Nine Blockchain technology-related firms have been accepted into the UK Financial Conduct Authority’s (FCA) regulatory sandbox, which enables them to test out their innovative ideas without immediately incurring all the normal regulatory consequences.
24 applications were deemed fit to meet the sandbox eligibility criteria and were accepted out of 69 to develop towards testing, including early stage start-ups, challengers and incumbent firms.
Earlier this year, the FCA signed a cooperation agreement with the Australian Securities and Investments Commission, to be the first time anywhere in the world that two financial regulators have agreed to make it potentially easier for innovative firms to access new markets by providing information to one another.
Why the sandbox
Before the program was launched in May, FCA Executive Director of Strategy and Competition Christopher Woolard, gave the rationale behind it:
“We are setting up a tailored authorisation process, which means that sandbox firms will first be authorised with restrictions, allowing them to test their ideas but no more. They still need to apply for authorisation and meet threshold conditions, but critically only for the limited purposes of the sandbox test.
So the authorisation tests should be easier to meet and the costs and time to get the test up-and-running reduced.”
He added: “If, after sandbox testing, the firm wants to launch itself into full activity on the wider market, it can do so if it satisfies the threshold conditions for that wider activity. We think this strikes the right balance – regulation that starts in proportion to the scale of the concept being tested and can grow with the ambition of the full business model.”
Firms that have been selected
Some of the Blockchain-related firms among the selected 24 include Billon, an e-money platform that facilitates the secure transfer and holding of funds using a phone based app; BitX, a cross-border money transfer service; Epiphyte, a payments service provider; SETL, a smart-card enabled retail payment system based on their OpenCSD distributed ledger; and Govcoin Limited, a technology provider that has partnered with the Department for Work and Pensions (DWP) to determine the feasibility of making emergency payments using means other than cash or the Faster Payments Scheme.
Others include Nivaura, which issues lifecycle management of private placement securities; Otonomos, a platform that represents private companies’ shares electronically on the Blockchain, enabling them to manage shareholdings, conduct bookbuilding online and facilitate transfers; Tradle, an app and Web-based service that creates personal or commercial identity and verifiable documents; and Tramonex, an e-money platform that facilitates the use of “smart contracts” to transfer donations to a charity.
Other firms will be able to apply for the second cohort of the regulatory sandbox from Nov. 21.