Crypto-Friendly Banking Service Provider Cashaa Introduces US Dollar Bank Accounts for Companies Dealing in Digital Assets

Cashaa, a cryptocurrency-friendly banking service provider, recently revealed that it’s introducing US dollar bank accounts for companies dealing in digital currencies. The new accounts are being offered through a partnership with Metropolitan Commercial Bank.

Beginning on November 25, 2019, crypto-asset dealers and other high-risk business owners may apply for a US dollar account, which will reportedly come with full banking capabilities and can be accessed from almost anywhere in the world via Cashaa’s platform (with the exception of sanctioned nations).

Janina Lowisz, co-founder and VP marketing, stated:

“As our world is changing, new types of businesses are evolving. Traditional banks currently underserve crypto-related businesses. Our goal is to create a hassle-free experience for all businesses who are building new technologies and business models.” 

Lowisz, who’s also the corporate relations head at Blockchain Summit India, said that adding US dollar accounts is a key milestone for Cashaa and the crypto industry.

More than 800 crypto-related firms have reportedly signed up since the platform’s beta launch in May of this year. Cashaa says it has been quite busy during the past few months, as it has been looking for quick and efficient ways to sign up crypto-related companies. The company’s existing financial services include UK current accounts with a 1 billion GBP limit with Mastercard.

The accounts are regulated by the UK’s financial regulator, the Financial Conduct Authority (FCA).

In order to speed up the onboarding process while lowering the rejection rate of new accounts, Cashaa has established a pre-compliance team. The company did this shortly after Barclays decided it would stop providing banking services to crypto exchange Coinbase.

Archit Aggarwal, chief product officer at Cashaa, stated:

“Our automated process and ability to understand crypto businesses have made us a leader in the European crypto banking space. Our products are designed for startups as well as unicorns in the crypto industry, who are our customers.” 

He added:

“Ever since our pre-compliance team came into action, our onboarding speed has doubled with our UK regulated partner entities. Partnering with a US bank will help us expand our services to the USA as well as provide our existing customers more opportunities.”

Aggarwal also mentioned that Cashaa’s US accounts will be domiciled in the US and will have full access to ACH and SWIFT with no limits. There will be a setup fee of 250,000 CAS, Cashaa’s native digital token.

Customers will be able to take advantage of low transaction fees, priority onboarding, comprehensive risk coverage, higher limits, and customer support.

Cashaa has reportedly signed up hundreds of US-based crypto firms, and the company is hoping that the introduction of US dollar accounts will provide the flexibility companies need to grow their business.

Cashaa also provides a non-custodial cryptocurrency wallet, which has the ability to perform fiat to crypto conversions for Bitcoin (BTC), Ether (ETH), Binance Coin (BNB) and CAS.  Cashaa recently added support for Indian Rupee INR) transactions, which will help Indian crypto traders acquire and sell supported digital assets by using INR. There’s a 10 million INR per month limit on transactions.

UK’s Largest Payday Loan Provider QuickQuid to Shut Down, Despite Thousands of Pending Complaints

The United Kingdom’s largest remaining payday loan company will be shutting down its operations, despite thousands of complaints regarding its lending procedures still unresolved.

Chris Laverty, Trevor OSullivan and Andrew Charters of Grant Thornton were appointed as joint administrators of QuickQuid on 25 October 2019, according to a post on the company’s home page. The company traded at Casheuronetuk.co.uk, Quickquid.co.uk, Onstride.co.uk, and Poundstopocket.co.uk in the UK.

All outstanding loans remain subject to the terms agreed and customers should continue to make payments in the usual way, stated the company.

Administrators are expeced to work closely with the Financial Conduct Authority.  The FCA posted an announcement on its website announcing that the company has gone into administration.

QuickQuid’s parent company, US-headquartered Enova, stated that it’s planning to exit the UK market “due to regulatory uncertainty.”

Customers have filed compensation claims according to a report by BBC, noting that they were issued loans that they were not able to repay.

Notably, QuickQuid is the latest company providing short-term, high-interest loans to shut down due to stricter regulations.

QuickQuid has been the UK’s largest payday loans provider for the last few years. The company was bigger than major local lending firm Wonga even before the latter closed down in August 2018. The Money Shop, another UK lender, also shut down earlier this year.

Kenneth Barker said he took out 11 different loans during a one-year period while working as a bartender in Essex in 2012.

The 28-year-old Leeds resident noted:

“The initial one was for £100. I paid back £160, but then needed a £150 loan to tide me over for the next month. It gradually worsened. To be honest, I knew what I was getting myself into, but sometimes you don’t have any other choice.”

Barker filed a complaint nine months back, noting that he was issued unaffordable loans, and was given £50 in compensation by the firm.

He added:

“I then went to the financial ombudsman. That was accepted and I was offered £2,000. I was told I’d get it within 28 days. I’m hoping I will still get that money. I have no idea how this is going to proceed or whether I will receive this money.”

Although he had to wait before receiving compensation, he acknowledged that he was pleased that a lender such as QuickQuid would be shutting down operations.

QuickQuid is a brand associated with CashEuroNet UK, which also operates On Stride, a longer-term provider of large loans that was previously called Pounds to Pocket.

Enova CEO David Fisher stated:

“Over the past several months, we worked with our UK regulator to agree upon a sustainable solution to the elevated complaints to the UK Financial Ombudsman, which would enable us to continue providing access to credit.”

He added:

“While we are disappointed that we could not ultimately find a path forward, the decision to exit the UK market is the right one for Enova and our shareholders.”

New rules introduced in five years ago have placed strict limits on the interest rates and fees payday lenders may charge clients. There’s also been a large number of complaints from customers, noting that they were mis-sold loans they were unable to pay back.

QuickQuid is reportedly facing around 10,000 outstanding complaints from customers.

The company might be closing down, however, its loans are still valid.

Caroline Siarkiewicz, acting CEO at the Money and Pensions Service, clarified:

“While you may be tempted to stop your repayments, it is crucial to keep to your regular schedule, because if you have entered into a loan agreement you must fulfil it. If you miss any repayments you could be hit by fees and additional charges, and it could also harm your credit rating.”

UK Launched GFIN Expands with Addition of US Regulators; SEC, FDIC, OCC Join Current Member CFTC to Support Global Fintech Mission

GFIN, or the Global Financial Innovation Network, has gained multiple US regulators as members. GFIN now lists the US Securities and Exchange Commission (SEC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC) as members joining the Commodity Futures Trading Commission (CFTC) which joined some time ago.

