Odaily Planet Daily News The joint consultation of the Bank of England and the FCA on the UK Digital Securities Sandbox ended last week, and the relevant feedback focused on two major issues: limits and digital currencies. The five-year digital securities sandbox was launched in January this year, temporarily relaxing the legal requirements of some central securities depositories (CSDs) to support experiments in distributed ledger technology (DLT) and tokenization. Although the core function of CSD is settlement and blockchain has the advantage of instant settlement, there is little discussion on this issue in the consultation document. The document mentioned that the Bank of England is considering using its real-time gross settlement (RTGS) system for synchronous settlement, but it did not specify whether or when it could be achieved. In addition, it mentioned the central bank comprehensive account facility. It did not explicitly mention Fnality, which uses a comprehensive central bank account as its tokenized settlement infrastructure. Fnality has been launched in the UK, but in a controlled manner restricted by the Bank of England. UK Finance believes that not using on-chain digital currencies is a missed opportunity, especially for non-bank institutions. Given that Fnality is only available to banks, this puts non-bank institutions in the sandbox at a competitive disadvantage. Stablecoins were not mentioned in the report, but UK Finance said their use was limited. The Global Blockchain Business Council and the International Regulatory Strategy Group (IRSG) also called for the use of systemic stablecoins in the sandbox. Regarding limits, UK Finance recommended setting them on a company-by-company basis rather than a global limit. IRSG warned that low limits could prevent the sandbox from attracting a large number of institutions, especially when testing large-scale projects such as digital gilts. In addition, IRSG mentioned that many legal adjustments simply clarify that digital securities are subject to existing laws. GBBC emphasized that the sandbox design is more inclined towards existing institutions, and start-ups have high participation costs and face dual compliance requirements. ICMA and other responders called for increased flexibility in many aspects to make the sandbox easier to use, but this would increase the workload of supervision. (Ledger Insights)
