In response to an FCA-BoE consultation, SEC Commissioner Hester Peirce proposed a cross-border digital securities sandbox.
Allowing businesses in the US and the UK to test distributed ledger technology (DLT) under a single legal framework is the proposal’s way of encouraging innovation and improving regulatory monitoring. Peirce stated in the response:
“This joint proposal reflects a commendable commitment to incorporating innovation into the financial system”.
She argued in favor of expanding eligibility for the UK’s digital securities sandbox (DSS) to include companies with US domiciles, arguing that this would encourage international innovation.
Peirce highlighted the advantages of a cross-border sandbox, enabling businesses to function under identical regulatory frameworks in both jurisdictions.
Another point she made was the success of the FCA’s sandbox, where businesses have raised more money and improved their business models through testing in the real world.
“Sandboxes have proven effective in facilitating innovation in highly regulated sectors,” Peirce noted. She also noted that, according to 85% of sandbox regulators, sandboxes aid in evaluating the suitability of legal or regulatory frameworks, providing regulators with essential insights into developing technology.
Peirce emphasized the revolutionary possibilities of a cross-border sandbox in his conclusion, noting that it may allow asset fractionalization, improve market transparency, and cut costs. she said:
“This consultation offers a timely opportunity to discuss greater cross-border collaboration in facilitating innovation”