GFIN is the creation of the UK Financial Conduct Authority – largely regarded as the leading regulator when it comes to embracing Fintech innovation including Regtech. Today, there are 46 individual regulators participating in GFIN. Formally launched in January 2019, GFIN was built on the FCA’s early 2018 proposal to create a global Fintech sandbox.

The concept was discussed in the summer of 2018 as part of a consultation that initially involved regulatory agencies from the US (CFTC), Singapore, Hong Kong, Australian, Canada and more.

In a joint statement, the new US members said:

“U.S. financial regulators have taken proactive steps in recent years to enhance regulatory clarity and understanding for all stakeholders and promote early identification of emerging regulatory opportunities, challenges, and risks. Participation in the GFIN furthers these objectives and enhances the agencies’ abilities to encourage responsible innovation in the financial services industry in the United States and abroad. By promoting knowledge-sharing on innovation in financial services, U.S. members of GFIN will seek to advance financial and market integrity, consumer and investor protection, financial inclusion, competition, and financial stability. Participation in international organizations such as this helps U.S. financial regulators represent the interests and needs of the nation and its financial services stakeholders.

The agencies join 46 other financial authorities, central banks, and international organizations from around the globe that are members of the GFIN to foster greater cooperation among financial authorities on a variety of innovation topics, regulatory approaches, and lessons learned.”

The US operates in a vastly different regulatory environment in contrast to most other jurisdictions. Unlike the UK where most financial services are regulated by a single agency, the FCA, the US has about a dozen federal agencies that touch financial services creating an enormously difficult regulatory ecosystem. This convoluted approach also acts as a hidden tax on society as innovation and change are more difficult to pursue.

Regardless, the addition of the aforementioned US financial regulators is very important for the global Fintech innovation sector.

Bank of England Reports that Machine Learning Methods in Financial Services Could Enhance Business Processes

A report from the Bank of England (BoE) notes that the application of machine learning (ML) methods in the financial services sector could enhance routine business processes. 

Improved software and hardware and increasing volumes of data have enhanced the pace of ongoing ML development, BoE’s report mentioned. The UK’s financial industry is taking advantage of ML technology, which improves the overall efficiency of financial services and markets. 

ML-based systems also make financial systems more accessible and helps to tailor them to specific consumer requirements. Existing risks may increase if governance and controls do not use the latest technology, the report noted. It added that ML also raises questions regarding the use of data, automation of business processes, decision-making, and the complexity of techniques.

The BoE and UK’s financial regulator, the Financial Conduct Authority (FCA), have expressed an interest in the way ML is being used by traditional financial institutions. The BoE and FCA performed a survey this year to gain a better understanding of the use of ML in UK’s financial industry. 

Approximately 300 companies participated in the survey, including major banks, credit brokers, e-money service providers, financial infrastructure firms, fund managers, insurance providers, non-bank lending firms and principal trading platforms. A total of 106 responses were obtained.

The survey asked questions about which type of ML had been deployed, the business areas where the technology would be used and the maturity of applications. The survey also obtained information regarding the technical requirements of different ML use cases. These included how testing and validation was performed on various models, the protection built into the software, the types of data analysis and methods used, and assessments made regarding benefits, risks, complexity and governance.

[easy-tweet tweet=”Machine Learning based systems are increasingly being used in UK’s financial industry. Two thirds, or 66%, of those responding to the survey said they currently use some form of  ML” template=”light”]

While the survey’s results may not be statistically representative of UK’s financial system, they do offer valuable insights.

As noted by the BoE, the main findings from the survey are as follows: 

  • ML-based systems are increasingly being used in UK’s financial industry. Two thirds, or 66%, of those responding to the survey said they currently use some form of  ML.
  • The median company uses live ML-enabled applications in several business areas and this trend is projected to double in the coming years. 
  • ML development has entered the advanced stages of deployment in certain cases. 
  • One third, or 33%, of ML-based programs are used for many different activities in specific business areas. 
  • ML deployment is most advanced in the banking and insurance industry. 
  • ML is used in front and back-offices across a wide range of business areas. 
  • The technology is also used in anti-money laundering (AML), fraud prevention, and customer-facing applications (customer services and marketing). 
  • Some companies use ML for improving credit risk management, trade pricing and execution, and general insurance pricing and underwriting.
  • Regulation is not considered a barrier, however, some companies emphasize the need for clearer guidance on how to apply current regulatory guidelines. 
  • Companies do not believe regulation will prevent or adversely affect ongoing ML deployment. Legacy IT platforms and data limitations could slow down the adoption of ML-based systems. Companies said that additional guidance on how to apply current regulation could help ML deployment.
  • Firms believe ML does not always create new risks, however, it could amplify existing risks. For example, ML applications might not work properly, which may occur if model validation and governance frameworks do not adopt the latest technology.
  • Companies use safeguards to manage risks associated with ML, including alert systems and “human-in-the-loop” mechanisms. These are useful for flagging if the model does not work properly.
  • Firms validate ML applications before and after the are deployed. Validation methods include outcome-focused monitoring and testing against benchmarks.
  • Many companies say that ML validation frameworks must evolve as ML applications begin to scale and become increasingly complex.
  • Companies usually develop ML applications in-house. They may also rely on third-parties for the underlying platforms and infrastructure (e.g. cloud computing).
  • Most of the users apply existing model risk management frameworks to ML applications. However, many note that these frameworks must evolve as ML techniques have become more advanced. 

The BoE and the FCA are planning to create a public-private group to address some of the questions and technical areas discussed in this report.


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UK Financial Conduct Authority Updates on Expectations as Brexit Deadline Nears

The UK Financial Conduct Authority (FCA) has published updated information on the ramifications of Brexit in a no deal scenario.

Currently, the UK is scheduled to exit the European Union on October 31st. Recently, there has been some more positive chatter on negotiations, and the deadline may be extended, but Brexit risk remains front and center at the FCA.

The FCA is advising firms to take “reasonable steps” to comply with post-exit MiFID reporting and EMIR trade reporting requirements.

The FCA states that if the UK leaves the EU without a deal, passporting will end.

Any EEA passporting firm wishing to continue operating in the UK will need to notify the FCA by 30 October that they wish to enter the Temporary Permissions Regime (TPR). Fund managers have until 16 October 2019 to inform the FCA if they want to make changes to their existing notification.

After exit, firms who notified the FCA of their intention to use the TPR will be contacted and provided with a landing slot when they will need to submit their application for full UK authorisation.

