May 29, 2024

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UK plan on digital securities sandbox laid before Parliament

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UK plan on digital securities sandbox laid before Parliament

The United Kingdom Financial Services and Markets Act’s provisions on a digital securities sandbox are scheduled to come into force in January 2024 after being presented to Parliament.

In a Dec. 18 publication, the U.K. government announced the Digital Securities Sandbox (DSS) regulations of the 2023 Financial Services and Markets Act, which were laid before Parliament, paving the way for crypto firms to test products and services in the country. According to the government, the regulations will take effect on Jan. 8, with the Bank of England and the U.K. Financial Conduct Authority operating the sandbox.

“The DSS will allow firms and the regulators to test the use of new technology across our financial markets,” said a memo explaining the bill. “In particular, this will involve trialling the use of developing technology (such as distributed ledger technology, or in general technology that facilitates what are commonly referred to as ‘digital assets’) to perform the activities of a central securities depository (specifically notary, settlement and maintenance), and operating a trading venue.”

The sandbox regulations were part of the Financial Services and Markets Act signed into law in June after being introduced in 2022. The bill included guidelines allowing crypto firms to operate in the U.K. under a regulatory framework to promote innovative technologies while protecting consumers.

Related: Majority of UK MPs ‘lack crypto knowledge,’ says industry association

Lawmakers in the U.K. have moved forward with other bills to crack down on illegal uses of digital assets in the country. In October, Parliament passed the Economic Crime and Corporate Transparency Bill — which gave officials the authority to seize crypto — and moved forward with plans to regulate stablecoins.

Other jurisdictions, including Brazil and the European Union, have proposed similar regulatory sandboxes to explore tokenization use cases. In the United States, some officials within financial regulatory bodies like the Securities and Exchange Commission and Commodity Futures Trading Commission have also pushed for such sandboxes.

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