Brexit — this topic has been in everyones mind for the prior weeks as I traveled across Germany and the US, not only in financial services. Nevertheless, today the first shock in financial services has gone and according to my opinion the Brexit has the potential to become THE game changer for implementing Blockchain Technology — fast track. Not only in financial services.
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – Bill Gates
But why? Currently London is to the European Union as Manhattan is to the United States. But why is London so important for Financial Services in Europe? European finance depends on the „City“, not to mention London’s dominance of financial services in UK: London is representing 9.6% of the United Kingdom’s GDP. Globally the FCA is one of the most innovative regulators, not only in terms of passporting and sandboxing for FinTech Startups. According to my opinion, passporting, sandboxing and a new EU bureaucratic for the UK could be the game changer in terms of Blockchain.
First: What’s #passporting?
To break it down: when you get a license for financial services in one country, you are able to passport this license to other countries, meaning you don’t have to spend money on applications for each country, learning different languages and wait to got through the bureaucratic application processes for all the European member states. A great approach for global acting financial institutions — with this approach London established itself as a financial service gateway to the European Continent.
Second: What’s #sandboxing?
The UK regulator, the FCA, established a safe space for FinTech startups, where businesses can test innovative products, services, business models and delivery mechanisms. Means building new businesses in a live environment without immediately incurring all the regulatory consequences. Linked to this approach for FinTech Startups, the FCA established a safe space for Blockchain Startups early 2016 as well. Blockchain Startups should experiment in a safe environment with financial service technology. All the efforts are underlined by the support of the Central Bank of England — the Central Bank of England has taken steps to explore the potential of Blockchain Technology as well.
Third: This brings me to the point >> passporting, sandboxing and a new EU bureaucratic for the UK could be the game changer in terms of Blockchain and Brexit, but why?
Taking the real opportunity for the UK and the European Union is to use the current time of uncertainty of leaving the EU to take action. Action in terms of implementing a new technology. For instance currently it is rather uncertain that global banks will keep the passportability of their licenses as well as staying in the UK. Banks need new incentives for staying in the UK.
To break it down shortly — incentives for Banks and the UK in relation to Blockchain could be (extract):
– Value Innovation — using sandboxing for establishing new standards to record, exchange, and trade assets as well as liabilities. Replacing traditional exchange and centralized markets as well as lowering barriers for business creation
– Re-Architecting the EU bureaucratic — implementing a document formation and management system for self-enforcing contracts (so called smart contracts) between the EU und UK
– Rebuilding Government and Democracy — rekindling the public’s trust in political institutions in the UK by establishing greater transparency and accountability in voting on the Blockchain
New difficulties, but also great opportunities arise in our digital interconnected world between the EU and UK. London and the UK must act and innovate – more than ever – to ensure London’s preeminence as a global financial hub.
The potential is big: the FCA has an innovative approach for Blockchain Startups and Banks — trial and error: this is unique in the European Union and might be one reason for Banks staying in the UK.
#sandboxing: this is unique in the European Union
Nevertheless, the Brexit was a defeat for the European Idea, but every defeat makes you stronger, learn from the past, adapt the future, be innovative and just try. The Internet of Information was just the start, the Internet of Value has the potential for changing our whole life:
Stand up Europe and implement the Blockchain Technology!
Source: Own Research/ Ideas, Forbes, Fortune
This article first appeared on LinkedIn Pulse. Featured Image: Pixabay