Upon authorization, the FCA states that it generally expects “firms to have a physical presence in the UK to help ensure effective supervision.”

Nausicaa Delfas, Executive Director for International at the FCA said:

‘The FCA has been preparing to ensure UK financial services are well placed if the UK leaves without a deal. Today, we have set out steps certain firms need to take – it is important that firms are as prepared as possible if there is a no-deal exit, and that they are aware of what they need to do.”

On MiFID transaction reporting, which is a crucial part of the FCA’s approach to market oversight, firms that are not able to comply fully with the regime at the time of the UK’s withdrawal from the EU will need to be able to back-report missing, incomplete or inaccurate transactions. This should be completed as soon as possible after October 31, 2019.

On EMIR reporting, FCA-registered trade repositories (TRs) should be ready to receive reports from UK reporting counterparties and be in a position to share these with UK authorities. FCA-registered trade repositories must ensure the migration of outstanding trades and historic EMIR data, and that the details of any trades newly concluded, terminated or modified by UK reporting counterparties on 1, 2, and 3 November 2019, are embedded in their systems. These need to be available for UK authorities by 4 November 2019.

UK reporting counterparties should ensure details of derivative transactions that are concluded, terminated and/or modified on 30 and 31 October 2019 which cannot be reported before the point of exit, are reported to an FCA-registered TR by no later than 4 November 2019.

The FCA has a dedicated webpage to inform firms on Brexit.

World Federation of Exchanges Ask UK Regulators Not to Ban Crypto Derivatives

An advocacy group representing mainstream stock exchanges and clearinghouses from around the globe, the World Federation of Exchanges (WFE), has asked the UK’s Financial Conduct Authority (FCA) not to ban cryptocurrency derivatives products aimed at retail investors.

In a consultation paper issued by the FCA in July, the regulator stated:

“(W)e consider that retail consumers cannot reliably assess the value and risks of derivatives and exchange traded products that
reference certain cryptoassets…due to the…

  • nature of the underlying assets, which have no inherent value…
  • presence of market abuse and financial crime (including cyberthefts from cryptoasset platforms)…
  • extreme volatility in cryptoasset prices…
  • inadequate understanding by retail consumers of cryptoassets…
  • lack of a clear investment need for investment products referencing them.”

Finalized FCA rule changes that may include a ban will be announced in early 2020.

The WFE says that when it was consulted by the FCA regarding measures designed to protect consumers investing in cryptocurrencies:

“(T)he WFE emphasised its desire to help find the right balance between enabling innovative products to be traded in the UK, and ensuring that they are sold responsibly, by fully regulated providers.”

In the WFE’s statement regarding its opposition to a ban, WFE CEO Nandini Sukumar distinguished WFE member exchanges from, “unregulated providers distributing inappropriate products.”

She said the exchanges she represents, “are best placed to deliver these products and support the developing marketplace. We ask that authorities, including the FCA, chart the right regulatory course to allow the market to flourish and benefit its consumers even as we understand that it’s a balancing act.”

What Sukumar does not mention is that cryptocurrencies are traded on a great number of unregulated exchanges now, and may be forever, given that they can be traded in any jurisdiction over the Internet. This “uncensorable” feature of crypto is what many traders are interested in.

Global anti-money laundering watchdog, the FATF, has transmitted guidelines for regulating the crypto sector to its 38 member states. These should improve conditions in crypto spot markets.

Still, popular exchanges could easily locate outside FATF jurisdictions, and enforcement regimes have yet to be established.

The WFE also asked the FCA to apply “caution” when it comes to, “applying the same measures to exchange-traded and centrally cleared derivatives as to underlying crypto-asset markets, as this could create unintended consequences.”

Any ban should be subject to review, “as the market evolves,” the WFE contended:

“This review is also designed to avoid international market fragmentation, particularly if international standard setters introduce a new global regulatory approach to the regulation of crypto assets.”

The US Securities and Exchange Commission has also expressed concerns about the integrity of crypto spot markets when addressing applications from firms eager to bring crypto derivatives such as futures and ETFs to the retail market.

The CFTC (Commodity Futures Trading Commission) has been somewhat more comfortable, and crypto futures can now be traded by retail investors in the US.

Any honest party with years of crypto trading experience will admit that market manipulation was and often still is par for the course, especially when it comes to small-cap cryptos.

Many chat groups and message app channels were created for the express purpose of manipulating crypto prices in coordinated pump-and-dump schemes.

Many of these groups likely formed in response to the action of “whales” (big holders) known to be manipulating cryptos. In early crypto especially, if you weren’t in on the pump, you were probably getting a haircut.

But once derivatives became available, the game developed a new dimension.

A twitter account called REKT (“rekt” is a crypto-slang term for liquidated) tracks traders losing their shirts on Bitmex, a crypto exchange that offers up to 100x margin crypto trades to retail.

Crypto skeptic David Gerard, author of Attack of the 50-Foot Blockchain, describes one aspect of crypto market manipulation as follows:

“You’ll frequently see the price of Bitcoin suddenly go up or down several hundred dollars in a few minutes. This seems to coincide closely with derivatives traders getting liquidated.”

“You’ll see charts where the price goes up several hundred dollars in minutes, hovers there for a few hours, then goes down several hundred dollars in a few minutes. This makes a formation that Bitcoin traders call a ‘Bart’ because it looks like Bart Simpson’s haircut.”

“Now, we don’t *know* this is caused by someone trying to liquidate margin traders. But every time it happens, it *coincides* with a margin trader liquidation.”

“We had the one in May, where the price on Bitstamp dropped $1600 in a few minutes. This would have cost someone about $40 million in Bitcoins. Coincidentally, this price drop would have wrecked about $250 million of long margin bets – bets that the price would go up – on BitMEX.”

“We saw the same thing a week or two ago, when the price suddenly dropped by a couple of thousand dollars – and this liquidated about $650 million of long margin bets on BitMEX.”

“As long as it costs less to rig a bet than you can make from the bet, this is going to keep happening.”

“And this works even if Bitstamp and BitMEX are totally above-board – it’s built into the market structure. Because Bitcoin is really thinly traded, so the price is easily manipulated.”


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Report: UK’s Financial Conduct Authority is Reviewing P2P Lenders After High Profile Failures

UK’s financial regulator, the Financial Conduct Authority (FCA), is currently investigating the operations of several peer-to-peer (P2P) lenders after discovering various failures or instances of non-compliance ahead of the implementation of stricter regulations this year, according to a report in the FT.

