FCA to offer support to DLT startups

When Malta announced it would be passing into force three blockchain, crypto, and ICO bills, it seemed likely that many other jurisdictions would follow suit. Now it seems that the UK is beginning to consider softening its approach and its financial regulator is looking set to recognise the potential of blockchain related businesses.

The Financial Conduct Authority (FCA) has allowed 11 blockchain and DLT related companies to gain access to its regulatory “sandbox”– 40% of the 29 businesses that were accepted. Out of 69 received applications, 40 did not make the cut according to an FCA statement released last week.

“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.”

Even more interestingly, one of the blockchain firms, 20|30 will be partnering with the London Stock Exchange group as well as a London based finserv company, Nivaura to build a DLT platform that will enable companies to raise capital in a more efficient way. The platform will allow the primary issuance of equity tokens based on Ethereum and offer them to investors.

Tom Fsofinzon, co-founder of 20|30 told the Financial Times;

“The next step will be to offer secondary transfers. Then we can work our way up the ‘capital stack’ to reinvent private equity and, public markets.”

The FCA’s regulatory sandbox was created back in June 2016 with the aim of allowing businesses to test innovative products, services, business models and delivery mechanisms in the market with the FCA’s approval.

Whilst this is great news for businesses in the UK, some say that in a post Brexit ecosystem, most firms operating in international finance and technology sectors will seek to migrate to EU shores. This is part of the reason why Malta has become such a prime location for blockchain and cryptocurrency start-ups- not only does it offer a friendly and supportive regulatory environment, but it is also a fully fledged member of the EU.

 

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