Who is eligible to apply?
The Digital Securities Sandbox (DSS) is open to firms of all sizes and at all stages of development as long as they are legally established in the UK. As set out in the legislation for the Sandbox (DSS regulations 2023) this could be an existing financial institution that is already authorised or recognised under current regulation (such as an investment exchange or recognised CSD) or a new entrant to the market.
The Bank and the FCA will also be looking for applicants to set out the regulatory barriers or obstacles to their business model under existing regulation for the activities listed and how the proposed changes might help overcome this. The regulators are open to admitting firms that point to areas of legal uncertainty, or even firms that could lawfully carry out their activity outside of the DSS, especially if we consider that benefits and risks related to the business model could be better observed in the DSS.
Firms that wish to participate in activities facilitated by the DSS, for example as an issuer, custodian, arranger of an issuance, or investor in digital securities do not need to apply. Technology firms that wish to provide their services to a regulated entity in the DSS or to which a DSS entrant will outsource their services, do not need to apply to undertake these activities.
To see more detail related to the eligibility criteria for the DSS and help guidance on submitting a high-quality application, please see the supporting notes which can be found with the Gate 1 Application Form on the FCA website.
The DSS may be of interest to firms who already provide platforms on which digital securities or digital assets are issued. The regulators would encourage those firms to discuss their business models with the regulators and to familiarise themselves with the legal requirements for the FMIs as detailed in the DSS Policy Statement.