U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has proposed a joint US-UK digital securities sandbox. She noted that the U.S. and UK are ideally positioned for this initiative, emphasizing that this collaboration would benefit innovators, regulators, and consumers in both countries.
SEC Commissioner Proposes Joint US-UK Digital Securities Sandbox
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Hester Peirce Pushes for US-UK Collaborative Financial Sandbox
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has proposed a joint US-UK digital securities sandbox to foster cross-border financial innovation. In a statement issued on Wednesday, the commissioner commented on the “Digital Securities Sandbox joint Bank of England and FCA consultation paper.”
She explained that the sandbox proposal from the Bank of England and the Financial Conduct Authority “is designed to generate real-world insights about whether distributed ledger technology (DLT) could streamline the issuance, trading, and settlement of securities without undermining investor protection, market integrity, or financial stability.” Noting that “opportunities for testing the technology have been limited,” Peirce wrote:
I write to make the case for a cross-border sandbox between our respective jurisdictions, which would build on the promise of the DSS and serve our investors, market participants, and regulators.
“This letter outlines one simple approach that our jurisdictions could take to implementing a cross-border sandbox,” she added, clarifying that her proposal reflects her sole views as an SEC commissioner.
The proposed cross-border sandbox aims to enable firms to conduct identical sandbox activities under the same regulatory requirements in both the UK and the U.S., Peirce described. She advocates for including U.S.-domiciled firms in the DSS, supported by a micro-innovation sandbox enacted by the SEC and an information-sharing agreement between the two jurisdictions. This expanded eligibility would promote cross-border innovation by allowing firms to experiment with technologies like distributed ledger technology for issuing, trading, and settling securities under chosen regulatory conditions. Firms would operate in the U.S. under the same regulatory conditions as in the UK, adhering to monetary and customer ceilings and anti-fraud provisions, she detailed.
SEC Commissioner Peirce emphasized that a cross-border sandbox offers greater transformative potential than a domestic one. She noted that the U.S. and UK are ideally positioned for this initiative due to their shared commitment to capital markets, integrated financial systems, and roles as global financial service providers and technology hubs. This collaboration would benefit innovators, regulators, and both British and American consumers.
Peirce concluded:
My proposal may not be as immediately actionable as other responses to your consultation request. However, this consultation request from the FCA and Bank of England offers a timely opportunity to discuss greater cross-border collaboration in facilitating innovation.
“I look forward to discussing with you, my colleagues in the US, and interested members of the public in the US and the UK about how we might bring a cross-border sandbox to life,” the SEC commissioner said.
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