Wednesday, September 18, 2019

Blockchain Firms Don’t Have It Easy In The UK When It Comes To Opening Bank Accounts

In the UK, the blockchain industry is yet to find its bearing, and this has not favored some companies. Some of them are faced with challenges in the world of conventional banking. Taking a closer look at the issue, a publication released by Digital Catapult has shown the situation of things in the UK for the blockchain community. Their report is composed of data obtained from 260 companies.

In order to make the content organized, the report divided the blockchain ecosystem into four categories namely:

  • Distributed ledgers
  • Distributed applications developers
  • Centralized systems
  • Service providers

The UK has already established many companies that will work within the local community. So far, the financial sector has a higher number of clients, but there is a promise of more industries adopting the blockchain technology. From the research, it could be seen that companies that have held an Initial Coin Offering (ICO) are only 4.5%, notwithstanding the coverage encircling non-traditional sources of investment. Those who funded their companies themselves were 80%, 41% sourced for a traditional seed round and 25% did not need external investment.

The report stressed the inability of the companies to secure a bank account. About 54% have found it very challenging, and approximately 45% decided that legal assistance was the solution.

Uncertainties regarding regulations were stressed in the report because 74% of companies in the blockchain industry talked about the absence of regulations and this particular concern was raised more than other issues, like access to legal, business or legal expertise. In addition, the General Data Protection Regulation (GDPR) was named as a tension point.

Related Article:  European Banks Might Soon Hold Bitcoin

The GDPR is essential in Europe as it is among the regulatory structures. Digital Catapult stated:

“This legislation raised concerns for companies using permissionless, public blockchains, which are open to anyone regardless of location, and where full copies of the database are replicated across all of the nodes participating in the network, making it impossible to selectively limit where the data goes.”

With GDPR, citizens can delete their information, and this brings problems because the ledger shouldn’t be manually modified. The design of the blockchain is to have it unchangeable so that transparency can be maintained.

Initial coin offerings (ICOs) was presented too, seeing that there are no regulations to guide it. The Financial Conduct Authority in the UK said they would provide regulation for ICOs within the year, yet nothing has been heard from them in eight months. Digital Catapult reported from their survey;

“This uncertainty was raised many times by the companies consulted, as they were unsure whether they should conduct an ICO in the UK or allow UK citizens to participate given the current regulatory landscape.”

Despite all these blockchain community troubles, the DLT sector is still progressing. The report also said,

“Investments rose from just over US$50m in Q3 of 2016 to US$150m by Q2 of 2018 (with ICO-related investments topping US$100m in Q4 of 2017 and fiat investments climbing to over US$100m in Q2 of 2018).”

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