Peirce proposes DLT sandbox collaboration between US and UK

Securities and Exchange Commissioner Hester Peirce proposed a joint digital securities sandbox between the United States and the Bank of England.

The idea would be to allow firms to use specified technologies in the toolbox, like distributed ledger technology.

“Even though I tend to be more of a beach than a sandbox type of regulator, sandboxes have proven effective in facilitating innovation in highly regulated sectors. Experience in the UK and elsewhere has shown that sandboxes can help innovators ‘try out their innovations under real-world conditions,’” Pierce wrote.

Through the sandbox, firms could conduct the “same sandbox activities under the same regulatory requirements in both the United Kingdom and the United States.”

The two jurisdictions could also give both countries access to a larger dataset than just one would have access to. Peirce further explained that she thinks that the UK and the US are aligned because of their views on capital markets.

This allows firms that might be smaller, but provide disruptive tech, to compete with larger firms.

“Most important, sandboxes can benefit the public. Allowing firms to access markets without having to comply immediately with the full panoply of regulations provides a manageable entry point into highly regulated markets. As a consequence, consumers and investors have access to products and services that might not otherwise be available to them,” she said.

This isn’t the first time that Peirce has put forth a proposal that would allow those dabbling in newer technologies to be exempt from some registration provisions under federal securities laws for a specified period of time. In 2020, she published a token safe harbor proposal.

While Peirce is more friendly towards crypto and technological developments, other commissioners — including Chair Gary Gensler — are not as pro-crypto.

Under Gensler, the SEC has shown a strong penchant for regulation by enforcement when it comes to crypto. The agency has served Wells notices to Consensys, Robinhood Crypto, Uniswap and pursued action against companies including Ripple, Coinbase and Binance.

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