Eversheds Sutherland has advised client 20|30 Limited (20|30), a UK company building blockchain-based platforms for corporate equity issuance, on its admission to Cohort 4 of the Financial Conduct Authority’s (FCA) regulatory sandbox.

The regulatory sandbox allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers. The sandbox is open to authorised firms, unauthorised firms that require authorisation and technology businesses.

The UK FCA announced the successful admission on 4 July 2018, describing 20|30’s offering as “a Distributed Ledger Technology (DLT) based platform that will allow companies to raise capital in a more efficient and streamlined way”.

The test is expected to lead to an Initial Token Offering of the equity capital of 20|30 by way of private placement at the end of Q3 2018. This is the first time that a company’s capital will be offered in the UK via a placement of Equity Tokens – crypto vouchers representing interests in securities bought and sold on a Blockchain using DLT. The offering will rely on the immobilisation of the shares under a trust structure, with the beneficial interest being recorded in the Equity Token ledger on the Blockchain. Cash Tokens - crypto vouchers representing interests in cash held in a client money account used to pay for the Equity Tokens on the Blockchain – will be created in tandem and recorded in a Cash Token ledger, using the same technology as that for the creation of the Equity Tokens.

The sandbox test will be facilitated in conjunction with the London Stock Exchange Group and Nivaura, who were advised by Eversheds Sutherland as part of Cohort One of the regulatory sandbox.

The Eversheds Sutherland team was led by Andrew Henderson, Partner in the financial institutions group and supported by Associate James Burnie (financial services). The wider team included Partners Simon Gamlin (commercial), Stephen Nash (corporate), Jake Mcquitty (litigation) and Ben Jones (tax), Regulatory Director Sally Rigg (Eversheds Sutherland Consulting), Principal Associates Kirstin Mccracken (commercial) and Deepesh Upadhyay (tax), Senior Associates Toke Myers (commercial), David Cook (litigation) and Naz Gauri (litigation) and Associates Nal Townley (commercial), Chris Perks (commercial) and Nathan Lucas (corporate).

Andrew Henderson commented:

“We are very excited to be involved with 20|30 in a project that has the potential to transform the manner in which companies raise capital and brokers trade shares.

“This project demonstrates the Eversheds Sutherland team’s ability to adapt existing law and regulation to develop new concepts to fit technical innovation and give regulators assurance, whilst providing practical, commercial advice to develop a trusted adviser relationship.”