By: Isha Das
The UK Treasury has unveiled a set of regulations known as the Digital Securities Sandbox (DSS) aimed at fostering innovation while allowing for the controlled testing of emerging technologies such as blockchain. These regulations, presented to parliament on Dec. 18, are designed to create an environment in which companies and regulators can test new financial market technologies without the burden of current regulatory hurdles.
The DSS rules, enabling the Treasury to change or introduce new legislative requirements, will be in effect from Jan. 8, 2024. They also empower the Bank of England and Financial Conduct Authority to manage and supervise a sandbox, provided they are granted the required powers from the Treasury. Potentially, findings from the sandbox testing could be permanently enacted into law through collaboration between the Treasury and Parliament.
The regulations focus on trials involving digital assets and related technologies, such as distributed ledger technology (DLT), traditionally associated with crypto assets. However, the aim is for these technologies to be used in broader applications. Crypto exchanges, amongst other firms, have shown interest in utilising the sandbox rules.
In spite of stringent crypto policies and advertising rules already in place, the UK government has consistently stated its objective of making the UK a safe hub for crypto activities. These new regulations, stemming from the Financial Services and Markets Act 2023, further underline this commitment.
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