The United Kingdom (UK) introduced new regulations allowing the Financial Conduct Authority (FCA) and the Bank of England (BoE) to run a sandbox for tokenized securities.
According to a new publication, the UK introduced the Digital Securities Sandbox (DSS) regulations of the 2023 Financial Services and Markets Act. The law allows the country’s financial authorities to operate the Digital Securities Sandbox (DSS), which it announced earlier this year. The new regulation will take effect on January 8, 2024.
FCA and Bank of England to Operate DSS
Sandboxes allow companies to test solutions and products and regulatory supervision, and with the new regulation, the FCA and the BoE will be able to operate the DSS. According to the rules, UK-based investment exchanges, investment firms, central securities depositories, and recognised central counterparties may apply to participate in the sandbox.
A memo explaining the rules stated:
“The DSS will allow firms and the regulators to test the use of new technology across our financial markets.
In particular, this will involve trialling the use of developing technology (such as distributed ledger technology, or in general technology that facilitates what are commonly referred to as ‘digital assets’) to perform the activities of a central securities depository (specifically notary, settlement and maintenance), and operating a trading venue.”
UK Introduces Financial Services and Markets Act
In June, the House of Lords passed the Financial Services and Markets Act, which aims to regulate bitcoin and crypto in the UK. The act is set to put the UK on a path of accepting crypto as a “regulated activity.”
The country has recognised the need to adapt to a changing financial system, which includes crypto activities. In July, the UK parliament passed a bill that could allow authorities to seize and freeze crypto used in criminal activities. The “Economic Crime and Corporate Transparency Bill” addresses the growing concern of exploiting crypto for money laundering and fraud.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2023/12/uk-to-launch-digital-securities-sandbox