The Bank of England and FCA’s joint consultation on the UK’s Digital Securities Sandbox closed last week. We reviewed four sets of feedback representing a wide range of opinions. Two aspects mentioned the most were the volume limits and the lack of discussion of digital currencies.
The five-year Digital Securities Sandbox which came into force in January, temporarily relaxes some of the legal requirements relating to central securities depositories (CSDs). This supports experimentation with distributed ledger technology (DLT) and tokenization, including the ability to operate both a trading and settlement market infrastructure.
Given that the core function of CSDs is settlement and that a key benefit of blockchain is instant settlement, there was surprisingly little coverage of the topic in the Bank of England and FCA consultation paper. The document mentioned that the Bank of England was considering synchronized settlement using its real time gross settlement (RTGS) system but it didn’t clarify if or when that might be available.
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