Britain unveils new fintech plans, including cryptocurrencies

LONDON (Reuters) - Britain announced a task force on Thursday to exploit the technology underpinning cryptoassets, such as bitcoin and other cryptocurrencies, as part of new plans to help fintech companies find more customers.

A bitcoin logo is seen at a facility of the Youth and Sports Ministry in Caracas, Venezuela February 23, 2018. REUTERS/Marco Bello

British finance minister Philip Hammond said he was committed to helping fintech grow and flourish by taking a series of domestic steps and forging links overseas.

“As part of that, a new task force will help the UK to manage the risks around cryptoassets, as well as harnessing the potential benefits of the underlying technology,” Hammond told a fintech conference hosted by the finance ministry.

Investors have flocked to cryptocurrencies like bitcoin despite wild price swings.

Regulators have warned that investors could lose all their money, but see promise in the blockchain technology that underpins cryptoassets.

Britain’s announcement comes after finance ministers from the Group of 20 richest economies (G20) were unable this week to find enough consensus for global regulation of cryptocurrencies.

Britain’s financial services minister John Glen said he expected an interim report on cryptoassets soon, though initial guidance is that the scale of activity does not pose any significant risks.

“Regulation could be an enabler of a stable, flourishing cryptocurrency sector,” Glen told reporters.

Bank of England Deputy Governor Dave Ramsden said the central bank has set up a new fintech hub to consider both how the Bank understands and how it applies fintech, relevant to its mission.

Ramsden said the hub would be a central point of contact for the fintech sector and would play a role in the new taskforce announced by Hammond.

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Britain has become a major centre for fintech and wants to reassure the sector of its support ahead of the country’s departure from the European Union next March.

The EU has also stepped up efforts to make itself more attractive as a location for fintech firms.

France plans to create a legal framework for raising funds via cryptocurrencies and aims to become a leading centre for offerings in bitcoin-style digital currencies, its finance minister, Bruno Le Maire, wrote on a news website.

Glen said despite French President Emmanuel Macron rolling out the red carpet to fintech firms, he saw no significant evidence of a serious appetite among firms in London to move to new jurisdictions.

While Brexit could be a distraction, there was also no evidence it was impeding investment in UK fintech, Glen said.

“We are still seeing great buoyancy and I expect that to continue. In fintech we see global opportunities,” Glen added.

But HSBC Chairman Mark Tucker told the conference that Britain also faces considerable challenges from other financial centres, highlighting China’s leadership in the mobile and digital economies.

“Even with London’s pre-eminent position, commercial advantage must be constantly worked for and renewed,” Tucker said.

Hammond said the fintech strategy would include schemes to pilot “robo regulation”, or the use of software by fintech firms to comply with regulation to save time and money.

New industry standards will enable fintech firms to team up with banks more easily to offer complex services and reach more customers, he said.

Industry and government will create “shared platforms” to remove barriers faced by fintech firms setting up new systems, Hammond said.

Hammond and Australian Treasurer Scott Morrison signed a “fintech bridge” agreement to help UK-based fintech firms sell products and services in Australia and promote regulatory cooperation.

Ramsden said the rise of fintech could help Britain improve its long-standing problem of weak productivity growth as well as help the BoE improve its internal infrastructure.

Additional reporting by William Schomberg; Editing by Catherine Evans