The London-based Financial Conduct Authority (FCA) has announced the names of companies selected to be a part of the fourth cohort of its regulatory sandbox. While the FCA had received 69 applications from prospective companies, it selected only 29 among them. The FCA provides financial and technical companies with a regulatory environment for them to test their products with real customers.
FCA Regulatory Sandbox
For cohort four, the firms selected employ advanced technologies to offer better products aimed at existing customers. The list of 29 companies selected was announced on July 03, 2018. The FCA stated in its press release they have accepted a number of firms that will be testing propositions relating to crypto-assets, and are keen “to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.”
Three firms among the 29 selected had already qualified in previous cohorts but need to test their product further. These companies will now be testing their products in a regulatory sandbox, which will be completed on a small scale within a short span of time. The FCA is in negotiations with companies to agree on parameters and consumer safety norms.
The sandbox aims to promote more effective competition in the interests of consumers by allowing firms to test innovative products, services and business models in a live market environment while ensuring that appropriate safeguards are in place.
Blockchain and Regulatory Sandbox
According to the FCA, “The sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. It was established to support the FCA’s objective of promoting effective competition in the interests of consumers and opened for applications in June 2016.”
Around 12 companies selected in cohort four are employing the use of distributed ledger technology. BlockEx is a platform that facilitates the issuance of bonds. It also tracks the lifecycle of bonds. All this is done using the distributed ledger technology.
Capexmove is a financial company which uses blockchain technology to allow small companies to raise capital more efficiently. Fineqia is a blockchain digital platform that enables companies to issue and track debt and equity. It also includes bonds which are backed by cryptocurrencies. The majority of all companies selected in cohort four are building or testing financial products.
Response to the Regulatory Sandbox
The FCA had said that early signs are encouraging. Firms who were selected in the earlier cohorts have been successful in testing new products, reducing time and cost of going from an idea to having a developed product. The regulatory sandbox ensures newer products are extensively tested and are built according to proper safety norms.
The FCA added:
“This initiative was introduced in our regulatory sandbox report in November 2015, and took effect from June 2016 when we first opened for applications.”
The agency had received a total of 207 applications in the first three cohorts. It selected 24 companies each in the previous three cohorts. Many of the companies that tested their products in the sandbox have since introduced their products in the real world as well.