This week the most important law you’ve never heard of came into force in the U.K. The Electronic Trade Documents Act powers commenced on the 20th of September 2023. The U.K. is the first G7 nation to pass such legislation.
The law transforms a paper bill of lading into a digital asset. A bill of lading is a bearer instrument for the consignment of goods on paper. As a digital asset, it requires no “wet ink” signatures, replacing them with digital signatures. This is similar to dematerialized securities like stock certificates which are traded electronically on stock exchanges and available on your favorite brokerage mobile app.
The advantages of digital over paper are self-evident, making it easier, cheaper, faster, and more secure to trade internationally.
The International Chamber of Commerce has estimated that digitalising trade documents could generate $25 billion in new economic growth by 2024, and free up $250 billion in efficiency savings. The benefits are not limited to just cost savings, the World Economic Forum suggests that “digital trade” could reduce carbon emissions from the global logistics industry by up to 12 percent.
Lord Holmes of Richmond, an active digital technology advocate and one of the principal sponsors of the Bill in the U.K.’s upper house, the House of Lords, says, “The Electronic Trade Documents Act is the most important trade law passed in the U.K. in over 140 years.
“With this new law the U.K. has implemented the U.N. model law on electronic trade records and demonstrated not just leadership on international trade but also on legislating for a technologically advanced future.
“The mission now must be to get not just the G7, but all nations to pass similar laws and be part of a new technology enabled trading epoch to help transform trade and deliver these benefits globally.”
While the law is technology agnostic, it is optimally suited for Distributed Ledger Technologies (DLT) like blockchains. Arguably, using “electronic” in the name of the Act could be misconstrued a misnomer by some, “digital” is the de rigueur term in the Web3 crowd, however, most of the world still refers to this category of automation as e-trading.
The digitization of trade also transforms the finance of trade, compressing timeframes to release trapped capital through quicker digital settlement times. New models for digital debt financing and syndication through leveraging the digital asset bill of lading by using smart contracts on DLT, and pooling capital with greater efficiency, will make the Act popular in the finance crowd.
With the focus on the tokenization of real-world assets at the top of the agenda of many institutions, the timing of the Act could not be better, and this could really be a match made in Web3. With global fintech funding at a historic decade’s low, the more bullish investment pouring into Web3 developments will gravitate towards use cases like ones enabled by the Act.
Small and medium sized business (SMBs) can capitalize on the new law and its potential, and this is where a decentralized Web3 reaches to deliver. It not only makes international trade easier and more efficient, but it may also make it possible to open up international markets for the first time for SMBs and become a strong tool for regional economic development and capital creation.
Holmes adds, “The Electronic Trade Documents Act demonstrates the potential that can be unleashed when the U.K.’s common law tradition is combined with our new technologies and our financial services ecosystem as 80 percent of trade documents constructed under English Law.
“I have long argued that the benefits of emerging technologies, like DLT, must be utilized for public good. This law is an ideal opportunity to do just that.”
Holmes was on the Special Public Bill Committee that scrutinized and pushed this legislation through Parliament, supported by the Law Commission. The Law Commission is at the forefront of laws for digital technologies and has created a separate digital asset class of property for the protection of digital assets holders under U.K. common law. This has positioned the U.K. as one of the premiere target global destinations for digital asset owners, custodians, and exchanges.
A16z, the preeminent blockchain venture capital firm has recently established an office up in London, and the turmoil of the U.S. crypto policy and digital innovation agenda is driving digital asset holders and infrastructure providers to consider re-domiciling, and they are looking East. Coherent policy and the stability of protective digital laws wins here, capital preservation with opportunistic growth and progressive tax regimes will be at the top of the list of favored jurisdictions.
This proactive and progressive public policy towards digital infrastructure is part of a well-orchestrated vision for Digital Britain led by Holmes and the community of digital advocates in the upper house working in tandem with the Government, the Treasury department, the Bank of England, and the Financial Conduct Authority (FCA), and all working in cooperation with industry.
With the new Financial Services and Markets Bill and the impending rules for crypto and stablecoin legislation expected in 2024, the FMI Sandbox, the Digital Pound, and the new Centre for Finance, Innovation and Technology (CFIT), industry is engaged. The Kalifa Review of fintech in 2021 set out this new era of digital policy and legislation, following the Government’s milestone decision after the Great Financial Crisis in 2008 to give the FCA a competition mandate and champion innovation and fintech.
