The US Securities and Exchange Commission’s (SEC) Commissioner Hester Peirce issued a joint proposal for a US/UK “digital securities sandbox”. This will act as a special safe harbor where companies in both jurisdictions can safely experiment with using blockchain technology for trading securities without fear of regulatory admonishment.
SEC makes a bold move
As per the statement issued, Hester Peirce stated that the joint proposal from the Bank of England and the Financial Conduct Authority for a digital securities sandbox (DSS) reflects a commendable commitment to incorporating innovation.
SEC Commissioner stated that a “cross-border sandbox” could be even more transformative than a solely domestic one. She added that the proposal would enable the SEC to set up a ‘micro-innovation sandbox’ where the US companies would be able to do a limited amount of business in the US. This will be done by using blockchain technology to trade securities without fear of getting targeted by regulators.
She added that the time in the sandbox would be limited to up to 2 years with possible extensions. However, the FinHub will help companies understand and navigate the sandbox.
Eleanor Terrett, a FoxBusiness Journalist, reported that the companies will be able to choose some of their own regulatory rules. Meanwhile, they will be required to follow certain guidelines to protect investors.
She added that If time in the sandbox is successful then companies might be able to graduate and continue their activities with special permission from regulators.
What’s more?
Hester Peirce highlighted that the information sharing agreement between the SEC and UK regulators would enable both regulators to learn from activity undertaken in both jurisdictions. However, this will also address the concerns about the lack of supervision over non-UK firms that led to the proposed exclusion of non-UK firms from the DSS.
She pointed out one report that stated that firms that entered the FCA’s sandbox raised 15% more capital, are 50% more likely to raise capital, and are 25% more likely to survive years later. This capital raising effect is most pronounced for “smaller and younger firms.
This move comes in when the crypto market is in the middle of its bull run. The global digital assets market recorded a marginal surge over the last day to stand at $2.55 trillion capitalisation. Its 24 hour trading volume stood at around $82.21 billion.