SEC Commissioner Hester Peirce has proposed creating a sandbox for cross-border digital securities in response to a joint consultation conducted by the Bank of England and the Financial Conduct Authority (FCA).
The proposal aims to foster innovation and enhance regulatory oversight by allowing companies in both the UK and US to trial distributed ledger technology (DLT) within a unified regulatory framework.
“This joint proposal reflects a laudable commitment to integrating innovation into the financial system,” Pearce stated in his report. Answer.
It has called for US-based companies to be included in the UK's Digital Securities Sandbox (DSS), suggesting that expanding eligibility would boost cross-border innovation.
Pearce emphasized the benefits of a cross-border sandbox, which allows companies to operate under the same regulatory conditions in both jurisdictions. It also pointed to the success of the FCA's sandbox, with companies raising more capital and improving their business models through real-world testing.
“Experimental environments have proven effective in facilitating innovation in highly regulated sectors,” Pearce noted.
It also noted that regulators are gaining valuable insights into emerging technologies, with 85% of regulators in the sandbox reporting that the sandbox helps assess the suitability of legal or regulatory frameworks.
Pearce concluded by emphasizing the transformative potential of cross-border sandboxes, which can enhance market transparency, enable asset segmentation, and reduce costs.
“This consultation provides an opportune opportunity to discuss further cross-border cooperation in facilitating innovation,” she said.