Bitcoin Barclays spoke to regulators about bringing bitcoin ‘into play’
Barclays has been in discussions with regulators and financial technology – or fintech – firms about bringing cryptocurrencies like bitcoin “into play”, the bank’s U.K. chief executive told CNBC on Monday.
Ashok Vaswani revealed that the banking giant has met with Britain’s Financial Conduct Authority (FCA) watchdog to talk about how to make bitcoin safe in response to a question about whether Barclays could support bitcoin.
“We have been talking to a couple of fintechs and have actually gone with the fintechs to the FCA to talk about how we could bring, the equivalent of bitcoin, not necessarily bitcoin, but cryptocurrencies into play,” Vaswani told CNBC at the Money 20/20 fintech conference in Copenhagen, Denmark.
“Obviously (it’s) a new area, obviously an area we’ve got to be careful with. We are working our way through it.”
Vaswani did not expand on to what extent Barclays could be involved with bitcoin. Barclays has recently been involved in the digital currency space. Last year the bank partnered with social payments app Circle. The start-up, which received a license from the FCA last year, allows users to send money to each other in messages, and supports bitcoin. Barclays provided Circle with an account to store sterling, as well as the payments network to transfer money.
Banks have typically been very cautious of being associated with any companies involved with bitcoin due to the cryptocurrencies bad reputation as being used to buy illegal items on the so-called “dark web”.
But the world’s largest cryptocurrency by market cap has seen rising retail investor interest, as well as a major rally since the start of the year that has seen its price hit record highs. Even though the price has pulled back in recent days and there is still volatility, regulators are becoming interested in bitcoin, which is lending legitimacy to the digital currency.
For example, Japan made it legal for merchants to begin accepting bitcoin as payments and Russia is also looking at ways to regulate it. The FCA in the U.K. has been cautious on bitcoin, however.
Chris Woolard, the FCA’s executive director of strategy, said that there needs to caution from institutions dealing with bitcoin.
“We don’t prohibit regulated firms from engaging in digital currency trading, nor do we prohibit banks from offering banking services to deal with currency firms that use [blockchain]. I am not saying that we view digital currencies as an inherently bad thing… but we do have to exercise a degree of caution,” Woolard said at a recent event, according to website Financial News.
While bitcoin has garnered plenty of interest recently, the banking industry is focused on using the technology that underpins it called blockchain. This is a distributed public ledger of activity on the bitcoin network. Banks see blockchain-like technology being applied to areas of their businesses from trading to money transfers. The promise is cost savings and faster processes.
Barclays and a number of other banks have been trialing different use cases for blockchain technology. Last year, the U.K. bank tested derivative trading using blockchain technology. Still, the industry admits it is early days and more work needs to be done to integrate this into everyday processes in banks.