Financial Conduct Authority Publishes Discussion Paper on Distributed Ledger Technology

The Financial Conduct Authority has published a discussion paper on distributed ledger technology (DLT). The FCA is seeking to start a dialogue on the potential for future development of DLT in the markets it regulates. The FCA describes DLT systems (such as Blockchain and Ethereum) as rapidly developing technology which offer exciting potential to support the needs of consumers and the market. However, it notes that DLT may also present new challenges and potential risks, such as how regulated firms allocate responsibilities for systems shared among them.

In the discussion paper, the FCA discusses the risks and opportunities of DLT in relation to a number of specific areas, as follows:

• governance and technology resilience;
• DLT and distributed data;
• recordkeeping and auditability;
• smart contracts; and
• the use of digital currencies to deliver financial services.

The FCA generally takes a 'technology neutral' approach to regulating financial services. However, it is considering whether there is anything distinctive about DLT which would require it to take a different approach in order to support innovation in line with the FCA's competition objective. The discussion paper is aimed at both users and providers of DLT solutions in the sectors supervised by the FCA. Comments on the Discussion Paper are due by July 17, 2017.

View the Discussion Paper and related webpage.

View the online response form.