At the end of September last year, the Bank of England and Financial Conduct Authority opened applications for its Digital Securities Sandbox (DSS), a program that’s designed to relax some regulations to support the trading and settlement of tokenized securities on distributed ledgers.
There are strong parallels with the EU’s DLT Pilot Regime, but when the UK’s concept was first announced in 2023 there were three important differences. While the EU regime supports permissionless blockchains, retail access and stablecoins, the British one did not. However, a recently published Q&A reinforces some movement on the first two of those points.
Stepping back, current regulations in both the EU and UK require the use of a central securities depository (CSD) for the settlement of secondary market securities trades and force the separation of trading and settlement venues. Both the regimes relax some of these laws.
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