Applications are now open for the UK’s Digital Securities Sandbox (DSS), the Financial Conduct Authority (FCA) and Bank of England (BofE) have revealed.
The sandbox will allow participants to test and explore different solutions, products and technologies relating to digital securities and digital assets. It has been touted by regulators and industry stakeholders as a major step forward for the UK’s digital economy.
In its statement, the FCA highlighted distributed ledger technology (DLT) as a notable example of the technology which can be tested via the DSS. It highlighted the potential this tech has to ‘improve efficiency and reduce costs in wholesale markets, benefitting industry and investors’.
The potential of DLT, and its support via the DSS, has been noted by others. For example, Dr. Alisa DiCaprio, Chief Economist at R3, a digital finance solutions developer, believes it will be a ‘significant milestone’ for this type of technology.
“Over the next five years, DLT is predicted to help tokenize an estimated $5trn in assets,” he said earlier this year. “The government must continue to recognise the role that this technology will play in maintaining the competitiveness of the City.”
In its latest update, the FCA also stressed that the platform can support financial instruments such as equities, corporate and government bonds, money market instruments like commercial paper and certificates of deposits, units in collective investment undertakings, and emissions allowances.
“We believe the DSS could also lead to a quicker, more effective and collaborative way of delivering regulatory change,” the FCA continued.
“The DSS supports innovation, helps protect financial stability and strengthens the UK’s leading position as a global and vibrant financial centre, built on globally respected high standards.”
The regulator has encouraged any firms interested in financial market infrastructure innovation to apply to join the DSS. The platform will be operational until December 2028, with the window to join expected to close in March 2027.
The government may opt to extend the DSS’ activity after the December date, however, depending on how it performs.