Prime Minister Rishi Sunak, a Stanford post-graduate Xennial, the youngest U.K. Prime Minister in over 200 years, has presided over a period that has ushered in the biggest changes to U.K. law in financial services and trade in decades. With the energetic commitment from the Economic Secretary of the Treasury, Andrew Griffiths, the speed and the quality of the digital legislation must be applauded.
The U.K. has put digital innovation at the heart of enabling the building of tomorrow’s economy, focused on improving national productivity, creating new jobs, and enabling greater participation and inclusion in the broader financial system.
As the Brits say, the proof is in the pudding, and it is not until industry acts on this substantive package of new digital policy and laws that markets will be able to measure its impact and success. Pundits will keep an eye on the tech investment numbers, foreign direct investment, and trade flows, along with the number of common law countries adopting this regime.
As the former CEO of Innovate Finance, the U.K. global fintech member’s association conceived by the Downing Street policy team a decade ago, I am privileged to have firsthand experience of the U.K.’s fintech policy tour de force.
In 2015 Innovate Finance published its U.K. Fintech Manifesto to create 100,000 new fintech jobs, attract £8 billion ($10 billion) of fintech venture capital, and create 25 U.K. fintech unicorns. The diligent and solid work put into these estimates by our industry members, Downing Street advisors, and City of London sponsors was impressive. The manifesto was praised by the Prime Minister, lauded by the fintech sector, and looked at incredulously by the institutions and markets.
The Manifesto targets for venture capital and unicorn were smashed over the past couple of years, and the number of fintech jobs, currently at 75,000, is estimated to hit 100,000 by 2030.
Banking, transferring funds, lending, and buying stocks and shares on your smartphone is as easy as shopping, booking your travel, or watching your favorite sports and movies. DLT technologies are set to transform and enhance this financial experience even further.
The U.K. tech ecosystem is a highly collaborative network with the Government and its agencies engaged with all segments of industry and capital providers, from startups to institutions. It is “designed”, as much as any jurisdictional innovation ecosystem can be designed, to enable Digital Britain’s ambition of becoming the premiere hub for the global digital economy.
This is achieved through patiently putting in the cornerstone building blocks of policy, law, and regulation, through a process of engaging and consulting the ecosystem, and enabling capital and industry to scale, at risks levels acceptable for most consumers and businesses.
Do not underestimate the strength and expediency of the policy planning and world-class common-law legislation that the U.K. ecosystem delivers. It demonstrates the innovation of the West Coast with capital of the East Coast and the lobby of Washington all in a 15 minute public transportation journey across London. The pace of the recent legislation enabling innovative digital technologies puts the U.K. at the front of the Digital Space Race.
Source: Fox Business
Add Some Sparkle to Your Holiday Wardrobe With 16 Glittering Accessories
Newcastle star Nick Pope may miss rest of season injured in blow to Euros hopes
Dusit Hotels and Resorts signs to manage its first hotel in Malaysia
‘Foreign terrorists’ believed responsible for deadly church bombing in Philippines, ISIS claims credit
FDNY: 1 person critical after fire at NYCHA building in the Bronx
49 Best Black Friday Mattress Deals You Can Still Shop 2023
37 Cyber Monday Treadmill Deals to Shop Right Now 2023
5 Best Blue-Chip Stocks For 2024
36 Cyber Monday Treadmill Deals to Shop Right Now 2023
44 Best Cyber Monday Mattress Deals You Can Shop in 2023
Middle Corridor countries expand cooperation beyond their region
Henry Kissinger in the Asian context
Taiwan to point US-supplied HIMARS at China
Philippines drops yet another sea gauntlet on China
‘Sister Wives’ Season 18: Meri Brown’s Redemption Storyline Line Was the Surprise Element The Show Needed
Sport23 hours ago
Dana White slams ‘one of the worst’ refereeing displays as fighter is battered
News24 hours ago
Israel-Hamas war: UAE sends ship with over 4,000 tonnes of aid, supplies to Palestine
Travel23 hours ago
Lufthansa Group tests Green Fares on intercontinental routes
News23 hours ago
Pope pleads with COP28 to find breakthrough on climate change
Lifestyle23 hours ago
Blake Lively Says Beyonce and Taylor Swift 'Don't Have to Be Threatened'
News24 hours ago
The ‘Frasier’ Reunion Is the Most Delightful Part of ‘Julia’
News23 hours ago
This Cleansing Stick Is a Travel Must-Have—And It’s Great for Everyday, Too
Sport24 hours ago
Man City vs Spurs: Get Haaland 2+ and Son 1+ shots on target at 3/1 with Sky Bet