regulatory sandbox

Hawaii Pushes Out New Digital Currency Regulatory Sandbox to Boost Crypto Growth

The government of Hawaii has recently announced its establishment of a regulatory sandbox for digital currency companies. The partnership between the Department of Commerce and Consumer Affairs, Division of Financial Institutions (DFI) and Hawaii Technology Development Corporation (HTDC) will see the launch of Hawaii’s first pilot program aimed for digital currencies.

The official announcement stated that the establishment of its “Digital Currency Innovation Lab” is a two-year initiative that would enable digital currency issuers to conduct business operations in Hawaii without a money transmitter license approved by the state.

With the new initiative, the government expects to gain more understanding and perspective on digital currency and its related activities during the two-year period. New legislation would also be considered during this time. The announcement stated that the regulators would consider the capital brought in by startups.

The statement read, “The insights attained will be used to guide legislation and determine the future of digital currency activity in Hawaii.”

Applications have been made available online since March 17 and will be available until May 1, 2020. The DFI mentioned that the businesses that are currently extending money transfer services without a valid registration will also be allowed to be part of the scheme, and will be let off the hook.

Earlier this month, Zimbabwe also announced a crypto regulatory sandbox in an effort to streamline activities in the crypto industry and boost its economy during this time. Russia also expressed its interest in stablecoins in December 2019 and has started experimenting with stablecoins in the regulatory sandbox.

Image via Shutterstock

ING Bank-Led Security Token-Focused Project Pyctor Was Selected by UK's FCA for its Regulatory Sandbox

Pyctor, a digital asset project led by ING Bank, in collaboration with ABN AMRO, BNP Paribas Securities Services, Invesco US, Société Générale – Forge, State Street, and others, was selected to be part of the UK’s Financial Conduct Authority’s (FCA) regulatory sandbox.

The ING-led project was chosen by the United Kingdom’s FCA as one of the businesses selected for Cohort 6 of its regulatory sandbox. Other applications received by the FCA were firms looking to operate in the retail banking, payments, and retail lending sectors.

Pcytor is described as a decentralized permissioned network that aims to “provide digital asset safekeeping and transaction services, with a focus on regulated security tokens issued either on private or public blockchain.”

The UK FCA stated in its announcement that it will be working with the chosen firms closely and test parameters and build in appropriate consumer safeguards. The FCA report added:

“We have an ongoing commitment to encourage and support innovation in the interest of consumers in financial services through – amongst other initiatives – the regulatory sandbox. We want to support innovators in the fintech sector who are under pressure because of the conditions created by coronavirus.”

ING Develops Travel Rule Protocol for Tracking Crypto Transfers

ING Bank has recently developed a new protocol to assist crypto exchanges and companies dealing in digital assets to adhere to the Financial Action Task Force’s Travel Rule requirements.

The new solution, the Travel Rule Protocol (TRP), developed by ING is also backed by Standard Chartered Bank, Fidelity Digital Assets, and Bitgo, and other firms in the crypto industry.

A source close to ING allegedly said that ING is not currently looking at dealing in cryptocurrencies, but will be focusing on security tokens and similar products.

Although ING does not seem like it is joining the crypto ecosystem, ING is no stranger to blockchain. ING is one of the founding members of Contour, a blockchain-based trade finance platform built on R3 Corda.

China’s Central Bank Reveals First Cohort of its FinTech Regulatory Sandbox Pilot

The Chinese central bank’s Shanghai headquarters has recently revealed the Shanghai FinTech Innovation regulatory sandbox application list.

The People’s Bank of China’s (PBoC) Shanghai branch is currently soliciting opinions from the public on eight applications to be included in the FinTech innovation supervision pilot.

The central bank has revealed that there were 13 applicants, including the Bank of Communications, Bank of Shanghai, and the Shanghai Huarui bank. The respective applications covered a diverse integration of FinTech, including small to medium enterprise financing services, including blockchain financing services, and risk-based products.

Yu Baicheng, the Dean of the Zero One Research Institute said:

“From the perspective of the first eight innovative applications announced in Shanghai, first of all, the focus is on banking-related businesses, and each application has the participation of banks. The application pilots of the company cover different fields such as banking, insurance, and non-bank payments; secondly, from the perspective of the subject of the application and the technology involved, it is relatively cross-cut and diversified. Five projects are multi-party cooperation.”

The city of Chengdu was approved for PBoC’s FinTech Innovation pilot

The People’s Bank of China has recently approved the city of Chengdu to carry out FinTech innovation supervision pilots.

Chengdu, the capital of China’s Sichuan province has been added to the list of regions that could carry out FinTech-related pilots.

The People’s Bank of China launched the FinTech regulatory sandbox in December 2019, to guide licenses financial institutions to explore with technologies while complying with laws and regulations.

According to the local report, the city of Chengdu has been exploring big data, blockchain, artificial intelligence, and cloud computing to improve local financial supervision capabilities.

The Chengdu Municipal government and the Chengdu branch of the Chinese central bank have issued a development plan, to promote Chengdu’s practice of FinTech innovation. According to industry insiders, it is believed that Chengdu’s approval of the FinTech innovation supervision pilot would accelerate the city’s FinTech innovation.

Shanghai High Court pilots blockchain for court reform

Shanghai’s high court has started using blockchain technology to record hearings as part of its court record reform pilot.

Using blockchain technology, and voice recognition, text records including audio and video recording functions were also activated. File names, sizes, creation time, and other information related to recorded audio and written files related to the court hearing were generated automatically.

Hong Kong's 2024 Budget Introduces 'Regulatory Sandbox' for Stablecoin Testing

Hong Kong’s Financial Secretary, Mr. Chan Mo-po, has announced the implementation of a ‘regulatory sandbox’ for stablecoin issuance as part of the 2024 budget. This initiative is aimed at testing the issuance processes, business models, investor protection mechanisms, and risk management systems for stablecoins within a controlled environment.

Establishing a Balanced Regulatory Framework

The announcement comes on the heels of the government’s proposal last year to regulate stablecoin issuers, which was open for public consultation. The objective is to establish a regulatory framework that balances financial stability with the need for fostering innovation. The Hong Kong Monetary Authority (HKMA) plans to roll out the sandbox in the short term, enabling institutions interested in issuing stablecoins to test and communicate with regulators regarding future regulatory requirements.

Enhancing Cybersecurity and Investor Protection

Mr. Chan emphasized the importance of cybersecurity and investor and consumer protection in the development of Web3.0. Adhering to the principle of “same business, same risk, same rules,” the Securities and Futures Commission (SFC) has, since June last year, implemented a licensing regime for virtual asset trading platforms. This move aligns with international standards and offers protection for investors, positioning Hong Kong ahead of many major jurisdictions. Furthermore, the government is consulting on the regulation of over-the-counter virtual asset services to strengthen investor and consumer protection.

Comprehensive Approach to a Robust Virtual Market

The government remains committed to promoting a stable and responsible development of the virtual market in Hong Kong. This will be achieved through timely information dissemination, comprehensive public education, and enhanced enforcement.

Conclusion

Hong Kong’s budget for 2024 reflects a proactive approach to integrating innovation with investor protection in the financial sector. The regulatory sandbox for stablecoin is a forward-thinking initiative that positions the city as a leader in the evolving landscape of cryptocurrency and financial technology.