial technology.

Original article: http://cointelegraph.com/news/uk-regulators-declare-start-of-beautiful-friendship-with-bitcoin-ethereum?ref=5019
Translator: slieta5
Reward address: 1CrCnYDtpYB7vYxXCpDw6joMvKE64XVxUQ
Editor: Kyle
Source (translation): Babbitt Information