The UK’s two principal financial regulators, the Bank of England (BoE) and the Financial Conduct Authority (FCA), have announced the launch of their Digital Securities Sandbox (DSS).
This initiative aims to foster innovation and new ideas concerning digital assets and their applications within the traditional financial services framework. Developed following a consultation process initiated by the BoE and FCA, the DSS will also serve as a platform to test legislative changes relating to digital securities and their potential market impacts.
In a joint statement, the BoE and FCA encouraged firms engaged in financial market infrastructure innovation to apply and noted that guidance has been published to assist them. Additionally, companies can schedule pre-application meetings with the regulators to gain a clearer understanding of the requirements.
The FCA emphasized that the DSS will enable participants to utilize emerging technologies, such as distributed ledger technology (DLT), to perform activities typically associated with Central Securities Depositories and trading venues. This setup allows firms to explore the advantages of new technologies and practices within traditional financial markets. The DSS has three primary goals: promoting innovation to support a safe, sustainable, and efficient financial system; safeguarding financial stability; and ensuring market integrity and transparency.