Blockchain Test Proves Its Potential in the DFSA’s Regulatory Sandbox

Based on a partnership with ZTLment ApS, a local B2B software company in Denmark, the Danish Financial Supervisory Authority (DFSA) has announced that it conducted a test that examined the use of blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term technology for a particular business model in the DFSA's regulatory sandbox, FT Lab.

The FT Lab test showed that blockchain has the ability to execute fast, secure and efficient payments. Furthermore, the test indicated that blockchain-based payment services have the potential to compete with existing payment solutions that use the traditional payment infrastructure. Therefore, the DFSA expects many different types of financial business models to use blockchain technology in the future.

The test with ZTLment was a good example of how FT Lab enabled the DFSA to get more insight into how blockchain can help optimize existing business models.

However, with the use of the new technology, new risks emerge. DFSA was concerned about how users are protected under blockchain networks compared to traditional payment solutions. Additionally, the watchdog identified that blockchain is not covered by the Danish Payments Act (DPA) if it uses it as a main payment infrastructure in connection with the provision of payment services. However, the regulator stated that blockchain payment services require authorisation from the DFSA.

Tobias Thygesen, the Head of the DFSA's Fintech, Payment Services and Governance Division is in charge of FT Lab, said: "Using blockchain could potentially change the way financial services are offered, including how payments are settled. The DFSA works to explore and fulfil this potential in such a way that it is safe and efficient for Danish consumers and businesses to use. ZTLment's participation in FT Lab has given the DFSA a good insight into how blockchain can be used in practice to make payments. The DFSA and ZTLment have had a good and constructive process, where both parties learned about the potential and regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term of the technology."

Navigating Blockchain Regulation

DFSA is not the only market regulator trying to develop a framework to responsibly monitor and guide blockchain activity in its jurisdiction. In March last year, The Dubai Financial Services Authority (DFSA) sought public consultation on a proposed framework for security tokens regulations as part of its efforts to regulate the security token space and to bring clarity to the Blockchain-based services industry. The regulator termed the move as important as it focuses on quality control of the technologies behind the security tokens and addresses the risks of using distributed ledger technology (DLT). DFSA considered the proposal as a major milestone in paving a clear and certain path for firms seeking to raise capital in or from the Dubai International Financial Centre (DIFC) using blockchain technology, and for those firms that wish to offer financial services.