The UK's Financial Conduct Authority greenlit blockchain startup Epiphyte to build an alternative clearing and settlement system for British financial institutions, using Bitcoin as the backbone for c
The UK's Financial Conduct Authority greenlit blockchain startup Epiphyte to build an alternative clearing and settlement system for British financial institutions, using Bitcoin as the backbone for cross-border transactions. The London-based company will test the service under the FCA's regulatory sandbox program.
Epiphyte's pilot service, called SpecialFX, will launch this month and lets customers send money to accounts in foreign countries using regular currencies while Bitcoin handles the settlement on the blockchain. The mechanism sidesteps SWIFT and other traditional banking systems for the international portion of payments. Bitcoin serves as the payments rail, cutting costs and settlement times while making each transaction more transparent.
"There has been a huge amount of hype about the potential to use blockchain for cross-border payments and to settle financial transactions. So far we have not seen much in the way of actual, live products. The FCA have taken an important step to change this – for the first time, real customers will see real benefits," Edan Yago, Epiphyte's CEO, said.
SpecialFX stands as the first live system to settle forex and cross-border transactions on the blockchain while holding regulatory authorization. Yago founded Epiphyte in San Francisco as a serial entrepreneur and blockchain expert. The company moved its headquarters to London in 2014 to capitalize on the UK's favorable regulatory environment for fintech.
The FCA created its regulatory sandbox in May 2016 to provide firms a safe space for testing new capabilities and business models while protecting consumers. The sandbox offers companies a customized authorization process during the testing phase, guidance for products that fall outside existing regulations, and sometimes waivers and no-enforcement-action letters. The FCA had launched its Innovation Hub in 2014 as part of its broader mission, facilitating the regulatory journey for both startups and established firms developing innovative financial services.
Epiphyte gained visibility after winning the SWIFT Innotribe Fintech of the Year award. Since then, the startup has partnered with major financial institutions including BBVA and Visa.
