Greg Kilminster
Head of Product - Content
In a speech at London’s Guildhall, US SEC Commissioner Hester Peirce outlined a regulatory vision focused on cross-border collaboration, technological experimentation and regulatory restraint. Addressing financial services leaders, she called for UK-US cooperation on a “sandbox” approach to innovation and warned against politicised rulemaking.
A Case for Cross-Border Sandboxes
Peirce renewed her proposal, as covered in a previous speech, for a joint US-UK regulatory sandbox, arguing that it would allow both jurisdictions to test emerging technologies such as distributed ledger systems under aligned conditions. “Innovators could benefit from simultaneously serving UK and US markets,” she said, adding that regulators would gain access to richer data sets.
She acknowledged that “sandbox” may be an inadequate term and suggested a more flexible, dynamic model—one with clear pathways to long-term compliance. “A sandbox has limited utility unless it comes with a smooth exit ramp,” she warned.
Digital Asset Experimentation and Regulatory Flexibility
Citing rising interest in blockchain technologies, Peirce called on regulators to create more space for innovation in digital assets, including tokenised securities, stablecoins and NFTs. She criticised regulatory ambiguity, which she said had stifled potential: “Many use cases… likely remained unexplored in the face of regulatory hostility or died in the labyrinth of regulatory ambiguity.”
Peirce expressed hope that the SEC’s Crypto Task Force could coordinate with the UK’s FCA, stating: “The unique challenges and opportunities raised by blockchain technology and crypto assets and their borderless nature would lend themselves well to a mechanism for facilitating experiments.”
Guarding Against Political Misuse of Financial Regulation
Peirce was explicit in rejecting policy conditions that depart from the SEC’s statutory remit. “I would not support conditioning a sandbox on sustainability or diversity objectives,” she stated, adding that using regulation “to achieve political outcomes” would be an “improper use” of financial oversight. She cautioned against regulatory overreach, quoting UK Chancellor Rachel Reeves' Mansion House remarks that regulation can “go too far in seeking to eliminate risk.”
Investor Protection Without Stifling Innovation
While reiterating the SEC’s investor protection mandate, Peirce argued that allowing new market entrants is part of that duty. “An often-forgotten part of protecting investors and markets is ensuring that new competitors, products, services, and ways of doing things can come into the market,” she said.
Peirce outlined practical considerations for sandboxes, including proportional limits, cost accessibility, and transparent entry conditions. She urged regulators to “build trust” and remain open to engagement with firms of all sizes.
Foreign Private Issuers and Market Alignment
Peirce also highlighted an ongoing SEC consultation on the Foreign Private Issuer (FPI) definition. She referenced a UK-based issuer’s comment urging “carve-outs or refined eligibility criteria” to preserve access to FPI status despite changes in shareholder geography. She invited further feedback, particularly from UK firms: “That first-hand perspective is valuable, and I look forward to hearing from other interested members of the public.”
Looking Ahead: Regulatory Cooperation Over Grand Designs
Peirce concluded with a call for pragmatism over blueprint planning. Referring to London’s post-Great Fire rebuilding, she said: “Grand plans drawn up by experts often give way to organic building in response to real and immediate human needs.”
Cross-border regulatory innovation, she suggested, should arise not from government mandates but “organically” from market participants. “A cross-border sandbox only makes sense if it streamlines the road to commercial viability,” she said.
With strong alignment on common law traditions and market-based principles, Peirce argued that the UK and US are natural partners in shaping tomorrow’s capital markets—provided that regulators stay focused on their core mandates and resist the urge to dictate commercial outcomes.