Regulators will publish more details and information about the initiative before the end of the year
The UK’s financial regulator, the Financial Conduct Authority (FCA), is preparing to adopt blockchain technology for regulatory reporting purposes.
The FCA is reportedly collaborating with the Bank of England (BoE) on a project designed to reduce compliance costs for thousands of firms.
In its announcement of the initiative, FCA chief executive Nikhil Rathi said that regulatory compliance processes cost between £1.5 billion and £4 billion annually. He explained that these high costs prompted the FCA to partner with the BoE to develop a blockchain-based reporting programme.
“By connecting firms through blockchain and API technologies, and by implementing machine-readable, executable regulations, compliance can be monitored almost in real time,” Rathi said.
The FCA’s move coincides with plans to expand its presence across the UK, with the goal of delivering stronger regulatory frameworks to address issues in financial markets.
This digital initiative is intended to help achieve that goal, and the regulator is recruiting more data engineers and analysts. It has allocated a £120 million budget to enhance digital reporting capabilities.
Having stepped up oversight of the crypto sector in recent months, the FCA looks to broaden its compliance monitoring of data-driven companies.
Rathi said the development responds to concerns about firms and individuals who might try to misuse the vast amounts of data generated in the industry for malicious purposes. The UK regulator plans to release further details about the project before the end of 2021.
UK authorities are increasingly focused on consumer protection, particularly regarding the use of cryptocurrencies. Alongside requirements that crypto-related firms obtain formal approval, they have issued warnings about investing in highly volatile assets such as Bitcoin.