The UK’s Digital Securities Sandbox (DSS) has just given preliminary approval to two early applicants, reports Ledger Insights. The two entities are digital securities CSD Montis and ClearToken, a central clearinghouse for crypto and tokenised assets. Preliminary approval does not mean the firms are allowed to go live yet – not in the real world or even within the DSS.
Applications for the DSS were opened at the end of September this year. The Financial Conduct Authority (FCA) is taking a two-gate approach towards giving permissions – Gate 1 is preliminary approval, while Gate 2 is permission to go live within the DSS.
According to Ledger Insights, the FCA has stated that the gap between Gate 1 and 2 “should not be too significant” for existing regulated entities. Early bank applicants, for example, could expect to get Gate 2 approval by February 2025. Unregulated entities might have to wait until November 2025. Both Montis and ClearToken have cleared Gate 1 approval and are awaiting Gate 2.
Like the EU’s DLT Pilot Regime, the UK’s DSS was established to explore the possibility of amending certain regulations traditional finance (TradFi) to cater to DLT market infrastructures. An example is the TradFi requirement that exchanges and CSDs always be separate, which could be impractical with DLT.
