All Banking Law, All in One Place. Bloomberg Law: Banking is the comprehensive research solution that powers your practice with access to integrated banking-related legal news, analysis,...
Oct. 7 — Federal Reserve Governor Lael Brainard doused the idea of the agency setting up a regulation-light “sandbox” for the testing of blockchain applications in the banking sector, telling a Washington conference Oct. 7 that the technology is “immature.”
Brainard's comments came in a panel discussion on blockchain, or distributed ledger technology (DLT), at a conference sponsored by the Institute of International Finance.
Brainard opened her appearance with lengthy prepared remarks, in which she said that the board would publish a report on DLT by the end of 2016. She referred to a board working group “that is engaged in a 360-degree analysis of financial innovation across the broad range of our responsibilities.”
A version of a regulatory sandbox was outlined in a House bill filed in September by Rep. Patrick McHenry (R-N.C.), a leader of efforts by the majority House Republicans to promote innovation in the financial services industry.
McHenry's bill (H.R. 6118) directs the Federal Reserve and 11 other regulatory agencies to set up offices to encourage innovation and outlines a mechanism for financial technology companies to propose tests of products or services that would not be subject to certain regulations the companies view as overly confining and outmoded. The tests would be subject to limitations on their duration and extent, and would include protections for consumers and financial systems.
Some fintech entrepreneurs suggest the U.S. is falling behind the increasing number of countries that have unveiled their own sandboxes, including the U.K. and Singapore.
But Brainard said it would be “premature” for the Fed to create a DLT sandbox.
Brainard praised the potential of DLT in her prepared remarks and identified several promising uses for it, such as international payments, trade finance, securities settlement and recovery from cyberattack.
She said, though, that “many potential applications are in their infancy.”
“The industry is eager to get on with adopting the various possibilities that distributed ledger technology may bring,” she said. “However, established players and, increasingly, new entrants understand that there are important guardrails that have been carefully developed over many years in the arena of payments, clearing, and settlement. The safety and soundness of financial institutions, safety and efficiency of the payment system, and broader financial stability are critical to a healthy financial environment that fosters innovation with broad public benefits over the long run.”
To contact the reporter on this story: Gregory Roberts in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Mike Ferullo at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)