SEC’s Hester Peirce Recommends US-UK Cooperation on Digital Securities Sandbox
US Securities and Exchange Commissioner Hester Peirce is pushing for a collaborative digital securities sandbox between the US and the Bank of England. This initiative would allow businesses to test innovative financial tools in a controlled environment.
The sandbox would provide firms with access to technologies, including distributed ledger technology (DLT), for their experiments.
Peirce, known for her vocal advocacy of cryptocurrency innovation, said in a statement Wednesday that the initiative aims to test if DLT can improve efficiency in issuing, trading, and settling securities while safeguarding investors, markets, and financial stability.
“Experience in the UK and elsewhere has shown that sandboxes can help innovators ‘try out their innovations under real-world conditions,’” she said. “A sandbox can provide a viable path for smaller, disruptive firms to enter highly regulated markets to compete with larger incumbent firms.”
Under Peirce’s plan, companies could test their ideas in the sandbox with consistent regulations across both the US and the UK. This would eliminate the hurdle of navigating different rules in each jurisdiction.
Firms participating in the sandbox would have the flexibility to choose a set of regulations to operate under. The sandbox environment also provides a valuable opportunity to identify and fix any design or implementation weaknesses before a wider rollout.
The SEC plans for the sandbox to be open to most companies, excluding those with a history of wrongdoing. It will also be seeking public input to establish a clear list of activities that can be tested within the sandbox. Participation will typically last for two years.
Meanwhile, the SEC’s FinHub will assist firms with submitting
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