Hester Peirce Makes A Case For A Cross-Border Sandbox Between US UK Jurisdictions

Hester Peirce, alias Crypto Mom, is pushing for tokenization through unilateral sandbox activities. She says it would promote market transparency across the US and the UK.

Peirce Wants Firms To Conduct Same Sandbox Activities

Republican Commissioner at the US Securities and Exchange Commission, the famous Crypto Mom, Hester Peirce, has made a case for a cross-border sandbox between two jurisdictions, the United States and the United Kingdom.

The letter looks to leverage the promise of the digital securities sandbox (DSS), serving investors, market participants, and regulators.

This letter outlines one simple approach that our jurisdictions could take to implementing a cross-border sandbox.

Suggesting that the DSS be open to US-domiciled firms, Peirce wants an information-sharing agreement between the two nations, saying that the expanded eligibility would foster cross-border innovation.

Among the innovations include technologies like the Distributed Ledger Technology (DLT) to issue, trade, and settle securities based on agreed regulatory stipulations.

Firms participating in the DSS could choose to operate in the US under the same regulatory conditions as those they follow in the UK. The firms’ US activities would have to stay below predetermined monetary and customer ceilings and would be subject to the general anti-fraud provisions of the securities laws.

Making her case, she explains that the information-sharing agreement between the SEC and UK regulators covering joint sandbox activity would enable both regulators to learn from activity undertaken in both jurisdictions.

An information-sharing agreement would also address the concerns about a lack of supervision over non-UK firms. This had previously led to the proposed exclusion of non-UK firms from the DSS.

With this, Peirce proposes that firms conduct similar sandbox activities, saying:

• Sandboxes have proven effective in facilitating innovation in highly regulated sectors
• Helps innovators try out their innovations under real-world conditions
• Creates an environment that helps produce effective and efficient regulations
• Allows firms to access markets without having to comply immediately with the full range of regulations
• Provides a manageable entry point into highly regulated markets

Also, consumers and investors get access to products and services that might not otherwise be available to them.

Incorporating Innovation Into Financial System Via Shared Sandbox

The sandbox generates real-world insights on DLT, determining whether it could streamline the issuance, trading, and settlement of securities. At the same time, it safeguards investors and upholds market integrity and financial stability.

Citing the need to have similar regulatory requirements in the US and the UK, the commissioner says it would promote market transparency.

Firms would have to adhere to reasonable conditions but reserve the right to choose regulatory systems that would serve investors and markets best. This would maximize their longer-term success with the Commission.

“I emphasize that this micro-innovation sandbox is not a Commission proposal,” she said, adding that it is a work in progress and welcomed public comment on viability and design.

Also Read: Crypto To Play Important Role In US Economy Amid Brewing Elections: Sen Cynthia Lummis