Last week, the FCA issued a warning to lenders according to the report, noting that the agency would “intervene strongly and rapidly where we see evidence of non-compliance”. 

P2P lending services assist borrowers by matching their requests with third parties, including retail investors or institutions, who finance their loans. The P2P lending industry expanded rapidly during the financial crisis with support from regulatory authorities and politicians. However, the FCA is now increasing its oversight of the sector after the agency was criticized over how it handled the failure two high-profile companies.

Property finance dealer Lendy collapsed in May of this year following months of warnings regarding its increasing default levels and poor underwriting. The mismanagement of Lendy’s business could lead to investors losing millions of dollars. The company’s failure came after Collateral closed down in 2018 due to various problems including operating without the proper FCA licence.

At that time, the FCA announced:

“The Collateral Companies operated a peer-to-peer lending platform through a website (collateraluk.com) and Collateral UK Ltd purported to hold an interim permission from the FCA to carry on regulated activities. In fact, none of the Collateral Companies held any valid authorisation or permission to carry on regulated activities. When challenged by the FCA, the Collateral Companies agreed to cease their lending activities and, on 26 February 2018, the lending platform became inoperative.”

Stricter regulations to reduce marketing activities and improving governance are expected to be enforced in December of this year. However, the FCA noted in its letter that it has already begun conducting reviews of several failings. The agency cited concerns regarding property lending, where it is currently investigating the quality of services on several platforms.

The FCA noted that it’s “engaging” with several firms that had made significant changes to their business operations without notifying the agency. The regulator will also be reviewing “the adequacy of a number of firms’ financial resources.”

Paul Smee, chairman of the P2P Finance Association (P2PFA), which represents some of the UK’s largest lenders, noted the industry was an important part of the UK economy, as it provides funding to local startups and small businesses. 

Smee remarked:

“I think some of the comments of the regulator are as though we’re a one-size-fits-all sector when clearly we’re not . . . That’s not to say there aren’t issues that need to be addressed by some platforms . . . [but] I would certainly say that the sort of business our lenders are doing is sensible and very transparent.”

Fintech Emma Says Some Banks are Not Meeting Open Banking Rules

Beginning September 14, 2019, European Union rules regarding “Strong Customer Authentication” (SCA), part of PSD2, kick in. These rules, which also impact the UK, involve the way in which banks or payment services providers verify their customers’ identity and validate specific payment instructions. Mandated API access must be implemented by the same date.

The UK Financial Conduct Authority (FCA) has recently agreed to an 18-month plan to implement SCA with the e-commerce industry of card issuers, payments firm, and online retailers. The plan is said to reflect the opinion of the European Banking Authority (EBA) which set out that more time was needed to implement SCA given the complexity of the requirements, a lack of preparedness and the potential for a significant impact on consumers.

The EBA also said:

“… the EBA is legally not able to postpone an application date that is set out in EU law. The Opinion also explains that sufficient time has been available for the industry to prepare for the application date of SCA, given that the definition of SCA had been set out in PSD2 when it was published in 2015, which gave clear indications that existing authentication approaches would need to be phased out, and because PSD2 already granted an additional 18-month period for the industry to implement SCA.”

Apparently, an extension by the FCA has been given for API access as well.

According to Emma App founder and CEO Edoardo Moreni, UK banks RBS, Natwest and HSBC are currently not meeting Open Banking rules. Emma is an App-based Fintech that helps consumers better manage their money and benefits by leveraging access to mandated bank APIs under Open Banking rules.

“The news is that RBS, Natwest and HSBC have just enforced Strong Customer Authentication and are not providing API access to several accounts (Open Banking),” Moreni told Crowdfund Insider. “In the case of RBS & Natwest, savings accounts are not coming through. In the case of HSBC, they are not giving us credit cards.”

Moreni says this is putting at serious risk every business like Emma (Yolt, Plum, Chip, MoneyDashboard) that connects directly to bank accounts. Moreni adds that he is concerned about losing customers.

Moreni said they have already filed several claims with the FCA.


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Robinhood Receives FCA Authorization to Operate in the UK; Appoints Wander Rutgers As President

U.S. fintech Robinhood announced on Wednesday it received authorization from the Financial Conduct Authority (FCA) to operate as a broker in the UK. According to Robinhood, the authorization will enable us to bring its investing platform to customers in the UK and is a “critical step” to achieve our mission of democratizing finance for all.

Along with the authorization, Robinhood also announced it has appointed Wander Rutgers as the new President of Robinhood International. Rutgers will be responsible for leading the UK business and oversee Robinhood’s new London office.

“Wander has a deep background in fintech, joining us from Plum, where he spearheaded the investing and savings product. Before that, Wander led product, compliance, and operations teams at TransferWise, and was instrumental in expanding into new markets.”

Speaking about his new position with the company and the FCA authorization, Rutgers stated:

“Today marks the beginning of a new chapter for Robinhood, and we’re excited to take the first important step towards bringing our investing platform to customers in the U.K. I’m thrilled to be a part of Robinhood and our effort to expand into a new international market.”

Founded in 2013 and publicly launched in 2015, Robinhood is on a mission to democratize finance for all. The company noted it believes its financial system should work for everyone and not just a few.

“We offer commission-free trading for stocks, ETFs, options, and cryptocurrencies. Democratizing our financial system. Securities by Robinhood Financial (Member SIPC). Crypto by Robinhood Crypto (licensed by NY Dept. Financial Services).”

UK Financial Conduct Authority Provides Final Guidance on Cryptoassets: Better Defines Utility Tokens

FCA: “any token that is not a security token, or an e-money token is an unregulated token.”

The UK Financial Conduct Authority (FCA) has published its much anticipated final guidance on cryptoassets following a feedback period on prior commentary. The FCA has now established which sector of crypto is regulated by the authority and which digital assets fall outside their remit. The FCA said the majority of respondents had supported their previous proposals on a regulatory approach. Additionally, the agency noted that few changes had been made since the prior document with the exception of “reframing” the taxonomy of cryptoassets to provide greater clarity for firms operating in the sector.

The FCA said that 92 different firms and individuals provided feedback ranging from big banks, to crypto exchanges, issuers, and individuals.

The FCA provided an important caveat stating the Guidance should act as a first step for market participants to understand whether authorization is required and should be read in conjunction with PERG [Perimeter Guidance Manual]. Where market participants are unsure and require regulatory feedback, Innovate support functions such as the Sandbox or Direct Support can provide this help for requests that meet the eligibility criteria for support. Market participants should also consider obtaining appropriate external advice.

