Globacap, a graduate of the Financial Conduct Authority's (FCA) regulatory sandbox scheme, announced on Monday the launch of a fully-regulated digital securities and administration platform.

The fintech offering is the first such exchange to operate in the UK under the regulatory guidelines of the FCA following its testing period inside the regulator’s sandbox.

The sandbox allows fintech firms to test products and services on a smaller scale in a controlled environment with real customers. The FCA believes the scheme has several benefits it can provide firms:

  • Reduced time to market at potentially lower costs
  • Support in identifying appropriate consumer protection safeguards to build into new products and services
  • Better access to finance
  • Tools such a resticted authorisation, individual guidance and informal steers

Path to Regulatory Authorisation

Globacap will leverage blockchain technology to provide its administrative platform for the the efficient raising of capital through the issuance of digital securities.

The company entered the FCA sandbox last year to trial its technology and work with the regulator and customers to achieve full regulatory authorisation.

Inside the sandbox Globacap trialled and launched the world’s first equity tokenization as a direct holding, and then repeated the achievement twice more for clients.

Myles Milston, chief executive of Globacap, said in a press statement:

The Sandbox programme has been a great experience, enabling us to come to market with a new application of an emerging technology in a controlled but quicker manner. From our groundbreaking proof of concept in August last year, to our product now coming to market, the support from the Innovate Team at the FCA was instrumental in the success of this journey.

Five Sandbox Cohorts

Since launching in 2016, the FCA has accepted 118 companies in five seperate cohorts to test their products and services within the sandbox environment.

Among the 29 companies accepted into the most recent cohort are:

  • Barclays, the UK bank, is testing a tool for profiling customers’ ethical investment preferences
  • London Stock Exchange is examining the integration of blockchain technology into its market infrastructure
  • The Post Office is testing customer verification processes

Sandbox Delivering Value

In October 2018, after the fourth cohort of entries into the sandbox scheme had been accepted, UK audit firm Deloitte conducted a survey of companies that had passed through the programme.

Respondents in the survey said the sandbox helped them identify any flaws in their offerings early on, while challenges posed by FCA experts encouraged thorough evaluation of risks.

The Deloitte survey concluded: 

While the benefits of going through the FCA sandbox vary, perhaps its biggest achievement has been to break the myth of regulation being a barrier to innovation.

Also on Monday, TokenMarket, a blockchain-powered investment platform and alumnus of the FCA sandbox scheme, said it was officially launch its Security Token Offering (STO) on July 8, allowing investors to buy equity tokens for 30p a share.