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Bank of England and FCA Introduce Digital Securities Sandbox for DLT Testing
The Bank of England (BoE) and the United Kingdom’s Financial Conduct Authority (FCA) have initiated a consultation process for the Digital Securities Sandbox (DSS) aimed at testing distributed ledger technology (DLT) products and services.
Overview of the Digital Securities Sandbox
- The DSS will allow participants to test DLT-based products and services by autumn 2024.
- It is designed to establish a new regulatory framework for securities settlement in the UK.
- The sandbox will operate over a five-year period.
Objectives of the DSS
The DSS aims to adapt UK financial regulations to accommodate advancements like DLT for trading and settling digital securities such as shares and bonds.
Features and Benefits
- Initial cohort of applicants expected to join the DSS by autumn 2024.
- Participants can experiment with securities depository and settlement services under modified regulations.
- The sandbox will be inclusive, welcoming various firms including new financial markets infrastructure providers.
Regulatory Innovation and Collaboration
The DSS allows firms to test regulatory changes in real-world scenarios before permanent implementation, fostering innovation and collaboration in the financial sector.
Guidance and Feedback
Regulators have released draft guidance for firms interested in the DSS and seek feedback until May 29, 2024. The finalized guidance is expected to be available for firms in the Summer of 2024.
Legislative Background
The inception of consultations on the DSS dates back to July 2023, with new regulations introduced in December under the U.K.’s Financial Services and Markets Act 2023.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
