Today, the Bank of Lithuania (BL) said it chose IBM Poland and Tieto Lithuania to work on the final stage of its blockchain platform LBChain. However, they will be working separately, and the ‘winner’ designs the final product. The central bank has also called upon to fintech companies and startups to test the technology.
Both IBM and Tieto are international software firms, so competition is fierce. Deloitte was the third service provider in the previous phase, but only the two software firms made it this far. They hope to complete the central bank’s LBChain, which is based on Hyperledger Fabric and Corda. It primarily serves as a regulatory sandbox with Bank of Lithuania consulting the participants.
Some of the tested use cases include a know your customer (KYC) solution for anti-money laundering compliance, cross-border payments, smart contract for factoring process management, a payment card solution, a crowdfunding platform and an unlisted share trading platform.
“We believe that the greatest advantage of LBChain is its versatility,” said Andrius Adamonis, LBChain Project Manager at BL.
He continued: “We strive to create a platform that would not only serve for testing products or services that are already offered on the market, but would also be used to create those that might currently exist only in a financial architect’s mind.”
The platform offers technological as well as regulatory support, which is conducive for the broader adoption of blockchain. It is also cheaper and less risky for companies to test ideas within a stipulated framework, rather than develop their own technology.
“It basically means that you can start your product from scratch and use LBChain to develop it into a market-ready solution,” added Adamonis.
Last month, the Bank of International Settlements (BIS) gave LBChain as an example of regulated innovation. But BL is not the first to build a regulatory sandbox. It is a member of The Global Financial Innovation Network’s (GFIN) platform for cross-border payment solutions, along with multiple other central banks and financial bodies. The Monetary Authority of Singapore (MAS) has more recently launched its own, and the Turkish government shared plans to develop one.