Dishonesty and fraud have plagued traditional banking systems and could spread into the new FinTech businesses that are springing up to challenge them, according to one of Britain’s most senior judges.
Sir Geoffrey Vos, chancellor of the High Court, said in a speech in London that “There is considerable scope for fraud in the brave new world of Fintech”. He also added that “In the digital era the manifestations of dishonesty will take a completely different form”.
According to Sir Geoffrey, the threat of cybercrimes and hacking can potentially make the frauds of yesterday seem modest in comparison. He also added that “We are staring into a firmament of which many people of my generation have very little comprehension.”
His observations highlight the fact that legal experts and regulators are struggling to keep up with the rapid growth of the FinTech industry, especially those that are largely unregulated, like cryptocurrencies.
This month Bank of England governor Mark Carney said that it was high time to push for the regulation of cryptocurrencies and the technology behind them. The G20 heads of states are scheduled to have a discussion on creating a global framework for bitcoin and other cryptocurrencies in this week’s summit in Buenos Aires.
Sir Geoffrey requested for a global approach on regulating blockchain, the technology that serves as the foundation for cryptocurrencies but is also being used to improve operations of a number of businesses. According to him, regulations to blockchain simply cannot be different in different countries since the technology is, by definition, borderless.
“The risk of fraud will increase [with] use of the public blockchain for financial transactions” he added. He said that the risk for fraud will decrease for startups but others will find a way to create opportunities for fraud.
The esteemed judge also said that Britain’s departure from the EU presented a huge opportunity to form an English common law as the international legal standard for the FinTech industry and blockchain technologies.
London faced competition from Germany and France to remain as Europe’s FinTech hub.
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