The United Kingdom Financial Conduct Authority (FCA) is working with the Bank of England on a blockchain-based solution that will allow companies to comply with regulatory reporting requirements.
FCA chief Nikhil Rathi revealed the latest developments while speaking at the annual Mansion House gathering in the City of London. He estimates that the costs of managing regulatory reports currently fails between cost between £1.5bn to £4bn annually, since there are 20,000 rules and 58,000 firms to oversee.
"That’s why we’re working with the Bank of England on the Digital Regulatory Reporting Initiative," Rathi told the audience, adding, "By connecting to firms through blockchain and API technology and implementing machine readable and executable regulation, compliance checks can be completed in near real time."
Under the current method, companies must manually file and submit reports that are also reviewed manually by regulatory agencies and sometimes might get lost or invalid since they're not processed in real-time.
However, the new solution will be designed with the goal of helping the regulatory bodies to lower the costs of compliance and ease the burden on reporting companies. According to chair Rathi, it will also augment a recruitment drive that will see the FCA hire at least 300 personnel over the next three years. The majority of the recruits will be data scientists and engineers as the FCA prepares for the burden of regulating more data-heavy businesses.
The regulator has mapped out £120 million to spend on its data handling capabilities over the next three years, and hopes that the digital regulatory reporting initiative and increase in staff headcount will allow for more proactive compliance checks.
Although the FCA is looking to tap into blockchain to boost its operations, the agency has remained fairly critical of the cryptocurrency industry. As part of his speech, the FCA chief repeated the now familiar warning that crypto investors must be 'prepared to lose all their money.'