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Securities and Exchange Commissioner Hester Pierce recently proposed a cross-border sandbox program for U.S. and U.K. blockchain firms experimenting with tokenized securities. Pierce’s letter builds on a joint proposal from the Bank of England (BOE) and the U.K.’s Financial Conduct Authority (FCA) to create a secure environment for blockchain companies in the U.K. to test the issuance and trading of tokenized securities without regulatory repercussions.
“We can have double the data coming from those experiments. So, what I suggested the SEC do is create a micro innovation sandbox in the U.S., which would allow people to set their own conditions for trials under certain activity ceilings.”
Pierce further explained, “One of the problems we’ve faced is that people approach the SEC for relief, but often, nothing progresses. This approach would encourage the SEC to take action.”
A graphic from the Bank of England outlines the timeline for their joint proposal with the FCA.
In her proposal, Pierce specified key conditions for a joint digital securities sandbox between reputable blockchain firms in the U.S. and the U.K.
Key among her stipulations was defining “eligible activities” for the sandbox, based on input from the public and industry stakeholders. Limits on these activities would also be set through public consultation and monitored by regulatory officials from both countries.
Pierce’s letter emphasized the benefits of securities tokenization, such as reduced transaction costs, enhanced settlement finality, and increased transparency for investors and market participants.
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