The UK's Financial Conduct Authority approved 29 fintech companies for its fourth regulatory sandbox cohort on Tuesday. More than 40 percent plan to test blockchain or blockchain technology.
The UK's Financial Conduct Authority approved 29 fintech companies for its fourth regulatory sandbox cohort on Tuesday. More than 40 percent plan to test blockchain or blockchain technology.
Six will use DLT to automate debt and equity issuance. Two others aim to build insurance products on the technology.
"We have accepted a small number of firms that will be testing propositions relating to crypto assets. We are keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks," the FCA said.
BlockEx operates a platform for issuing and managing regulated bonds on DLT. Capexmove offers tokenized debt solutions. Etherisc operates an automated flight insurance service using smart contracts. And 20|30 created a DLT platform that allows companies to raise capital.
20|30 will test equity token issuance on Ethereum using UK blockchain startup Nivaura's integration with the London Stock Exchange Group's Turquoise platform. David Siegel, the company's founder, called the acceptance a milestone. "For the first time, our integration with the Turquoise platform will demonstrate a regulatory-compliant way for institutional investors to purchase equity tokens. We believe this is an important first step to building a new digital foundation for capital markets," he said.
The 20|30 system aims to become the regulated entity licensed to onboard companies issuing equity tokens. It will comply with UK regulations and conduct all necessary checks on investors and issuers. Co-founder Tomer Sofinzon mapped out the path forward: "The next step will be to offer secondary transfers. Then we can work our way up the 'capital stack' to reinvent private equity and, eventually, public markets."
The FCA selected 29 winners from 69 applications. Beyond blockchain, submitted tests involved geolocation, APIs and artificial intelligence. The regulator will work with each firm to set parameters and build in consumer safeguards. Testing will occur on a short-term, small-scale basis.
Christopher Woolard, executive director of strategy and competition at the FCA, noted the record cohort size. "I am pleased to say that this is the largest sandbox cohort to date with a record number of applicants meeting our eligibility criteria. Cohort 4 has seen a large increase in the number of firms testing wholesale propositions including firms that are aiming to increase the efficiency of the capital-raising process. Alongside these we can see significant use of DLT, some experimentation with crypto assets which will help inform our policy work and propositions aimed at helping lower income consumers."
Applications came from across the financial services industry, covering areas like consumer credit, robo-advice and insurance.