[easy-tweet tweet=”E-Money and security tokens fall under FCA regulation but everything else, depending on the specific characteristics of the cryptoasset, do not fall under the watchful eye of the UK regulator” template=”light”]

The Guidance follows a report published last fall from a crypto task force which included HM Treasury, the FCA and the Bank of England.

In an accompanying release, FCA Executive Director of Strategy and Competition Christopher Woolard stated:

“This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter.”

The FCA advised consumers to remain cautious on the emerging sector of Fintech due to intrinsic risk noting that unregulated cryptoassets fall outside the Financial Compensation Scheme and there is no recourse to the Financial Ombudsman Service.

Digital assets, as defined by the FCA, fall within four separate categories.

  • Specified investments under the Regulated Activities Order (securities)
  • e-money under the E-Money Regulations
  • captured under the Payment Services Regulations
  • outside of regulation

Regarding specific token types, the FCA updated the previous delineations as outlined below:

  • Security tokens: this category does not change materially from the Guidance that we consulted on and refers to those tokens that provide rights and obligations akin to specified investments as set out in the RAO, excluding e-money. We have now specifically removed e-money from the definition of a security token, to create a separate category. These remain within the regulatory perimeter.
  • E-money tokens: this category refers to any token that reaches the definition of e-money. These tokens are subject to the EMRs and firms must ensure they have the correct permissions and follow the relevant rules and regulations. This category formerly sat within the utility tokens category. These tokens fall within regulation.
  • Unregulated tokens: this category refers to any token that does not meet the definition of e-money, or provide the same rights as other specified investments under the RAO. This includes tokens referred to as utility tokens, and exchange tokens.
    • These tokens can, for example, be issued centrally or be decentralised, give access to a current or prospective good or service in one or multiple networks and ecosystems, or be used as a means of exchange. They can be fully transferable or have restricted transferability. These tokens fall outside the regulatory perimeter.

Bitcoin Unregulated?

While “exchange tokens” were deemed not to be regulated by the FCA, the report noted that “5AMLD” will bring in an anti money laundering (AML) regime for cryptoassets including exchange tokens. 5AMLD is the Fifth Anti-Money Laundering Directive by the European Union that is an enhancement of existing rules (4AMLD). 5AMLD has provisions for virtual currencies and EU member states must implement provides by January 2020. While exchange tokens like Bitcoin may not be directly regulated, firms using these tokens on either side would be subject to Payment Service Regulations (PSRs).

Regarding stablecoins, some of which are backed by fiat currency such as US dollars or British Pounds, the FCA had this to say:

“…not every ‘stablecoin’ will meet the definition of e-money, or a security token.”

E-money tokens are tokens that meet the definition of electronic money in the EMRs. That is:

  • electronically stored monetary value that represents a claim on the issuer
  • issued on receipt of funds for the purpose of making payment transactions
  • accepted by a person other than the issuer
  • not excluded by regulation 3 of the EMRs [E-Money Regulations]

Exchange tokens as they fall outside the FCA regulatory perimeter. This means that the transferring, buying and selling of these tokens, including the commercial operation of cryptoasset exchanges for exchange tokens, are activities not currently regulated by the FCA. If you are a crypto exchange that deals in Bitcoin, Ether, etc. you are not carrying out a regulated activity.

A Security is a Security But it Still Depends…

To quote the FCA:

“For our taxonomy, we specifically refer to security tokens as only those that reach the definition of specified investments under the RAO. The category has been slightly amended to specifically exclude e-money from this definition.”

The RAO references the Regulated Activities Order as defined by the Financial Services and Market Act legislation. The FCA Guidance is the first step but “definitive judgments can only be made on a case-by-case basis.” This is indicative of ongoing ambiguity within the crypto sector.

Utility Token Clarity

Utility Tokens are unregulated tokens that do not provide rights or obligations akin to specified investments (like shares, debt securities and e-money). While Utility Tokens remain unregulated this may change but only by an act of legislation, according to the FCA. HM Treasury is said to be reviewing this issue.

Utility tokens may be centrally issued, decentralized, primarily used as a means of exchange, or grant access to a current or prospective product or service. They might be used in one or many networks or ecosystems. They can be ‘privacy tokens’, ‘fungible utility tokens’, ‘non-fungible tokens’, ‘access tokens’ etc. They can be fully transferable or have restricted transferability.

The FCA states that “the key thing to note is that any token that is not a security token, or an e-money token is an unregulated token.”

Of note, the FCA states that Utility Tokens may trade on a secondary market and change in value. This is key as this allows for speculation by purchasers.

The Guidance as provided by the FCA differs dramatically from that of the US but is similar in nature to some European countries.

In the US, any token issued in advance of a fully-fledged, operational network would be considered a security. Once the network is live it can morph into something else. A token that can trade at a variable price due to market forces regardless of any utility nature would be deemed a security in the US – in stark contrast to the Brits. Perhaps, the FCA had France in mind when allowing non-security tokens to trade on exchanges as the French Pacte Law (Loi Pacte) provided clarity on utility tokens.

While the Guidance is “final” that does not mean it will not change. As indicated above, action by Parliament could impact the ecosystem.

The FCA explains:

“… as the cryptoasset market evolves, we need a flexible approach to ensure our regulation remains accurate and appropriate.”

E-Money and security tokens fall under FCA regulation but everything else, depending on the specific characteristics of the cryptoasset, do not fall under the watchful eye of the UK regulator.

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See the FCA Cryptoasset Final Guidance below or download it here.


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TokenMarket Closes Own STO at £240,000

TokenMarket, a Fintech operating under the watchful eye of the Financial Conduct Authority (FCA) Fintech Sandbox, has completed its first security token offering (STO) for equity in the firm. TokenMarket set an initial funding goal of £150,000 but had stated it would have accepted several million pounds.

In an email TokenMarket distributed, the company explained its next steps:

“Now our raise has been completed, we are working with the UK’s Financial Conduct Authority (FCA) to review the final stages of the STO. We hope to graduate the sandbox test environment in the coming weeks and achieve our full FCA license.

For those who invested in the TokenMarket STO, your security tokens will be distributed in the coming weeks. In order to make sure that you are ready to receive your TokenMarket tokens, we have prepared a short video for you to set up your wallet.”

TokenMarket said it has “a lucrative pipeline of STOs already lined up.”

