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Regulators Plan 'Global Sandbox' for Fintech Including Blockchain

A number of financial regulators from across the globe are forming a new alliance to facilitate the growth of financial technologies such as blockchain and distributed ledger technology (DLT).

The U.K.’s Financial Conduct Authority (FCA), which spearheaded one of the world’s first fintech sandbox programs, announced the Global Financial Innovation Network (GFIN) initiative on Tuesday, alongside 11 other member regulators from jurisdictions such as Hong Kong, the U.S., Australia and Abu Dhabi.

GFIN will primarily serve as a network of regulators to discuss policies regarding financial technologies, the statement indicates, as well as to develop a “global sandbox” that will give firms with “an environment in which to trial cross-border solutions.”

While the paper offers few details on how the regulators’ plan to create a supervised environment for blockchain startups, the FCA said the new alliance follows a consultation effort in February on the idea of an international sandbox.

Among the 50 responses it received at the time, the FCA said one key theme focused on how regulators around the world can work together to pilot cross-border payments based on DLT and how to regulate initial coin offerings, which often extend beyond borders.

In fact, several members of GFIN, including the Monetary Authority of Singapore, Hong Kong Monetary Authority and Abu Dhabi Global Market, are already working on cross-border payment corridors built with DLT.

Along with the announcement, the group jointly published a consultation paper seeking public feedback on the GFIN initiative by Oct. 14.

Just last month, the FCA also granted 11 blockchain crypto-related startups to the fourth cohort of its sandbox program – almost 40 percent of the 29 firms accepted – which can now trial their products in a regulated environment.

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Hong Kong's Blockchain Trade Finance Platform to Go Live By September

The Hong Kong Monetary Authority (HKMA), the autonomous Chinese territory’s de facto central bank, is poised to launch a live blockchain trade finance platform within two months.

“The Trade Finance Platform is a blockchain project initiated by 7 banks in Hong Kong. The project has been facilitated by the HKMA and is targeted for launch by September 2018,” the authority told CoinDesk via email.

According to a report from the Financial Times on Monday, the HKMA’s blockchain platform has 21 banks participating as participating nodes, including HSBC and Standard Chartered.

The project has been public since early in 2017, when reports indicated several banks had completed a test for the trade finance platform, alongside the HKMA, in an effort to bring transparency to data sharing across financial institutions.

As previously reported, participants at the time included the HKMA, Bank of China, Bank of East Asia, Hang Seng Bank, HSBC and Standard Chartered Bank, with consulting firm Deloitte as a facilitator for the project.

“The aims of the platform are to reduce frauds related to trade finance and double financing, and therefore lead to increased credit availability and lowered financing costs in the long run. This may in turn help small and medium-sized enterprises (SMEs) access to trade financing,” the HKMA explained today.

Aside from the founding banks, other institutions have also indicated interest in the platform, the email added, and the HKMA expects more banks to gradually join in the future.

When and if it goes live, the HKMA project will be one of the first live blockchain trade finance platforms backed by a government institution. Earlier this month, a group of European banks also announced that a trade finance blockchain platform dubbed We.Trade empowered by technology giant IBM is also live.

Meanwhile, the HKMA is also working with its counterpart in Singapore to develop a blockchain-based trade finance network to settle cross-border transactions. The two partners previously estimated a launch in early 2019.

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Hong Kong Seeks to Widen DLT Use in Trade Finance With Abu Dhabi

Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, is planning to work with regulators in Abu Dhabi to develop a cross-border trade finance system that is built with distributed ledger technology (DLT).

The HKMA signed a fintech co-operation agreement on Tuesday with the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market, which supervises the financial market of the U.A.E.’s capital.

The HKMA said under the co-operation agreement, it will collaborate with the FSRA to develop innovative financial technology projects, with a specific interest focusing on DLT utilization in international trade finance.

Nelson Chow, chief fintech officer of the HKMA said in the announcement:

“We are particularly pleased to start a dialogue with FSRA on the opportunity to build a cross-border trade finance network using distributed ledger technology.”

Though the HKMA has not offered details on what platform the potential pilot may be built on, the initial plan comes at a time when the HKMA has already started similar works with its counterpart in Singapore.

As previously reported by CoinDesk, the HKMA and the Monetary Authority of Singapore (MAS) have started testing a Hong Kong Trade Finance Platform (HKTFP),  an HKMA-led and DLT-based trade finance proof-of-concept since last year.

The report said at the time that over 20 global banks and financial institutions joined the test in an effort to advance the proof-of-concept to commercial production, which was expected to be ready by early 2019.

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Hong Kong, Singapore to Collaborate on DLT Trade Finance Platform

Hong Kong’s banking regulator and de facto central bank has announced a new collaboration with Singapore aimed to digitize trade finance using distributed ledger technology (DLT).

Making the announcement today at a fintech event, the CEO of the Hong Kong Monetary Authority (HKMA), Norman Chan Tak-lam, said the joint project with the Monetary Authority of Singapore (MAS) will focus on a DLT proof-of-concept called the Hong Kong Trade Finance Platform (HKTFP).

Already having seen involvement from seven Hong Kong-based banks, the project is designed to digitize trade documents and reduce risk and fraud in the industry. Ultimately, the authorities plan the creation of a cross-border infrastructure that would serve as a bridge between HKTFP and a similar trade platform in Singapore.

According to the South China Morning Post, Chan described the initiative as a “breakthrough’ for distributed ledger technology, adding:

“We firmly believe that the time has come for trade finance to move into the digital era.”

The CEO also announced a number of other schemes aimed to boost collaboration between Hong Kong and the Chinese city of Shenzhen, making it easier for fintech firms to operate in both jurisdictions.

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