Regulation
SEC Commissioner Proposes Cross-Border Sandbox for US and UK Crypto Industries
Hester M. Peirce suggests a collaborative effort towards building a normative framework.
A senior official at the US Securities and Exchange Commission has praised a proposed joint regulatory framework from two of the UK’s top financial authorities and is calling for a joint effort between the countries.
Commissioner Hester M. Peirce released a statement on May 29, suggesting a cross-border sandbox for crypto firms operating in the US and UK, Pierce noted that this is his personal opinion, not necessarily shared by the agency as a whole or other commissioners.
“The proposed cross-border sandbox would allow companies to conduct the same sandbox activities under the same regulatory requirements in both the UK and the US,” Peirce wrote. “Together with a micro-innovation sandbox adopted by the Commission and an information-sharing agreement between our two jurisdictions, expanded eligibility would foster cross-border innovation.”
Your letter is in response to a Sandbox for digital titles (DSS) that the Bank of England and the Financial Conduct Authority (FCA) are trying to create – for which several consultation documents have been published.
Peirce’s proposal is ambitious, considering the SEC’s ongoing attack on the cryptocurrency industry. And the UK has also been quick to shut down crypto services and broadly sanction all types of activities related to the digital asset space.
That said, his letter is cause for optimism.
This shows that even within a SEC clearly aggressive, there are dissenting voices against the “regulation through enforcement” approach. Indeed, Peirce and his fellow commissioner, Mark Uyeda, did already rejected against the agency’s position on cryptocurrencies.
The creation of a cross-border sandbox would be the first of its kind and, considering the size and influence of the US and UK markets, could serve as an example for other regions.
The commissioner also revealed that it tends to be “more of a beach than a regulatory sandbox” and outlined a number of points that will form part of its microinnovation sandbox. These include the requirements set by the SEC for companies to begin operating in the country, including the ability for participants to choose regulatory conditions, the duration and exit of a company, and eligibility requirements.
Peirce wrote that a sandbox can provide a viable path for smaller, more disruptive companies to enter highly regulated markets to compete with larger companies. According to a report, Companies that entered the FCA sandbox raised 15% more capital, are 50% more likely to raise capital and are 25% more likely to survive years later.