UK Government Sets Regulatory Boundaries for Digital Securities Sandbox
The UK government has revealed that it does not anticipate making changes to the current legislative framework for derivatives and unbacked crypto assets in the near future, despite recognizing the potential benefits of crypto adoption in terms of market efficiency, transparency, and resilience.
In a consultation paper released today, the Treasury outlined its plans for the Digital Securities Sandbox (DSS), which is being launched under the authority granted by the UK’s Financial Services and Markets Act 2023, recently passed into law.
The primary objective of the DSS initiative is to establish a flexible regulatory environment for digital securities, covering both native digital securities and tokenized representations of existing securities.
However, the sandbox will not include unbacked crypto assets like Bitcoin or Ethereum, which the Treasury categorizes as an asset type closely associated with the advancement of emerging technologies such as Distributed Ledger Technology (DLT). This asset type also encompasses exchange tokens, as stated in the paper.