FCA UK Approves Crypto Businesses for 4th Phase of Regulatory Sandbox


FCA UK approves Crypto businesses for 4th cohort of regulatory sandbox. The sandbox aims to provide the opportunity to new businesses to test their products on consumers for three to six months. 

4 July, AtoZ Markets – The financial regulator of the UK markets, the Financial Conduct Authority (FCA) has announced that there are some firms that have been successful in their applications to commence testing in the fourth cohort of the sandbox. 

FCA UK Approves Crypto Businesses for 4th Phase of Regulatory Sandbox

The UK regulator has mentioned a “small number” of cryptocurrency-related firms that have been accepted to test their solutions and business models in the market. Earlier, the watchdog has received as many as 69 submissions for the fourth phase of the regulatory sandbox. Out of them,29 applications have satisfied all the requirements and were accepted to carry on with further testing. 

Additionally, the UK FCA has stated that more than 40 percent of companies that are accepted to cohort four are utilizing Blockchain technology. The FCA has further noted that it wants to “explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.”

FCA’s regulatory sandbox has been established in 2016. Since that time, the project has enabled more than 100 firms to test their innovations with real customers, but in controlled environment. The sandbox aims to provide the opportunity to new businesses to test their products on consumers for three to six months. 

In general, the idea has been quite successful in terms of oversight and analysis, according to the FCA. The regulator has evaluated different methods of pushing this model to a global level. 

UK Warns About Crypto Risks

One of the first cryptocurrency businesses to receive an approval is TokenCard. The company describes itself as a “depositless Ethereum token-based debit card & platform.” It is planning to allow users to load cryptocurrency onto a card and use it just like a traditional credit or debit card. 

Another project that got an approval is Fineqia, a Blockchain-based digital platform that enables companies to issue and manage debt and equity securities.

Christopher Woolard, the director of Strategy and Competition at the FCA, has commented:

 “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. Alongside these, we can see significant use of distributed ledger technology (DLT), some experimentation with crypto assets which will help inform our policy work and propositions aimed at helping lower-income consumers.”

Last week, the UK Prudential Regulation Authority issued a letter to UK banks, warning them about the possible risks associated with investing in cryptocurrencies. Sam Woods has published a letter this Thursday, where he has stated that banks, investment, and insurance companies should take steps to be secure against the market volatility and potentially risky investments in the cryptocurrency market. 

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