Financial Firms Offer Diverse Blockchain Views in European Commission Response

The executive branch of the European Union has officially completed a public consultation on FinTech and distributed ledger technology (DLT), and the results of its outreach are becoming public.

Entitled “Public consultation on FinTech: a more competitive and innovative European financial sector”, the consultation granted any consumer or business the ability to answer a questionnaire that sought to clarify general sentiment on financial technologies, including blockchain and DLT.

Now with the comment period officially concluded on 15th June, companies and organizations as diverse as Euroclear, the European Association of CCP Clearing Houses (EACH), the European Payment Institutions Federation (EPIF) and the European Consumer Voice in Standardization are going public with comments on DLT’s regulatory obstacles and risks.

Launched in March, the survey asked participants to answer questions such as “What’s the most promising use cases of FinTech?”, “Which DLT applications are likely to offer opportunities to small and middle sized enterprises?” and “What are the main regulatory or supervisory obstacles to the development of DLT solutions?”, among others. 

So far, it seems comments have been optimistic about the development of DLT, with most submissions calling it one of the most promising use cases of fintech in terms of bringing down costs and increasing efficiency. 

Regulatory split

However, the most notable comments came in response to the question of how the European government should be involved in any transition to DLT more broadly, as opinions on a path forward were largely split.

EACH, the membership group for the region’s central counterparties, argued that it is in favor of the private market leading the charge to evaluate and implement the technology. It went on to state that regulators would be expected to play a role in permissioned blockchain systems, and that the industry should move to ensure they’re able to use the technology to monitor such systems.

By contrast, the EPIF, which represents payment institutions, suggested a more forceful hand will be needed to spur market development.

“The lack of regulatory guidance, or government intervention, has held back the maturity, usability and safety of cryptocurrencies,” it wrote.

Elsewhere, post-trade giant Euroclear, which is among the respondents openly experimenting with blockchain, advocated for a wait-and-see approach.

Euroclear wrote:

“Regulators will need to pay close attention to … the links between trading, clearing and settlement providers where new operational risks might be created if different parts of the value chain implement different approaches to DLT at different times and with non-standardized business practices.”

For now, it remains to be seen whether additional comments, with more forceful opinions, will be published as responses come to light.

EU image via Shutterstock.