 

TokenMarket Security Token Offering Scheduled to Close on Monday

TokenMarket, part of the UK Financial Conduct Authority Sandbox program, is scheduled to close its own security token offering (STO) this coming Monday (July 22nd).

TokenMarket launched its STO in early July seeking a max amount of £2 million. As it stands today, TokenMarket has raised £235,000 – eking past its £150,000 hurdle.

In February, it was reported that TokenMarket would seek initial a far higher amount in its own STO.

According to an email distributed by TokenMarket, the offering will be followed by an FCA review:

“Following the close of our STO, we will demonstrate to the UK Financial Conduct Authority (FCA) that tokenised equity can be written to the blockchain, and aim to exit the sandbox successfully.”

TokenMarket seeks to create a robust primary issuance platform for digital assets. The company is incorporated in Gibraltar, a crypto-friendly jurisdiction. The company has applied for a DLT license with the Gibraltar Exchange.

After its self-crowdfunding round, TokenMarket says it has a handful of other issuers in the queue.

The inevitable digitization of securities is a grand experiment that will take years to play out. The FCA is helping move the process along by keeping a watchful, yet supportive, eye on compliant firms keen on being a part of this transition. It will be interesting to see how TokenMarket’s offering does and how forthcoming issuers perform.

Here is the FCA Consultation Proposing the Ban of Cryptoasset Derivatives for Retail Investors

Earlier this month as previously reported, the UK Financial Conduct Authority (FCA) proposed a ban on the sale of both derivatives and exchange-traded notes (ETNs) based on “certain types of cryptoassets.” The announcement of the proposed ban kicked off a consultation, embedded below, for feedback from interested parties that is scheduled to close this coming October. A final policy statement and final Handbook rules is expected in early 2020.

The FCA states they are “seeking to reduce the harm to retail consumers caused by the sale of derivatives and ETNs referencing unregulated transferable cryptoassets.” The proposed ban is estimated to save consumers from a loss of between £75 million and £234.3 million.

It is interesting to note that the UK market for crypto is “remains small” in contrast to other jurisdictions, exhibiting “limited trading volumes.” This could be due to the fact that the UK has already fostered a robust online capital formation market and boasts the most effective crowdfunding market today.

The FCA is looking to create specific rules to:

“ban the sale, marketing and distribution of derivatives and ETNs that reference certain types of unregulated, transferable cryptoasset to all retail clients by firms in, or from, the UK.”

The FCA is in the midst of a broader digital asset consultation with results of the process expected to be released within the next couple of weeks.

The final Guidance by the FCA will seek to allow firms to understand whether certain cryptoassets are regulated. The guidance hopes to provide regulatory certainty protecting consumers.


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First Crypto Hedge Fund, Prime Factor Capital, Approved by FCA in UK

Prime Factor Capital, “an asset manager that specialises in cryptocurrencies,” has been licensed by the Financial Conduct Authority (FCA), the region’s financial regulator, to operate as a “full-scope” Alternative Investment Fund Manager (AIFM).

The London-based firm believes it is the first cryptocurrency fund to be so authorized.

Prime Factor Capital has also been approved as a depositary (possibly a regulated custodian of crypto assets) “as required by AIFM Directive (AIFMD).”

According to the firm:

Depositaries provide an additional layer of protection
to investors by providing independent fund oversight, asset ownership verification, and cashflow monitoring.”

Prime Factor CEO Nic Niedermowwe called the licensing, “a significant milestone… for the industry as a whole.”

He added that the FCA’s approval will likely reassure the public, which has been privy to many stories of malfeasance involving cryptocurrencies:

“Being FCA-regulated brings us under the purview of one of the most recognised financial markets regulators globally. This is particularly relevant in the cryptocurrency space, which has repeatedly captured headlines for poor operating standards and even fraudulent activity. Investors need to be able to trust their managers not only to generate returns, but also to act responsibly and in their best interest.”

Prime Factor COO Adam Grimsley said the firm will be held to scrupulous standards:

“Full-scope AIFMs are subject to heightened transparency, disclosure and reporting requirements, in addition to a number of other obligations. We are pleased to be able to offer institutional investors with a suitable investment vehicle to deploy capital to this emerging asset class with its unique risk-return profile.”

Prime Factor Capital says its team is comprised of “seasoned professionals” drawn from firms such as Blackrock, Legal & General, Deutsche Bank, and Goldman Sachs.

Together, the staff combines, “decades of experience in
the financial services industry managing complex investment portfolios and structuring bespoke customer solutions…”

According to Payments.com, “The firm will follow European regulations and be allowed to manage more than 100 million euros ($113 million) in assets and target institutional investors.”

 

Ban Hammer: UK Financial Conduct Authority Proposes Prohibition of Crypto Derivatives

The UK Financial Conduct Authority (FCA) has proposed a ban on the sale of both derivatives and exchange-traded notes (ETNs) based on “certain types of cryptoassets.”

This ban will impact retail investors.

As part of the decision-making process, the FCA has commenced a public consultation on a ban.

The FCA believes these types of crypto-derivatives may cause harm to retail consumers. The financial regulator said “these products are ill-suited to retail consumers who cannot reliably assess the value and risks of derivatives or ETNs that reference certain cryptoassets (crypto-derivatives).

The FCA stated this is due to:

  • Inherent nature of the underlying assets, which have no reliable basis for valuation
  • The prevalence of market abuse and financial crime in the secondary market for cryptoassets (eg cyber theft)
  • Extreme volatility in cryptoasset price movements, and
    inadequate understanding by retail consumers of cryptoassets and the lack of a clear investment need for investment products referencing them

The FCA’s consultation proposes a prohibition on the sale, marketing, and distribution to all retail consumers of all derivatives (ie contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable cryptoassets by firms acting in, or from, the UK.

The FCA said a ban will create a potential relief for retail consumers of between £75 million to £234.3 million a year.

Christopher Woolard, Executive Director of Strategy & Competition at the FCA, stated:

‘As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers. These are complex contracts built on top of complex assets.

Woolard added that most consumers cannot reliably value derivatives based on unregulated cryptoassets.

“Prices are extremely volatile and as we have seen globally, financial crime in cryptoasset markets can lead to sudden and unexpected losses. It is therefore clear to us that these derivatives and exchange traded notes are unsuitable investments for retail consumers.”

The FCA is currently in the midst of a broader consultation regarding digital assets. The document will be published later this summer.

