Eight Blockchain Projects Accepted To UK’s Regulatory Sandboxbr>
The UK Financial Conduct Authority (FCA) has announced that eight blockchain projects have been selected for the fifth cohort of its FinTech regulatory sandbox.
Launched in June 2016, the FCA sandbox provides a range of tools to firms to help facilitate testing a proposition and applies a tailored authorization and registration process for firms accepted. This is restricted to allow firms to test only the proposition agreed. The FCA may also be able to waive or modify certain rules to aid testing, as deemed appropriate.
In its announcement, the FCA said that it received 99 applications to cohort 5 of the regulatory sandbox – the largest number of applications it has received to date. The majority of applications reportedly came from firms looking to operate in the wholesale and retail banking sectors.
Of the total 99 applications, 29 businesses have been accepted into cohort 5, eight of which will be testing solutions that are based on blockchain or distributed ledger technology (DLT). Accepted firms that will be testing blockchain solutions include:
- Diro Labs – an identity verification service that can verify any person or document online directly from the original source. The solution provides provable, auditable and reportable evidence of Know Your Customer (KYC) and due-diligence in a shareable format through a central blockchain-based store of information.
- Nuggets – an e-commerce payments and verified digital identity platform. It will test the storage of personal and payment data securely with blockchain, and the use of this data to access financial services products.
- Fintech Delivery Panel Partners – a test that is looking to show that consumers can take control over their digital identities and ‘port’ previously verified digital identities across different companies that rely on them to satisfy their customer due diligence and KYC obligations related to identity verification.
- Fractal – a platform that facilitates SME financing and securitisation of SME debt, by digitising credit applications and connecting loan issuances to the underlying financial data, using distributed ledger technology (DLT) and artificial intelligence technology.
- Karma – an interest-free salary-advance and cash flow management product utilising DLT that enables consumers to spend a portion of their salary every month at a range of different merchants.
- London Stock Exchange Group (LSEG) – a test that will integrate DLT within LSEG-operated listing and trading venues to test market infrastructure for the issuance, admission and trading of equity securities, evidencing the change of beneficial ownership. LSEG has invited Nivaura and select market practitioners along the value chain to participate as part of this test.
- Renso – a DLT-based real estate investment management platform.
- Torca – a platform that uses DLT to streamline the capital raising process, providing a one-stop-shop for issuing securities, including onboarding, raise-management and token issuing services. The platform aims to increase transparency and speed of execution for both security issuers and investors.
The regulator said that tests will be conducted on a short-term and small-scale basis, and that they will work closely with each firm to agree testing parameters and build in appropriate consumer safeguards.