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A Fortnight in Fintech: sandboxes, smartphones, hedge funds and high growth

21 May 2019

 

Where finance meets technology, interesting things are guaranteed to happen. Various developments from the world of fintech have caught our eye recently. Some involve regulatory bodies in the UK becoming increasingly active in their support of fintech. Others involve mixed results for crypto hedge funds and good news for the UK’s growing fintech businesses.

Read on to find out more about these stories and our reactions to them.

FCA regulatory sandbox and blockchain

At the end of April, the Financial Conduct Authority (FCA) accepted a new cohort of 29 businesses into its ‘regulatory sandbox’, giving them the opportunity to test innovative products, services, business models and delivery mechanisms in a controlled market environment.

It’s great to see the FCA continue to support innovation in blockchain technology, with eight blockchain firms joining the sandbox this year. Some larger institutions are also included in this year’s cohort, including the London Stock Exchange, who are looking to use the technology in securities trading.

HMRC and payments via smartphone

HMRC has announced that it will allow payments to be made with Google Pay and Apple Pay for selected services. While this is only a trial involving four government services, it demonstrates forward thinking from HMRC. Hopefully it will be a success and rolled out to more areas. Imagine being able to collect air miles whilst making tax payments!

Cryptocurrency and hedge funds

The 2019 Crypto Hedge Fund Report has been published by PwC and Elwood. It highlights some of the difficulties and issues faced in the world of cryptocurrency funds.

While quant funds seemed to have generated returns, there are difficulties in NAV calculations, particularly for more illiquid digital assets. Perhaps most strikingly, according to the report, the median fund returned a 46% loss in 2018 versus a Bitcoin benchmark of -72%.

Let’s wait to see if that is light at the end of the tunnel, or an oncoming train from the USA’s Securities and Exchange Commission.

Success for fintech startups in the UK

Also published this month was the latest annual report from Tech Nation, which helps startups through growth programmes and initiatives. There was good news:

‘In the UK, investments in UK high growth fintech firms topped the charts, at £4.5bn from 2015-2018.’

We’re pleased to see the fintech sector performing so well and to support so many ambitious and innovative fintech clients. Our teams work together to help fintech businesses with tax planning and structures, outsourced accounting, audit and assurance. For more information on how we can help your fintech business, please get in touch with your usual BKL contact or use our enquiry form.