The British Treasury Plans to Launch Digital Securities Sandbox
The British Treasury is aiming to launch the Digital Securities Sandbox (DSS) by the end of the first quarter of next year, according to Helen Boyd, Head of Capital Markets at the independent regulatory watchdog, the Financial Conduct Authority (FCA). The sandbox is a controlled testing environment for those looking to bring innovative products to the market. The FCA already has a similar initiative called the Regulatory Sandbox where companies with viable products can pitch them to a closed circle of early customers.
Speaking at CCDT’s Digital Asset Summit in London today, Boyd drew a distinction between the FC’s “traditional innovation sandbox” and the upcoming DSS, which she says has “new rules set that would allow us to do new things with digital securities.” She added that the DSS will hopefully launch “at the end of Q1 next year.”
When asked by the host to explain the role of the FC in regulating crypto, Boyd explained that the FC derives its powers from HM Treasury – the UK’s Financial Industry. “At the moment, we are still waiting for that power,” Boyd clarified. “We do have to wait for Treasury to firstly publish the results of its consultation and then move forward with the legislative part.”
Once that’s done, says Boyd, “the FC will be in a position to take forward those new powers and work out what the regulatory framework is that we will be writing the rules for.” She added that the FC hopes to gather input from the industry as well.
FC Crypto Advertising Deadline Looms
Earlier this month, the FC told crypto companies advertising in the UK that they have until October 8th to get in line with the regulator’s existing financial promotion regime. All companies have to make an application and pay a fee to be approved.
The regulator isn’t just targeting domestic crypto firms, either. It stated that if a company’s marketing such reaches or influences British customers in any way, it will fall under the FC’s purview.
There will be four routes for digitally connected crypto ads to reach UK customers, all of which involve obtaining approval from an FC-regulated body.
Failure to comply, says the FC, can result in two years’ imprisonment, a fine, or both.
During her talk, Helen Boyd said that certain firms running late for registration may be able to get an extension: “There are some firms who are early and some flexibility. […] Please come and talk to us. And we may be able to extend some flexibility to you into the new year.”
Hot Take: The Launch of the DSS Signals Progress in Digital Securities Regulation
The upcoming launch of the Digital Securities Sandbox (DSS) by the British Treasury is a significant step towards effective regulation of digital securities in the UK. The sandbox will provide a controlled environment for testing innovative products before they are introduced to the market. With this initiative, the Financial Conduct Authority (FCA) aims to foster innovation while ensuring consumer protection. The distinction between the traditional innovation sandbox and the DSS lies in the new rules set that will enable the exploration of new possibilities with digital securities. The FC is eagerly awaiting the publication of results from HM Treasury’s consultation to move forward with the legislative process. The FC seeks industry input and aims to establish a robust regulatory framework for digital securities that can revolutionize traditional financial processes.
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