SEC Commissioner Proposes US-UK Crypto Sandbox for Tokenized Assets Innovation

SEC Commissioner Hester Peirce has outlined a proposal for a cross-border regulatory sandbox to facilitate innovation in tokenized assets, bridging the United States and the United Kingdom [1]. The initiative aims to create a unified testing environment for blockchain-based technologies, including digital securities, real-world asset (RWA) tokenization, stablecoins, and decentralized finance (DeFi) protocols. Peirce first introduced the concept in a May 29, 2024, comment letter to the Bank of England and the UK’s Financial Conduct Authority (FCA), later expanding on it in a July 16, 2025, speech at London’s Guildhall [1].

Under the proposed framework, firms would be able to operate in both jurisdictions simultaneously, leveraging a “micro-innovation sandbox” in the US alongside the UK’s Digital Securities Sandbox (DSS) [1]. This collaboration would reduce regulatory complexity and compliance costs for companies, allowing them to test their innovations under consistent operational rules. The sandbox would include monetary and customer limits to manage risk while supporting meaningful experimentation over a two-year period [1].

Eligible activities would be determined through public input and could cover a range of blockchain applications, such as tokenizing real estate, corporate shares, and government securities [1]. The proposal also includes specific guidance for stablecoin development and DeFi protocol testing, provided these remain within defined risk boundaries. Clear regulatory oversight would support developers and maintain investor protections, market integrity, and financial stability [1].

Peirce emphasized that innovation in digital assets often transcends national borders, and traditional jurisdictional approaches can hinder progress in international markets [1]. By fostering a shared regulatory environment, the sandbox aims to provide clearer policy insights than isolated national trials, potentially accelerating the development of more effective regulations [1].

Analyst MartyParty noted that Peirce’s initiative reflects the growing global nature of crypto innovation, suggesting that cross-border coordination is essential to avoid regulatory arbitrage and promote legitimate technological advancement [1]. The sandbox would enable firms to test new financial instruments in a controlled setting before broader market deployment, ensuring that transparency and investor confidence are maintained [1].

The proposal also aligns with recent regulatory developments, such as the UK’s FCA decision to end its retail ban on crypto exchange-traded notes (ETNs) on October 8 [1]. This shift highlights a broader trend of regulators seeking to balance innovation with investor protection.

The initiative has been presented as a potential model for future cross-border regulatory cooperation, especially in fast-moving sectors like tokenized assets. If implemented, it could serve as a precedent for other international partnerships aimed at fostering responsible innovation in digital finance [1].

Source:

[1] SEC Commissioner Proposes US-UK Crypto Sandbox for Tokenized Assets Innovation

https://coinedition.com/sec-commissioner-proposes-us-uk-crypto-sandbox-for-tokenized-assets-innovation/