“We want to be proactive, not reactive. It’s very important as a bank to be this way. It’s great when a regulator comes to us and says: ‘We want to understand what Barclays is doing in this space.’ And we can respond that very day,” says Sandler, recently declared one of the Top 100 Women in FinTech.
She adds: “It’s a misconception that banks are only just waking up to crypto-assets and their potential. For a number of years, people at the bank have been looking at blockchain and crypto-assets. I went to the European Parliament back in 2016 to talk about them, and Barclays was one of only two banks there. Crypto-assets may have had more air-time in the past eight months because of what’s happened with the price of Bitcoin. But banks have been looking at them for a number of years.”
Unsurprisingly, then, Barclays is heavily involved in the global debate about how to regulate crypto-assets. There is no doubt that crypto-assets – such as Bitcoin, Ethereum, Ripple and Litecoin – will play a major role in the future of finance. But as crypto-asset markets so far do not offer any protection to investors, lack of regulation is becoming a pressing issue for all involved. The United States has attempted to regulate initial coin offerings (ICOs), while China has banned cryptocurrency exchanges altogether. Where to start is proving to be a conundrum.
“Some people think that having regulation is a bad thing. But it isn’t, especially for a bank. And that’s because when we know what our regulatory perimeter is, we can work within that. But if you regulate too soon, then you can get what we refer to as a ‘race to the bottom’: jurisdictions wanting to regulate so that companies come to them, but they may not fully understand the regulation,” according to Nicole Sandler. “When we talk about regulation, there isn’t a one size fits all, because there are thousands of crypto-assets – and counting. You can’t just have this regulation for all. It’s a vast area,” says Sandler.
So, what’s the answer? While lots of professionals are continuously deliberating how to regulate this vast digital currency space, Barclays has been proactively calling for a wider use of the ‘sandbox’ to help everyone get to grips with how crypto-assets work in real terms – and therefore how to police them. Sandler herself has worked with the Financial Conduct Authority (FCA) on consultations regarding the use of the sandbox (a safe space in which new or untested software or coding can be run securely).
“Whilst a sandbox is excellent for a company, it’s even better for a regulator because it’s going to show them where their touchpoints are. I would actually really like it if a crypto-asset or an ICO went into a sandbox. In order to fully understand something, you need to work with it,” says the FinTech regulation expert.
At the forefront of advising and working with regulators, Barclays’ Nicole Sandler is the only representative from a British bank (and one of only three representatives for the banking industry across Europe) on the European Commission’s prestigious ROFIEG (Regulatory Obstacles to Financial Innovation Group). It’s this type of efficient collaboration that’s seen as key to the future of not only the crypto-asset space, but the future of financial service as a whole.
Understanding the perfect symbiotic relationship between banks on the one hand – with their longstanding customer trust and heritage – and start-ups on the other – with their innate speed and agility – also led Barclays to introduce its ‘Accelerator’ programme. Blockchain and Bitcoin start-ups Chainalysis and Safello are just two of its recent Accelerator partnerships.
As London’s black cabs were confronted by Uber not that long ago, banks are learning to evolve alongside the virtual currency technology sector. And that’s due to customer demand. Through the eyes of one of the traditional gatekeepers of money, the industry as a whole needs to works together to make crypto-assets safe and useable for all – from Barclays and the other big banks, to regulators, start-ups, policy-makers, et al.
“Collaboration, not competition, is the true strength here for all involved,” insists Sandler, whose role in such an exciting space may well mean she’s speaking to regulators more than her mum for a few more years yet.
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