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cryptocurrency November 5, 2018

November 5, 2018 11:06 PM

The blockchain developer aims to protect Arizonans from predatory loans.

Non-profit blockchain developer Sweetbridge is the third company to join the Arizona FinTech Sandbox, according to a November statement issued by Arizona Attorney General Mark Brnovich.

The sandbox was launched on August 3 of this year and is reportedly the nation’s first state-level regulatory sandbox for FinTech. The sandbox removes some of the licensing requirements (and related costs) for businesses in a bid to “[foster] innovation aimed at making products and services more available, affordable, and safe for customers.”

Sweetbridge announced its intention to join the sandbox in a November 2 blog post. According to the blog post, Sweetbridge decided to participate in the sandbox specifically to disrupt the vehicle title loan industry and protect consumers from the often high interest rates and predatory lending practices associated with vehicle title loan providers. (The attorney general’s office agrees, warning Arizona residents that many auto title loans “have excessive and often disguised fees, inflated rates, and other terms that frequently result in consumers being unable to make their loan payments on time, resulting in default.”)

According to a 2015 report by the Pew Charitable Trusts, most auto title loan companies charge an annual percentage rate of 300 percent on a typical one-month title loan and “the average borrower spends an estimated $1,200 in fees annually for a $1,000 loan. Each year, this comes to approximately $3 billion across the more than 2 million American adults who use these loans.”

To protect consumers from this kind of lending, Sweetbridge intends to provide token-based, asset-backed lending to a maximum of 10,000 Arizona residents who are looking to procure an auto title loan. Sweetbridge believes the new blockchain-powered platform will cut out intermediaries as well as remove “significant physical and operational overhead from the title lending process.”

By eliminating these aspects form the auto title lending process, Sweetbridge believes it can effectively reduce the interest charged to consumers from around 300 percent to approximately 20 percent.

Those participating in the sandbox will have two years to develop and launch their new products, services, and technologies to a limited number of Arizona consumers. After that time, Sweetbridge and other sandbox members must obtain any necessary licenses in order to continue offering their product.

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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Source: ETHNews

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