Today HM Treasury published a consultation document for its Digital Securities Sandbox (DSS). The aim is to relax legislation for digital securities, whether they are native or tokenized representations of existing securities. The government recognizes that digital assets could be “genuinely transformative for financial markets,” both in terms of efficiencies and also more radical market changes. The Sandbox will run for an initial period of five years.
The UK has learned from some of the issues experienced in the EU’s DLT Pilot Regime, which has similar objectives. For example, some larger banks found the EU volume limits too restrictive. In the UK, the limits will be more flexible and are yet to be announced. One of the limits will be on the volume of digital securities for an entire asset class. And the second limit will apply to the organization, but is flexible based on its size, activities and sandbox performance.
The asset classes exclude cryptocurrency but include debt, equity and money market instruments.
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