Philip Hammond, the third chancellor from the genesis block, will set plans to turbocharge fintech, according to reporting from Tim Shipman of the Times.
Financial Technology, or fintech, is a broad term that covers new innovative products that harness technology to provide financial services.
That includes blockchain technology, an industry that has been facing difficulties in opening or maintaining bank accounts to the point FCA implicitly accused banks of acting anti-competitively.
The chancellor will launch a new strategy to address those issues, among others, “with work from a ‘fintech delivery panel’ on the creation of a new industry standard to improve the process for companies wishing to partner with established banks.”
Coinbase just recently announced they have secured a bank account from Barclays, allowing them to now offer instant fiat deposits and withdrawals.
But the strategy will focus more broadly, promoting the sector in general by, among other things, setting up three “fintech regional envoys.”
They will also deploy a new task-force, led by the Treasury, Bank of England and the Financial Conduct Authority (FCA).
The taskforce will “examine the risks associated with crypto assets and the potential benefits of the underlying technology.”
The overall strategy will be used to promote the fintech sector to global investors, with Shipman saying:
“The government is looking to turbocharge a British success story seen as a central plank of Theresa May’s industrial plan.”
We think the British civil service has a lot more to do with it than May, who appears clueless on the matter, or Hammond.
Britain championed this space in 2014, seeing a competitive opportunity after the New York Bitlicense debacle.
The then chancellor, Osborne, gained the honor of being the first high ranking official to speak of this space after he bought a small amount of bitcoin in 2014 to highlight the Fintech strategy.
Industry flocked, with Fintech booming in London, but the Brexit shock vote distracted everyone and the once wave ruling FCA fell so behind they allowed the French FCA to pull a 2014.
As we announced recently, the French FCA is seemingly to go ahead with very radical proposals of a stupendously innovative regulatory approach whereby ICOs can voluntarily gain a license, with unlicensed ICOs allowed to go ahead regardless.
The market is thus to judge, with the market probably valuing due diligence if the process has reasonable requirements and is timely. Which in turn would make entrepreneurs very much want that badge.
It is quite the right approach in our view since this space is moving so fast even those in the business of keeping track struggle with how to balance punishing cheaters while not throwing the baby with the bathwater.
At this stage however, where ICOs in their current form are concerned, it has become somewhat apparent that projects must reveal profits, revenue, user numbers and so on, with someone preferably verifying it is true, and with someone verifying the team actually has the experience it says it has.
With the rest very much secondary if at all relevant, especially where any judgment of success is concerned as that should be left to the market because no one thought anyone would buy books from Amazon.
We did think it would be London’s FCA which would lead such approach, in a private-public partnership of sorts where a non-governing body of sorts, supervised by FCA, sets reasonable guidelines, with the market then pressuring entrepreneurs because if the guidelines are reasonable everyone would ask why they are not complying.
So making non-compliance automatically suspicious unless there are some very good reasons for it.
That is a very adult approach, which assumes individuals are not stupid, and since this is individual’s own money, then there is no reason to be any more coercive or to in any way interfere in voluntary contractual arrangements.
In this way the guidelines can more easily evolve and respond to market movements, just as laws currently evolve but through the far slower process of court precedents.
The regulator thus, instead of being a far away entity that throws down the bible, becomes part of the community, innovates with the community, and most importantly trusts the many good people that make the engine go around while severely punishing the very few cheaters.
As all this makes very much sense, the British civil service is perhaps seeing they are being out innovated by none other than the French. So they are apparently putting the matter back on the agenda.
But they’ll have to move very fast in our view because Congress is changing its tune. In a recent report, they take a very adult approach towards this space, and we suspect they might start singing 2014 too.
Trump, and the Republican conservative administration in general, has understandably been dealing with far bigger matters, but we suspect they’ll soon speak of a beautiful partnership too.
Just as we suspect Clayton is a clueless distraction playing the harps of a previous outdated administration, with the congress report implicitly snubbing him. As such, the “grown ups” in congress, we think, will probably soon move.
So, if Hammond can hear us, he should hear this. The vast majority of people working in this space and driving it forward are the cream of this generation. They are utterly reasonable, and therefore they won’t listen to you, unless you provide wisdom.
Because they understand they are not of your age, just as they understand you are of a different age. They understand certain issues must be addressed, just as they understand regulators should address certain issues with their own very slow and highly costly licensing practices.
Because as a very wise man recently said, Giancarlo, it is not necessarily the laxest regulatory environment that wins, but the one with the most reasonable regulatory environment. For everyone knows the rule of law has given us wealth, just as everyone knows unreasonable law is not law at all.