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Bitcoin regulations is a serious business and the governments know that. These regulations are not about parallel economies or money laundering anymore. Bitcoin technology may be the answer for the solutions they were looking for so far to improve their financial sector. The importance of Bitcoin technology in today’s digital world has led the governments and central banks to opt for a wait and watch stance instead of rushing with regulations in a futile attempt to control the popular distributed digital currency.
There have been instances where few government bodies went ahead to introduce regulations in a hurry, only to see it backfire, creating a tough environment for the development of ground-breaking technological innovations that can contribute to the financial sector. Except for a handful of countries and states, no other government or central bank has implemented strict regulations that can hamper any further development and growth of the sector. The United Kingdom is one of those nations that has adopted the wait and watch approach.
The Bank of England- Central Bank of the United Kingdom has earlier today stated in a conference that they are willing to wait a bit longer to see if any startup will come up with innovative blockchain solutions that provide limited access to its users. Currently, the Bitcoin blockchain is a transparent open ledger where all the transactions happening over the blockchain can be observed by anyone. While this type of blockchain is suitable for bitcoin, it doesn’t work for the banking sector. Banks have their own set of rules and regulations that need to be followed. These regulations also include a certain degree of privacy and security to safeguard confidential customer information among other things.
While speaking at the conference organized by the Bank of England and London School of Economics — Chief Cashier for the Bank of England, Victoria Cleland declared that the Bank of England clearly understands the Bitcoin technology, its potential advantages and disadvantages. While waiting for new innovations to emerge, the Bank of England is weighing the benefits of blockchain based technology against potential risks. Once the Central Banks forms a definitive opinion, it will be using these insights to frame fintech regulations which will be applicable to peer-to-peer lending and use of bitcoin technology for financial applications.
Bitcoin and its underlying technology have grown from being a pain to potential salvation to the banking industry. Even though the banking and financial sector consider bitcoin as a threat to their business, they are more open towards the underlying blockchain technology. The banking sector is working on blockchain technology to create an alternative to the existing SWIFT network for fund transfer and for other regulatory and compliance applications. This will help the banks cut down costs to a large extent. At the same time, they will also be able to keep up with bitcoin’s progress and avoid themselves from becoming obsolete.
There is no specific timeline set for the introduction of digital currency and fintech regulations yet by the Bank of England and, from the looks of it, the central bank’s patience and thoroughness with regard to crypto-tech and cryptocurrency will come in handy to make informed decisions that will be good for everyone.
Ref: Reuters
