A further step forward towards the regulation of digital currencies took place in late February when Startup forex transaction provider Tramonex was issued with the first approval to issue digital cash by the UK’s Financial Conduct Authority (FCA).
GamCrowd has written before regarding the FCAs willingness to provide regulatory clearance for innovation via its Project Innovate and regulatory sandbox programme.
The latest news demonstrates the willingness of the body to facilitate new business ideas if it can advance the cause of the consumer.
The FCA register shows that the company – registered under the name Tramonex Labs - has been allowed to “issue electronic money (e-money) and provide payment services.”
Tramonex sees this the FCA licensing as the first step in revolutionising payments on the blockchain. They say that with the reduction in cost and execution via smart contracts will come the elimination of the middlemen.
In April last year, Tramonex received a grant from the UK government of £250,000 – secured through the agency Innovate UK – in order to develop its plans for a blockchain-based money transfer system.
The compnay says its prototype will cut the transfer costs significantly, making FX services much more affordable to small and medium businesses. Currently, the firm says, traditional banks often still consider SMEs too risky, limiting their ability to trade across borders, and charging them uncompetitive commission fees.
Marc Avedissian, co-founder and chief operating officer at Tramonex, said at the time of the funding news: “It’s only a question of time until blockchain technology goes mainstream and becomes the standardised option for cross-currency transfers. With this grant, Tramonex wants to provide a platform to create a common standard, to ultimately reduce the time and cost to transact across currencies.”
The Tramonex smart contracts are based on the Ethereum blockchain platform.
In August last year, the FCA first said that it would consider regulating companies working with blockchain. In an interview with the Financial Times the FCA’s director of strategy and competition, said the body believed there were “some potentially interesting applications” for blockchain and that the financial watchdog was talking to firms thinking about how to apply that to financial services and how it could benefit consumers or indeed make the business of compliance easier. “There may be areas where we might want to encourage it a bit,” he said at the time.