- Hester Peirce, a crypto-friendly SEC member, has proposed a new regulatory framework for the crypto market.
- Peirce suggests a “cross-border sandbox” for crypto firms in the US and the UK to operate under regulatory supervision for two years.
- Peirce’s proposal responds to the Bank of England and Financial Conduct Authority’s consultation on creating a “Digital Securities Sandbox” (DSS).
Discover the latest proposal by SEC’s Hester Peirce for a cross-border sandbox aimed at fostering innovation in the crypto market.
Hester Peirce’s Proposal for a Cross-Border Sandbox
Hester Peirce, a commissioner at the US Securities and Exchange Commission (SEC), has put forward a proposal for a “cross-border sandbox” to regulate crypto firms. This sandbox would allow firms in both the US and the UK to engage in specific activities under regulatory oversight for a two-year period. The proposal is a response to the Bank of England and Financial Conduct Authority’s consultation paper on establishing a “Digital Securities Sandbox” (DSS).
Details of the Proposal
In her statement on Wednesday, Peirce emphasized the need for a sandbox that would fulfill the promises of the DSS and serve investors, market participants, and regulators across jurisdictions. Known as the “crypto mom” for her pro-crypto stance, Peirce has previously suggested solutions for regulating the crypto industry. In 2020, she proposed a three-year “safe harbor period” allowing innovators to launch blockchain-based digital projects without registering under certain federal securities laws.
Implementation and Oversight
Under the proposed “micro innovation sandbox,” the SEC would publish a list of “eligible activities” after public comments. According to Peirce, the agency would also set “monetary caps.” The aim of these caps is to ensure that participants can gauge market reactions to their products or services and identify areas for improvement without compromising investor protection or market integrity. Firms participating in the sandbox would also be subject to anti-fraud provisions.
Conclusion
Firms would be allowed to participate in the sandbox for two years, provided they do not exceed “customer limitations” or monetary caps. During this period, firms would work with the Commission and its staff to obtain a no-action letter or exemption order covering their activities. This proposal by Hester Peirce aims to create a balanced regulatory environment that fosters innovation while ensuring investor protection and market integrity.
