UK Partners with Crypto Industry for Digital Securities Legislation

• UK Government to Advance Legislation for Digital Securities
• Design and Feedback on Digital Securities Sandbox (DSS)
• DSS Supervision and Scope
• UK Treasury Initiates Consultation on Five-Year Digital Securities Trial

UK Government to Advance Legislation for Digital Securities

The UK government intends to collaborate with the financial services and technology sectors to formulate necessary legislation, which will advance digital securities. This initiative is a part of the government's pursuit to establish the UK as a crypto industry hub.

Design and Feedback on Digital Securities Sandbox (DSS)

The design of a proposed Digital Securities Sandbox (DSS), which will allow companies to test new products with real customers under regulatory supervision, has been generally supported by respondents to a consultation conducted in July, the Treasury revealed on Wednesday. Several respondents underscored the need for the sandbox rules to remain flexible to accommodate unique use cases. There were also calls for more clarity regarding the tax aspects within the sandbox.

DSS Supervision and Scope

The DSS will be under the supervision of the Bank of England and the Financial Conduct Authority, as per the draft legislation published on Monday. The sandbox will enable businesses to experiment with the distributed ledger technology, the backbone of crypto, to digitize or tokenize traditional securities and represent them on a blockchain. The government plans to incorporate assets such as debt, equity, and money-market instruments within the sandbox's scope, which was a request made by several respondents.

The government will liaise with the regulators and industry to discern any additional legislative provisions that need to be incorporated, and if needed, can aid this through further statutory instruments amending the DSS, was the response to the consultation.

UK Treasury Initiates Consultation on Five-Year Digital Securities Trial

Note that this text has been modified by Sheldon Reback.

Edited by Jonathan Stoker