SEC Commissioner pitches safe space for digital securities experiment

Securities and Exchange Commissioner Commissioner Hester Pierce recently published a letter pitching a cross-border sandbox program between U.S and U.K. blockchain firms experimenting with tokenized securities.

Pierce’s letter follows a joint proposal from the Bank of England (BOE) and the U.K.’s Financial Conduct Authority (FCA) to create a safe space for blockchain companies in the U.K. to test real-world implementation of tokenized securities issuance and trading without fear of reprisals from state regulators.

During a recent panel at Consensus 2024, Pierce explained the benefits of conducting a cross-border collaboration for tokenized asset exploration. Cointelegraph’s Turner Wright provided this statement from Pierce:

“We can have double the data coming from those experiments. And so in order to do that, what I suggested the SEC do is create [a] micro innovation sandbox in the U.S., which would allow people […] to come in, set their own conditions for trying something, try it under certain activity ceilings.”

Pierce continued, “One of the problems that we’ve had is that people have tried to come into the SEC to get relief, but, you know, you sort of come in, and nothing happens. This would […] force the SEC’s hand a little bit.”

Related: Tokenized asset market could hit $16T on public blockchains — RippleX VP.

The SEC Commissioner outlined a series of stipulations for a joint digital securities sandbox program between blockchain firms of good standing in the U.S. and the U.K.

At the top of her list was the establishment of “eligible activities” for experimentation in the digital securities sandbox, with the eligible activities coming from public and industry input.

Ceilings and limits to the experimental activities would likewise be set by public input and monitored by regulatory officials on both sides of the Atlantic, according to Pierce’s letter.

The pro-crypto regulator’s letter also highlighted the benefits of securities tokenization, including lower transaction costs, increased settlement finality, and greater transparency for investors and market participants.