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On Monday, the UK’s Digital Securities Sandbox regulations will come into force.
The Digital Securities Sandbox will apply exemptions and modifications to existing legislation so that financial institutions can leverage DLT for the management and trading of securities. This will enable assets to be tokenized on blockchain without having to make wide-ranging regulatory changes, and has been widely dubbed the UK’s equivalent of the EU DLT pilot regime.
Dr. Alisa DiCaprio, Chief Economist at enterprise blockchain firm R3 on what this development means for financial innovation in the UK, comments:
“The official implementation of the UK's Digital Securities Sandbox regulations marks a significant milestone in the adoption of distributed ledger technology within financial markets, reflecting the UK's commitment to advancing financial innovation.
“By allowing firms to experiment with DLT within a regulated framework, the FMI sandbox will serve as a stepping stone to a more collaborative, open, and trusted digital economy.
“Over the next five years, DLT is predicted to help tokenize an estimated $5 trillion in assets. The government must continue to recognise the role that this technology will play in maintaining the competitiveness of the City.
“The introduction of smart regulation and standards will be key in creating the right environment for financial services to innovate with technology. As we move ahead, we look forward to seeing how the Digital Securities Sandbox will foster a dynamic and secure financial environment, paving the way for continued growth and innovation."
R3’s DLT platform, Corda, is currently being used in key tokenization initiatives. Earlier this year, Corda powered the first digital bond on Euroclear’s newly launched digital financial market infrastructure.
