U.K.’s Financial Regulator Eventually Recognizes the Potential of Blockchain-based Startups

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by Julia Sakovich · 3 min read
U.K.’s Financial Regulator Eventually Recognizes the Potential of Blockchain-based Startups
Photo: FCA

Finally, the U.K.’s financial regulator, Financial Conduct Authority, started to recognize the benefits that blockchain technology can bring to the society.

As it has been revealed, the UK’s Financial Conduct Authority (FCA), the country’s financial regulator, announced that 29 companies were accepted to compose the fourth cohort of its regulatory sandbox. According to the information provided, more than 40% of them will test blockchain or distributed ledger technology (DLT) solutions.

It means that 11 blockchain and distributed ledger technology-related companies have received access to the sandbox. In total, 69 companies filled their applications but 40 of them did not make the group as they didn’t meet the requirements for being selected.

“We have accepted a 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,” said the FCA in its official announcement.

Among the blockchain startups and projects that were accepted to the UK FCA’s fourth cohort there are:

  • BlockEx which is a platform aimed at facilitation of the issuance and managing of the lifecycle of regulated bonds utilizing DLT;
  • Capexmove that represents itself a DLT-based solution for issuing tokenized debt;
  • Etherisc that is a special service that with the help of smart contracts used on a blockchain platform can ensure absolutely automated, decentralized insurance for flight delays;
  • Fineqia – a blockchain-based digital platform that provides companies with an opportunity to issue and administer debt and equity securities;
  • TokenMarket that a DLT-based funding platform that helps to make issuing shares more efficient;
  • Tokencard – a special service that provides connection between a centralised payment card and a decentralised blockchain;
  • 20|30 that is a platform functioning on the base of DLT and enabling businesses to raise capital.

The most notable startup is probably 20|30. It will be testing its platform in cooperation with the London Stock Exchange Group and a London-based financial service company called Nivaura.

The co-founder of 20|30 David Siegel said:

“We are delighted to be included in the latest cohort of the FCA’s regulatory sandbox. This is a significant milestone for the 20|30 team. 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.”

All the tests will be carried out on a short-term and small-scale basis. In order to agree testing parameters and build in appropriate consumer safeguards, the FCA will be working with each startup separately.

The executive director of strategy and competition at the FCA Christopher Woolard commented on their new initiative the following way:

“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.”

Let us also remind that it is not the first step to implementation of blockchain in the U.K.  Last week there was published a new report called “Unlocking Blockchain: Embracing new technologies to drive efficiency and empower the citizen”. It called on the government to make the technology and its benefits a priority and to appoint a public-facing chief blockchain officer who will coordinate the country’s strategy on applying blockchain technology to public services.

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