Yesterday, in a speech delivered at Cambridge University, Woolard shared the FCA’s evolving approach to the issuance and utilization of “stablecoins.”

UK Financial Conduct Authority Addresses Topic of Stablecoins Providing Insight into Regulatory Approach

In a speech presented today by Christopher Woolard, Executive Director of Strategy and Competition at the UK Financial Conduct Authority (FCA), the regulator addressed the hot topic of “stablecoins.” The speech was delivered at the annual Cambridge Centre for Alternative Finance conference which saw regulators from all over the world visit the Judge Business School at Cambridge University to discuss emerging Fintech innovations and the future of finance.

Earlier this month, Facebook announced the creation of a stablecoin labeled “Libra.” Facebook’s spin on crypto is designed to become a global payment platform removing much of the intrinsic friction and cost associated with existing payment rails.

The Facebook stablecoin is a “basket of assets” designed as a type of corporate currency which will hold a relatively consistent value. Additionally, Libra’s blockchain is able to create smart contracts similar to Ethereum – currently, the most popular blockchain for creating utility type features for the cryptosphere.

Woolard provided an interesting perspective from the FCA, globally viewed as the most innovative regulator when it comes to Fintech innovation.

Woolard said the term “Stablecoin” has been widely adopted by the crypto industry as a distinct sector of cryptoassets. He noted that depending on the characteristics of an individual stablecoin, it could, or may not, sit within the FCA’s regulatory perimeter.

“As has been widely reported, along with other regulators and central banks, we have been discussing their plans with Facebook. If this comes to fruition, Libra could be very significant indeed,” stated Woolard. “It will pose questions for us as a regulator. It will pose questions for our colleagues at the Bank of England. It will pose questions for us working with our international partners. Moreover, its size and scale will pose questions for society and government more generally about what is acceptable and desirable in this space.”

Woolard said the term stablecoin is a “broad term” which encompasses a variety of cryptoassets. Some may be pegged to a single fiat currency, others linked to an asset like gold, or perhaps defined by an algorithm. Regardless, the FCA looks at each crypto individually to determine its makeup before determining their regulatory approach.

A stablecoin could constitute e-money if it meets the definition provided in the Electronic Money (e-money) Regulations.

A “stablecoin” could fall between regulatory categories. Because of this, the FCA questions the accuracy of the label.

If a cryptoasset is e-money then the issuer needs to be authorized as an e-money issuer and needs to comply with all relevant requirements under the E-Money and Payment Services Regulations.

If a stablecoin is algo-driven it would need to be judged on its characteristics. Or perhaps it may be considered a regulated product such as a collective investment scheme. It simply depends.

“Volatility and stability are important concepts, but they are relative in nature,” said Woolard. “Whilst a wobbly tripod is seldom a good thing in the world of wildlife photography, ’volatility‘ in financial services is completely context-dependent.”

He said that FCA does not have criteria for endorsing the stability of any cryptoasset.

“What is this thing, why is there a new term and what problem is it trying to address? Who is it for – wholesale banks or retail consumers? Is it within our regulatory scope or outside? Is this really an innovation or just something old in a new, flashy wrapper?”

Woolard said the FCA reviews each question as to the benefit to consumers or how it impacts competition. The agency also questions if there is harm created due to increased risks or complexity.

“In short, we seek to consider any cryptoasset, including those labeled “stablecoin,” on a case-by-case basis and we encourage both consumers and firms to do likewise.”

Additionally, does the “stablecoin” adhere to international regulatory standards such as AML and KYC. An important question, especially in light of the recent FATF guidance for VASPs.

The FCA is nearing the end of a consultation on cryptoassets. The comments have been received and the regulator is correlating them now. The final response will be forthcoming shortly as the FCA provides additional clarity regarding their regulatory approach when it comes to crypto.

In the end, the FCA does not accept the stamp of stablecoin at face value. A smart approach.

Recent events at Tether, the largest stablecoin by market cap, uncovered glaring shortcomings in the sector which begs for more stringent regulation.

This will hold true for any aspiring stablecoin including Facebook’s attempt to create its own version of a Euro type basket of assets. Libra is a crypto that can expect stiff regulatory challenges. While moving fast and breaking things can drive change it also forces regulators to slow things down.

“When considering these changes as regulators we need to be ready to lean in, to experiment, learn and adapt, but always be ready to protect consumers, competition and market integrity,” Woolard said, “… In other words, we, ourselves need to go behind the scenes.”

 

UK Government Looks to Insurtech to Help Low Income Renters

HM Treasury and the Financial Conduct Authority (FCA) recently organized a workshop on assisting low-income renters. Predicated on the fact that rental insurance has “very low take-up” amongst a lower demographic, Treasury and the FCA invited multiple firms to attend an “Access to Contents Insurance Innovation Workshop.”

The officials believe that the ideas generated will help the industry to design better products for low-income consumers.

Hosted by L39, the workshop reportedly saw product specialists from across the financial services sector (including insurers, brokers, and Insurtechs) join to explore how tech may help deliver more valuable outcomes for low-income consumers.

Commenting about the initiative, Economic Secretary to the Treasury, John Glen, stated:

“The UK is leading the world when it comes to innovation in the insurance industry. There are over 120 Insurtechs registered in the UK, which are fundamentally changing the way that customers interact with insurers and transforming the way the insurance industry is perceived. With such low uptake of contents insurance by low-income renters there is a clear opportunity for innovative new approaches to this area that will help some of society’s most vulnerable people.”

According to the organizers, the event focused not on digitizing existing insurance products but explored new products which may have the ability to increase insurance coverage.

A panel of judges selected the best solutions.

The Judges included:

  • Gwyneth Nurse (Financial Services Director – HM Treasury)
  • Chris Woolard (Executive Director of Strategy and Competition – FCA)
  • Caroline Wayman (Chief Ombudsman – Financial Ombudsman Service)
  • Sophie Winwood (Associate – Anthemis)

Two winners were selected. The first was “biggest credible impact on the market” and the second was the idea with the “most innovative approach.”

The winner for impact came from team “Simple Sure.”

Their concept offered a price first, no questions asked insurance product targeted at small, local, and underinsured communities, using B2B marketing to sell the product at key touchpoints in the communities.

The winner of the most innovative approach was from “Retro.” Their idea was for loss-specific loans targeted at gig economy workers.

FCA Competition Director Christopher Woolard Testifies before House Committee Fintech Task Force

Financial Conduct Authority (FCA) Director of Competition Christopher Woolard testified before the House Financial Services Committee Fintech Task Force today.

