Most of the regulators across the globe are now engaging with the possible impact distributed ledger technology (DLT) could have on the financial services sector. But the regulatory position relating to use of th technology is still evolving, as our round up of different jurisdictions shows.


In the UK, the FCA and PRA are only at the early stages of considering the risks posed by DLT and what regulatory requirements should apply to its use.

For example, the FCA published DP17/3 asking for comments in order to start a dialogue on the potential for future development of DLT in the markets they regulate.

The FCA is due to publish a Summary of Responses or further Consultation Paper based on the comments they have received.


In France, the government has shown some interest in the technology but unlike the UK it has not yet launched any major initiatives.

In March 2016 the Ministry of Economy passed a decree to allow debt-based instruments to be issued on a distributed ledger.

In May 2017, France Stratégie, the French Prime Minister’s cabinet for national strategies analysis, held several hearings on DLT issues such as legal and social issues or regulations.

Most recently, Finance Innovation, a French institution dedicated to fostering the French financial sector, is said to be setting up a working group to guide the government over initiatives they will need to lead in the DLT sector.

However, the French regulators have not joined a number of other countries in setting up real DLT experimentations, instead continuing to hold conferences and workshops.


In Australia, the Australian Securities and Investments Commission (ASIC) published “Information Sheet 219” about evaluating DLT which stated that it will follow a ‘technology neutral’ regulatory approach in line with its historical approach to these types of technologies.

ASIC has set up an Innovation Hub to help start-ups developing innovative financial products to navigate the regulatory system.

However, similarly to the UK, ASIC has made clear that, at this stage, they believe the existing regulatory framework is able to accommodate DLT use cases that have emerged.

But the regulator intends to engage extensively with a wide number of these organisations as the technology matures and they will evaluate various use cases and consider their potential impact on specific services within the market.


In January 2017, the U.S. Financial Industry Regulatory Authority (FINRA) issued a report entitled Distributed Ledger Technology: Implications of blockchain for the Securities Industry.

This was very much in line with the various other papers that regulators have produced in order to elicit views, stating that – “This paper is intended to be an initial contribution to an ongoing dialogue with market participants about the use of DLT in the securities industry.”

Later, in March 2017, the US Illinois Department of Financial and Professional Regulation became the first US State regulator to become a member of the R3CEV consortia.

In the U.S., the National Association of Insurance Commissioners (NAIC) established an Innovation and Technology Task Force to monitor emerging technologies, including DLT.

The Task Force’s mission is to “provide a forum for regulator education and discussion of innovation and technology in the insurance sector, to  monitor technology developments that impact the state insurance regulatory framework, and to develop regulatory guidance, as appropriate.”

European Union

The regulatory approach in the EU has thus far been an ‘active’ wait-and-see approach.

In June 2016 the European Parliament voted for ‘smart regulation’ of DLT, with German MEP Jacob von Weizäcker noting: “To avoid stifling innovation, we favour precautionary monitoring rather than pre-emptive regulation”.

In February 2017, the European Securities and Markets Authority (ESMA) issued a report on DLT concluding that regulatory action was premature given that the technology was still at an early stage, as well as finding that the current EU regulatory framework did not represent an obstacle to the use of DLT in the short term.

In April 2017, the European Commission established a ‘European Union Blockchain Observatory’ to develop expertise on topics such as infrastructure, governance and validation mechanisms, contracts, regulatory and legal challenges, interoperability and standards, and will explore possible use cases within the EU.

In June 2017, the European Commission announced the launch of its ‘#Blockchain4EU Project’ to help industrial use cases for blockchain and DLT.

The objective is to identify, discuss and communicate possible uses and impacts of blockchain and other DLT objects, networks and services within EU industrial or business contexts.

The European Insurance and Occupational Pensions Authority (EIOPA) is also taking an active role in the discussions around DLT.

In April 2017, EIOPA organised its first InsurTech roundtable to discuss with stakeholders the benefits and risks of digitalisation for the sector and consumers as well as potential obstacles to effective innovation.

It was concluded at the roundtable that:

“Arguably, supervisory oversight is less necessary in regards private blockchains (notwithstanding antitrust and competition matters, or powers necessary to supervise possible illegal activities). In public blockchains, supervisors may need to focus on a range of different issues, such as the role of miners and nodes, or security and privacy challenges. Some participants also noted that regulatory authorities could also consider addressing some of the legislative barriers preventing the implementation of blockchain.”

In June 2017, the EIOPA also responded to the European Commission’s public consultation on ‘Fintech: A more competitive and innovative European Financial Sector’, stating that:

“There are also some risks arising from digitalisation that supervisory authorities need to examine very carefully. This is for instance the case with possible price discrimination issues or with vulnerable consumers’ access to insurance. Digitalisation could also lead to an increasingly fragmented insurance value chain, raising challenges from a supervisory perspective, similar to the increasing exposure of undertakings to cyber risks… This includes automation of financial advice, blockchain, artificial intelligence, and peer-to-peer insurance. While it is still early days for some of these financial innovations, EIOPA will closely monitor them in view of their potential impact and take action as relevant.”


Regulators across the globe have also made efforts to collaborate with their counterparts in other countries to gain and share knowledge in regulating these new technologies.

For example, in June 2017 the Monetary Authority of Singapore and the Association of Supervisors of Banks of the Americas signed a Memorandum of Understanding (MOU) to bolster FinTech ties between Singapore and the Americas.

ASIC has also signed a number of fintech-related MOUs with overseas regulators in the UK, Kenya, Singapore and Canada.


DLT and blockchain have found its way onto the websites of other regulators like BaFin in Germany.

The technology’s potential to significantly change transactions including payment transactions is clearly recognised.

For example, Felix Hufeld, the President of BaFin, in his speech at the G20 Conference on “Digitising Finance, financial inclusion and financial literacy” on 25 January 2017, made clear that:

“Regulation should be neutral and not discriminate against digital processes as such. As new risks emerge – to financial stability as well as consumers – we have to adapt… Digitisation offers no doubt considerable opportunities – but a host of opportunities for cyber-attacks as well…Given the nascent and dynamic nature of technological developments, it is quite challenging for us regulators to get the timing right: we shouldn’t try to be quicker than market developments themselves, stifling innovation and producing regulation prematurely. On the other hand, we are carefully examining new threats to financial stability and shouldn’t wait until the next global crisis comes about…”

Next steps

To examine these issues in depth, read and download our new report, Blockchain/DLT in the Insurance Sector.

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