The UK Government has initiated consultations on the introduction of a Digital Securities Sandbox (DSS) designed to test innovative new market infrastructures for digital assets.
The DSS will allow firms to model the operations of a central securities depository and trading venue utilizing distributed ledger technology (DLT) to support digital assets. This consultation follows a Call for Evidence issued in 2021, which explored the application of DLT in financial market infrastructures. A major concern raised by market participants at that time was that the UK legislative framework was not adequately prepared to facilitate the use of DLT in financial markets.
The Sandbox aims to enable testing of the technology with temporary adjustments to existing legislation, allowing for modifications to legislative frameworks as testing progresses.
Industry feedback is invited regarding the approach to the DSS, as well as insights on additional policy and legal matters. Respondents are encouraged to formally indicate their interest in utilizing the DSS, with discussions with potential applicants expected to commence as early as possible.
The consultation will remain open until 11:59 PM on 22 August 2023.