Page 161 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

These ‘sandboxes’ have been created or are in the process of being created in the US, Singapore, UK, Australia,
and Abu Dhabi. The UK Financial Conduct Authority, for example, has started a FinTech sandbox program,
115
which allows a limited launch of FinTech applications, products, and services. In the US, a bill has been proposed
to mandate federal support for FinTech sandboxes. In Singapore, the Monetary Authority of Singapore (MAS)
116
recently published its FinTech regulatory sandbox guidelines. 117
Beyond creating the necessary regulatory framework to consider DLTs and other innovative technology/
processes, regulators have also been specifically looking at DLTs and how to embrace their positive attributes.
The European Commission plans to set up a FinTech task force that will look at all emerging technologies
including those linked to blockchain virtual currencies. In the UK, the Government Office for Sciences
118
published a generally positive report and recommended embracing DLT for specific purposes, describing
developments as potentially catalyzing ‘exceptional levels of innovation.’
119
Over and above policy support for DLT development, certain regulators and governments are embracing DLT
themselves. In Singapore, the MAS is fully embracing DLT in partnering with R3 and a consortium of financial
institutions on a proof of concept (POC) project to conduct inter-bank payments using blockchain. The
120
project will develop a pilot system in which blockchain infrastructure is used to issue and transfer funds among
participants.

The Republic of Georgia is using DLTs for property registries, a common approach by other governments
121
looking for public-good uses of DLT. In a discordant note on the limits of DLTs, the US state of Vermont
undertook a feasibility study for use of DLTs for public records but decided against its use primarily because
of cost and the need to adapt existing state record-keeping structures. 122

The Dubai government announced that it plans to use blockchain technology for all government documents
by 2020, while in South Africa, the South African Reserve Bank is part of the new Blockchain Working Group
123
along with its central securities depository and several of the country’s largest banks, aiming to chart a course
toward large-scale blockchain implementation. 124

And in France, the Banque de France has tested blockchain technology for hypothetical use in the management
of Single Euro Payments Area (SEPA) credit identifiers.
125
Similarly, many technology companies and financial institutions have been working on the adoption of voluntary
guidelines and self-regulation to promote best practice. 126

115 See Mondato (2016) The Regulatory Sandbox, available at http:// blog. mondato. com/ the- regulatory- sandbox/ .
116 Finance Two Zero (2016) U.S. Government Sandbox Program to keep FinTech Applications in Play, available at https:// goo. gl/
660pjU .
117 Crowdfunding Insider (2016) Monetary Authority of Singapore Issues FinTech Sandbox Guidelines, available at https:// goo. gl/
L4OcWW .
118 Arstechnica (2016) European Parliament Votes for Hands-Off Approach to Blockchain Tech Regulation, available at https:// goo. gl/
P4FW75. There is also D-CENT (Decentralised Citizens Engagement Technologies), an EU project that has proposed the creation
of a social blockchain toolset that will allow adopters to generate their own alternative currency. See http:// dcentproject. eu.
119 UK Government Office for Science (2016) ibid.
120 MAS (2016) MAS, R3 and Financial Institutions experimenting with Blockchain Technology, available at https:// goo. gl/ zCu8C1 .
See Section 4.3 .
121 See Section 7 below.
122 Vermont (2016) Blockchain Technology: Opportunities and Risks, available at https:// goo. gl/ 6SA2Hf
123 Gulf Business (2016) Dubai to Use Blockchain Technology for All Government Documents By 2020, available at https:// goo. gl/
76vICG .
124 CoinDesk (2017) South Africa's Financial Power Players Are Going All-In on Blockchain, available at http:// bit. ly/ 2khelqQ .
125 These are identification markers used to establish the identity of creditors within the Single Euro Payments Area. See CoinDesk
(2016) France's Central Bank Details its First Blockchain Test, available at https:// goo. gl/ F9EZks .
126 Norton Rose Fulbright (2016) Financial Institutions and Blockchain Technology, available at https:// goo. gl/ e5ffsM .

141