The other witnesses participating in the hearing included:

  • Paul Watkins, Assistant Director, Office of Innovation, Consumer Financial Protection Bureau (CFPB)
  • Beth Knickerbocker, Chief Innovation Officer, Office of the Comptroller of the Currency (OCC)
  • Valerie Szczepanik, Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation, Securities and Exchange Commission (SEC)
  • Charles E. Clark, Director, Department of Financial Institutions, State of Washington, on behalf of the Conference of State Bank Supervisors (CSBS)

The newly formed Task Force is designed to seek out solutions to encourage benevolent innovation in the financial services sector.  Announced by House Financial Services Committee Chairwomen Maxine Waters in May, the bipartisan Committee will hold hearings for legislators to better understand innovations in financial services.

Woolard, as a member of the leading global regulatory body when it comes to facilitating Fintech, provided valuable non-US perspective to committee members. As the regulatory ecosystem is less fragmented in the UK, the two jurisdictions can generate a good amount of contrast. The UK is widely recognized as the gold standard in embracing change.

In the US, financial services must submit to a dozen or so federal regulators as well as 50 different state regulators which are loathe to reduce any of their political influence. The US regulatory system is convoluted and Byzantine at its best.

In the UK, the FCA is the lead regulator when it comes to much of the financial services industry acting as a point of focus for innovation.

While Woolard’s opening testimony was brief, he provided the below presentation for Committee members to review.

A handful of other US federal regulators, besides the four mentioned above, were unable to attend.


As the Lines of Financial Services Blur, the UK Financial Conduct Authority is Doing a Consultation on a “Cross Sector Sandbox”

While it is a fact we all need bank-like services it is also true we do not necessarily need a traditional bank. The digitization of finance has liberated the masses from paper driven, brick and mortar operations to the bank of the iPhone (or Android for that matter).

Financial services are quickly becoming ubiquitous.

Technology is at its best when it is simple to use, and available at the moment of need, but otherwise remains unobtrusive. The same holds true for Fintech.

Perhaps the best examples today of this phenomenon are full stack Fintechs such as Alibaba and Tencent. From payments to credit to wealth management – it’s all there. But these companies are not banks.

Facebook’s Libra is an effort to leapfrog the Chinese innovators by providing a decentralized financial service ecosystem creating a central bank of Facebook for retail customers. Borderless and integrated into your daily existence.

The UK Financial Conduct Authority (FCA) has recognized this fast emerging trend and launched a consultation on the possibility of creating a “cross-sector sandbox” to better understand this systemic change.

The FCA states:

The financial landscape is changing. Technologies such as Artificial Intelligence (AI) and Distributed Ledger Technology (DLT) are affecting the way consumers, firms and regulators interact. Access to, and usage of, data is fundamental, underpinning both products and services. These changes prompt us to think about how we respond as a regulator to ensure financial markets can benefit from such innovation, while advancing our statutory objectives of market integrity, consumer protection and competition.

The FCA recognizes the “increasing fluidity with which products and services are being offered.”

The regulator is curious, and concerned, as to how this will impact consumers, as well as to how their role will be altered in the future.

The FCA seeks to ensure innovation and competition can flourish while markets work as they should and consumers are protected. However, the shifting sands of innovation mean overlapping responsibilities amongst agencies with oversight of various sectors of industry.

Launched last month, this consultation is open until August 30, 2019.

This is an interesting pursuit and unique to the financial regulatory world. Credit, where credit is due – kudos to the FCA for tackling such a topic in public.


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TokenMarket Receives Approval From FCA to Run Security Token Offering in Regulatory Sandbox

TokenMarket, a UK-based global investment platform, announced on Monday it has received approval from the FCA to run its Security Token Offering (STO) in the regulatory sandbox. According to TokenMarket, the offering is being conducted under existing UK crowdfunding rules, allow for up to €8 million raised before the company has to do a prospectus. The company is reportedly seeking £2 million, with 964 interested parties.

As previously reported, TokenMarket was officially accepted by the FCA into the organization’s regulatory Fintech Sandbox in July 2018. The TokenMarket STO is notably claimed to be the “first of its kind” in the UK. Since the company was founded at the end of 2016, it has reportedly helped to raise £240 million for 30 start-ups, which includes utility token offerings such as Storj, Fetch.ai, Civic, Dent, and Crypto.com. The company revealed:

“Today’s FCA’s approval is a critical step in securing a regulated and compliant ecosystem for STOs, a cheaper, easier way for companies to raise money. Once TokenMarket has completed its STO and exited the sandbox the Company will be able to organise STOs for UK and international companies looking to source growth finance by tapping TokenMarket’s pool of 170,000 investors.”

Also speaking about the approval, Ryan Hanley, Managing Director of TokenMarket, stated:

“We are delighted to announce the FCA’s approval for our STO, with the launch expected imminently. We look forward to exiting the sandbox, completing our fund raise and tokenised equity issuance, and then cracking on with launching STOs for other ambitious businesses. Access to finance is still a big issue for SMEs- it remains difficult and expensive, and this is holding back economic growth, and job and wealth creation.”

Hanley went on to add:

“We hope our own STO can demonstrate that you can use blockchain technology to transform the way capital is raised. At the same time, we want to offer our wide and deep pool of international investors the type of exciting investment opportunities that were previously closed off to them. We believe STOs promise nothing less that the transformation and democratization of capital markets.”

Earlier this year, the FCA issued a consultation on cryptoassets in order to provide clarity on the regulatory approach. The consultation was notably part of the UK Cryptoasset Taskforce’s recommendation for the FCA to provide additional guidance on the regulatory perimeter. The FCA is expected to publish a set of rules for cryptoassets this upcoming summer. Christopher Woolard, Executive Director of Strategy and Competition at the FCA, revealed at that time:

“This is a small but growing market and we want both industry and consumers to be clear what is regulated, and what isn’t. This is vital if consumers are to know what protections they’ll benefit from and in ensuring we have a market functioning as it should.”

Meanwhile, France is also moving forward to embrace blockchain technology, as well as the issuance of digital assets, by creating a regulatory regime that supports the issuance of utility tokens. This news comes around six months after the French Government issued a decree (Décret n°2018-1226 du 24 décembre 2018) outlining a portion of the utilization of blockchain for securities. It was reported that in regards to initial coin offerings (ICOs) the country took a rather unique step to draft legislation to support token issuances that are not deemed to be a security.