SEC Commissioner Hester Peirce has put forth a proposal for the establishment of a cross-border digital securities sandbox in response to a joint consultation conducted by the Bank of England and the Financial Conduct Authority (FCA).

The primary objective of Peirce's proposal is to encourage innovation while bolstering regulatory oversight by providing firms from both the United Kingdom and the United States with a platform to experiment with distributed ledger technology (DLT) within a unified regulatory framework.

In her statement, Peirce commended the commitment demonstrated by the joint proposal, highlighting its potential to integrate innovation into the financial system effectively.

Advocating for the inclusion of US-domiciled firms in the UK's digital securities sandbox (DSS), Peirce emphasized that expanding eligibility would facilitate cross-border innovation and collaboration.

Peirce underscored the advantages of a cross-border sandbox, which enables firms to operate under consistent regulatory conditions across both jurisdictions. Drawing attention to the success of the FCA's existing sandbox, she noted that participating firms have benefitted from increased capital raising opportunities and the refinement of their business models through real-world testing.

Highlighting the efficacy of sandboxes in fostering innovation within heavily regulated sectors, Peirce noted that regulators gain valuable insights into emerging technologies through these initiatives. She cited statistics indicating that 85 percent of sandbox regulators believe these platforms assist in evaluating the appropriateness of legal or regulatory frameworks.

Peirce concluded by emphasizing the transformative potential of a cross-border sandbox, which could enhance market transparency, facilitate asset fractionalization, and reduce operational costs. She expressed optimism about the consultation process, viewing it as an opportune moment to discuss greater cross-border collaboration in fostering innovation within the financial sector.