SEC Commissioner Hester Peirce has proposed the creation of a cross-border sandbox in an effort to safely explore digital securities and establish clear regulation for the cryptocurrency industry.
In a recently shared post, the SEC Commissioner highlighted the importance of blockchain technology and DLT in streamlining and optimizing the securities market, without risking investor security or affecting financial stability. She noted that these developing technologies can offer greater speed and efficiency in securities markets and unlock new opportunities, which have so far remained limited.
To explore the potential of blockchain technology in securities markets, Peirce suggested creating a cross-border regulatory sandbox between the United States and the United Kingdom, two of the most powerful economies in the world.
SEC Commissioner argument that this cross-border sandbox would allow for the creation of a regulated micro-innovation environment for companies in the blockchain industry to experiment and develop in both jurisdictions, in a safe manner.
A controlled environment to experiment with blockchain technology
Peirce's proposal is based on the Digital Securities Sandbox (DSS) proposed by the UK financial authorities, the Bank of England (BoE) and the Financial Conduct Authority (FCA), to explore the advantages of digitizing securities on the blockchain.
According to Peirce, the goal of this sandbox is to support innovation by allowing companies to build with new technologies within a regulated environment, and to create a commendable commitment to incorporating this innovation into the current financial system.
“The SEC’s microinnovation sandbox would allow firms to experiment in the marketplace with specific technologies, such as using DLT to issue, trade and settle securities, under their choice of regulatory requirements,” the commissioner noted.
If approved, blockchain companies will be able to operate in the US and carry out the same sandbox activities under the same regulatory requirements as in the UK. This will encourage further innovation in both jurisdictions, while allowing regulators to learn from the activities undertaken by participating companies. Peirce stressed the importance of this in establishing a clear regulatory framework that is in line with the innovation and development of the blockchain industry and addresses existing concerns about the industry today.
Moving forward in the tokenization of securities
Peirce's proposed cross-border regulatory sandbox also aims to experiment in the digital securities market with greater transparency through tokenization.
In the statement, the SEC commissioner noted that companies could experiment in different areas, including Tokenization of securities to enable greater efficiency and transparency within this market.
Peirce also spoke about the fragmentation of asset ownership and blockchain interoperability as possible areas that companies can explore in the proposed cross-border sandbox. In addition to the above, he highlighted the multiple advantages of incorporating blockchain technology into the financial system, such as optimizing settlement times, reducing costs and increasing the transparency of the system in general.
The SEC commissioner, known in the crypto world as “Crypto Mom,” has been a strong ally of Bitcoin and crypto assets, constantly seeking more favorable regulations for these technological developments. Peirce has publicly opposed several of the hasty regulations that the SEC has applied to the crypto industry, advocating for a more open, inclusive, and progressive approach.
