Category Archives: fintech

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UK Crypto Plan Under Review

The UK’s Financial Conduct Authority (FCA) has announced that it plans to release the results of its task force on cryptocurrency in the summer.

One of the functions of the UK government’s task force is to examine the risks of blockchain technology and mitigate these while examining the benefits of distributed ledger technology in financial services. The Crypto Assets Task  Force, consisting of the UK Treasury and the FCA, has been set up for this purpose.

Chancellor Hammond’s comments at a recent Fintech conference in Australia demonstrate that the UK would open its doors to innovators and inventors, suggesting the task force as a first step towards automating financial compliance in the UK. In the context of the fintech sector, he saw it being able to “grow and flourish” in a regulatory climate that has broadly been supportive of blockchain technology and cryptocurrencies over the years.

The FCA suggests that cryptocurrencies are “an area of increasing interest for markets and regulators globally”. The discussion paper to be published this year should clarify Bank of England and Treasury views on which direction to take regarding cryptocurrency regulation.

On Friday, the authority clarified that firms offering cryptocurrency services would need to comply with new guidelines set or be prosecuted under the law. Treasury committee chair, Nicky Morgan, also made it clear that its own ongoing enquiry into cryptocurrencies would examine some of the risks and threats posed to UK consumers, as well as businesses and governments, by digital currencies.

Morgan pointed out, on a more positive note, that the committee would “examine the potential benefits of cryptocurrencies and the technology underpinning them, how they can create innovative opportunities”.

Committee member Alison McGovern suggested that the inquiry would help lawmakers and politicians educate themselves on cryptocurrencies before enforcing legislation on how the industry should conduct its business. She suggested that the UK government needed a clearer understanding of cryptocurrencies and to think more clearly about “the policy environment for blockchain technology”.

 

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Single-purpose cryptocurrencies have a problem

Let’s face it. There’s a slight problem with cryptocurrencies and no, it’s not the issue of regulation. And no, it’s probably not the volatile markets or any other buzzwords or catchphrases you can think of.

Spoilt for choice?

It comes down to the eye-watering amount of pending and existing cryptocurrencies. CoinMarketCap.com has, at present, 1,565 coins and tokens listed; it’s a mind-bogglingly large number of cryptocurrencies and, to an outsider, it doesn’t quite make sense.

Cryptocurrencies are viewed as these odd digital credits that you can purchase for real money and well, that’s about it.

Unless you’ve painstakingly spent the time searching around for places and businesses in which you can go to spend your cryptocurrencies, then you’re likely nonplussed about the whole Bitcoin boom. And if you have taken it upon yourself to search for a place, you’ll come up with a few traders and merchants that accept Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH) or any of the ‘big coins’ in the business.

Or too many cooks?

Then there is the second part of this issue. It comes in the form of a question and be prepared to think about this one. When there are 180 UN-approved currencies in the world, what good is it to have 1,565 coins?

The logical conclusion would be that the majority of these coins are entirely redundant, but that just isn’t the case.

A staggeringly large number of coins are utility tokens that solely function within an internal economy on their native platform, and this also is by no means is a particularly healthy situation for the industry at large.

Imagine that, to access your Google Drive Cloud storage you had to pay with a cryptocurrency to do so. Every single time you acted within its cloud storage platform it would be ‘fuelled’ or ‘funded’ by a coin designed explicitly to do so.

Well, you have all your cloud-storage tokens, now how about some Starbucks tokens to get your coffee? Do you have enough Apple tokens to make purchases through the App store or have you not converted enough of those tokens from the tokens you use to pay your rent?

Notice anything odd with the above?

Cryptocurrencies by their hundreds tackle niches within industries, offer solutions to some particularly fringe topics which may excite the novice or veteran traders who know how to navigate the markets profitably.

But to assume that the everyday cryptocurrency users will happily and continuously go through the process of converting their primary coins such as BTC or ETH to gain access to things that regular currency can buy? It just doesn’t seem logical and will stifle the blockchain industries’ efforts to get adopted en masse globally.

The single-use tokens that exist will have to shorten out at some point if there is to be any hope for the industry to have an easily accessible, widely available and uncomplicated future for its consumers. To the average onlooker, it’s safe to say that less is more.

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